Client
A privately held, natural gas producer.
The Challenge
For over a decade, our Client had been hedging their natural gas production with a leading natural gas marketing company and, historically, was very satisfied with the relationship as well as the hedging instruments and prices offered by the marketing company. However, when faced with a challenging economic and lending environment, the marketing company was forced to reduce our Client’s credit line as the marketing company’s own credit lines had been drastically reduced by their lenders. Making the matter worse, our Client’s existing hedge positions were set to expire in the coming months. The economic environment had led many banks and trading companies to cease accepting new hedging customers and our Client had no prospects for an alternative hedge provider(s).
The Solution
Within days of the first conversation with our Client, we assessed their hedging goals and objectives, quantified their hedging requirements and facilitated introductions to over a dozen potential counterparties, none of which were previously known to our Client. Within 60 days of being contacted by our Client, we were able to assist them in forging a relationship and line of credit with a well capitalized counterparty that also happens to offer unparalled customer service. The new relationship and line of credit have led to the establishment of a revamped hedging program for our Client.
The Results
Working with Mercatus Energy Advisors and the new counterparty, our Client once again has a solid natural gas hedging program in place. Knowing that their revenues and cash flow are once again predictable, our Client has been able to return their focus to their core business of drilling for and producing natural gas.
Furthermore, since engaging Mercatus Energy Advisors, our Client’s hedging program is significantly outperforming their benchmarks, and the company is well positioned to produce even stronger results in the coming year.
Can Mercatus Energy Advisors assist you in developing, improving or optimizing your natural gas hedging and risk management initiative? Contact us to discuss your specific situation.
Client
A publicly traded pharmaceutical company.
The Challenge
Our Client has numerous facilities across the United States, many of which consume large volumes of propane. Historically our Client's individual facility managers were responsible for managing their facility's propane supply and the associated costs. As a result, the company's propane procurement process was inefficient and hindered the company's ability to hedge their exposure to volatile propane prices.
The Solution
Our Client desired a solution to improve their propane procurement process, ensure that their propane costs are compeitive and to develop a propane hedging program. We then worked with the Client to develop and implement a system that would allow them to “outsource” the management of their propane procurement and hedging functions to the Mercatus Energy Advisors team.
The Results
Since we began working with our Client, we have helped them implement a centralized propane procurement process as well as a propane hedging program. The combination of the two initiatives ensures that our Client's propane supply is reliable and economic, mitigates their exposure to volatile propane prices and allows them to accurately forecast their current and future propane costs.
Can Mercatus Energy Advisors assist you in developing, improving or optimizing your propane hedging and procurement process? Contact us to discuss your specific situation.
Client
A privately held, petroleum marketer.
The Challenge
Our Client markets bio-diesel, diesel fuel, gasoline, heating oil, kerosene and propane to commercial and industrial end-users as well as residential consumers. As a value added service, our Client offers their customers price protection (fixed and capped prices) programs via embedded derivatives.
While our Client had all of the internal resources to successfully market these programs to their customers, they didn’t have the expertise or experience to manage the supply contracts or hedge portfolios that are necessary to properly manage the price protection programs. As a result, our Client was exposed to significant price, operational, basis and credit risk that they couldn’t manage in-house, which cause a long list of problems, including declining profit margins and cash flow issues.
The Solution
Our Client desired to "outsource" the hedging, supply and risk management functions of their price protection programs. We worked with the Client to develop and implement a system that would allow them to outsource the management of their hedging, supply and risk management requirement to the Mercatus Energy Advisors team.
The Results
Since engaging Mercatus Energy Advisors, our Client's marketing programs have allowed them to gain market significant share as well as increase their profit margins. Furthermore, our Client knows that their risks are being properly managed, which allows them to accurately forecast their revenues, cash flows and profit margins.
Can Mercatus Energy Advisors assist you in developing, improving or optimizing your petroleum hedging and marketing initiatives? Contact us to discuss your specific situation.
