U.S. producers have decreased their exposure to natural gas prices and boosted it for oil heading into 2021, which could have a significant impact on the bottom line, according to Raymond James & Associates Inc.

Analyst John Freeman said in a note Monday the exploration and production (E&P) companies covered by Raymond James had hedged 53% of their gas volumes and 43% of their oil, “with the average oil swap price falling precipitously against a nice bump in the average natural gas swap price.”

“The average E&P has roughly 50% or less of their commodity exposure hedged for next year so oil and gas prices will continue to have a significant impact on the bottom line for most companies,” Freeman wrote.

Hedging gas and oil prices traditionally is a way to limit downside...