They need to be treated the same as any other investment. They were aquired at a certain price and have a carrying value. As the price of oil fluctuates the value of the hedges fluctuates, it simply means that if they were to acquire those hedges at this point in time they would have paid that much less for them, its a non-cash item in that those hedges will eventually expire and the company will replace them, or not, depending on covenents of their financing agreements. They neither make or lose money on the hedges per se its just that those hedges gaurantee a rate of return on production for an up front fee.