Mercatus Energy Advisors | In The News

airline fuel hedgingUS Airlines Loosen Belts On Costly Hedges as Jet Fuel Turbulence Wanes

By Matthew Kohlman, David Elward & Su Yeen Cheong

August 2014

"We have certainly seen some North American carriers reduce the overall percentage of fuel they are hedging," said Mike Corley, president of Mercatus Energy Advisors, an independent energy hedging advisory firm.”

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natural gas hedgingLong-Term Trends Define Hedging Strategies

By Gregory DL Morris

March 2014

"Most hedging mistakes can be avoided by simply taking the time and effort to create a hedging policy, and develop and implement strategies that meet a company’s goals and objectives.”

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electricity hedging article resized 600How An Energy Firm's Demise Was A Financial As Much As a Weather Event

By Mark Holan

February 2014

"It was changing by $100 per megawatt hour per day,” said Mike Corley, president of Mercatus Energy, a Houston-based energy hedging, trading and risk management advisory firm.

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jet fuel hedging dublinAir Industry Mulls Jet Fuel Hedging Options

By Victoria Bryan

January 2014

"Airlines are very good at mitigating risk across the business but managing commodity price risk is often an area where they fall short," Corley said.

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airline fuel hedgingMitigate Not Speculate

By Mike Corley

December 2013

"While many argue that airlines should not need to hedge their exposure to fuel price volatility, the reality is that when an airline sells a ticket to a customer they are increasing their exposure to fuel prices."

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crude oil hedging articleSovereign Hedging Picks Up As Developing Countries End Fuel Subsidies

By Alexander Osipovich

November 2013

"Mike Corley, president of Mercatus Energy Advisors, a Houston-based consultancy that advises both corporate and sovereign clients on their hedging programmes, says CPC's experience frightened a number of governments away from hedging."

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crude oil hedging articleLinn Energy Inquiry Sparks Hedge Accounting Debate

By Alexander Osipovich

September 2013

"It is rare that we see a producer buying in-the-money put options. For starters, because they're in-the-money, they require significant cash upfront," says Mike Corley, president of Mercatus Energy Advisors, a Houston-based consultancy that advises energy companies on hedging.

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farm diesel hedgingBook Farm Diesel

By Julie Deering

July 2013

"Whether you're buying or selling a swap, option, futures contract or entering into a contract with a supplier, run a what-if analysis so that you know how the contract will impact your cash flow and bottom line in various price environments."

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crude oil hedging articleLiquidity Improves in Canadian Heavy Oil Derivatives

By Alexander Osipovich

July 2013

"It's still a young market. In due time I think we will see the liquidity increase and the volumes grow. But it's going to take a while to get there," says Mike Corley at Mercatus Energy Advisors."

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hedging jet fuel articleTaking Control

By Mike Corley

June 2013

"While many airlines benefit from hedging, the majority are not realizing the full benefits of hedging because they are not actively managing their hedge portfolio."

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airline fuel hedging article may 2013Fuel Costs: Hedge Your Bets

By Mike Corley

May 2013

"Given intensive competition in the airline industry, a proper fuel hedigng program can create a significant competitive advantage."

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minimising risk through bunker hedging april 2013Minimising Risk Through Bunker Hedging

By Mike Corley

April 2013

"As the global oil markets evolve, the qustion of wherther or not to hedge continues to challenge companies thoughout the shipping industry."

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Eide Bailly The Key Elements of a Successful Oil and Gas Hedging ProgramThe Key Elements of a Successful Oil & Gas Hedging Program

By Mike Corley

March 2013

"The key to a successful oil and gas hedging program is developing a solid plan and sticking with it."

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NGL Hedging Options Lag Production GrowthHedging Options Lag Production Growth

By Gregory DL Morris

January 2013

"Counterparties are active in natural gas and crude oil, and even refined products, because the underlying physical markets are well connected. They are less willing to participate in NGL trading or hedging because that infrastructure does not yet exist."

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nucor natural gas hedgingThe Art of Creating a Corporate Energy Hedging Programme

By Jay Maroo

December 2012

"However, Mike Corley at Mercatus Energy Advisors believes the adoption of this strategy can be recipe for trouble. It might not require cash upfront but it’s rarely the best strategy. If you actually quantify it, more times than not, a swap or simple call option has produced better results than a costless collar when you consider the all-in cost.”

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nucor natural gas hedgingNucor Praised for Pursuing Natural Hedge

By Alexander Osipovich

December 2012

"In other words, Nucor may simply be exchanging one set of risks for another," says Mike Corley, president of Mercatus Energy Advisors, a Houston-based consultancy that advises companies on energy hedging. "Time will tell whether these are good decisions," he adds. "It is certainly a different approach than many have taken in the past."

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jet fuel hedgingJet Fuel Hedging Remains A Tough Call for Airlines

By Peter Shaw-Smith

November 2012

"Airlines often do not place enough emphasis on fuel-price risk management, said Michael Corley," president of Mercatus Energy Advisors of Houston, Texas.

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natural gas producer hedgingNatural Gas Producers Step Up Hedging

By Alexander Osipovich

November 2012

"Producers have been drawn back into the market by attractive forward prices, but they are not hedging as much as they were in 2009 or 2012, according to Mike Corley, president of Houston-based consultancy Mercatus Energy Advisors."

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mexico oil hedging strategyExperts Question Shift in Mexico Oil Hedging Strategy

By Alexander Osipovich

September 2012

"The problem is, if prices drop significantly and stay low for an extended period of time, then obviously they won't be in good shape," says Mike Corley, president of Houston-based Mercatus Energy Advisors. "Clearly they're trying to reduce the amount of premium to as little as possible..."

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brent oil hedging hedging Benchmark Shift Drives ICE Brent Option Surge

By John Parry

September 2012

"Mercatus, an energy hedging and risk management advisory firm, recently surveyed the airline industry on its jet fuel hedging activity. The company found that more than 80% of the airlines were hedging fuel price risk, and that the most common instruments to do this were swaps and options."

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commodity hedging press releaseCommodity Hedging's PR Dilemma

By Alexander Osipovich

September 2012

"If your hedging programme is well-structured and if the fundamental reason behind the hedge was a sound one, explaining a loss is straightforward, says Corley. "

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ICE swap energy hedging

ICE's Swaps Switch Moved Up to October from January

By John McCrank

September 2012

"But there is still a lot of uncertainty among swaps market participants as to how exactly they will be affected, said Mike Corley, president of Mercatus Energy Advisors, a Houston-based consultancy that advises companies on fuel hedging".

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Qantas fuel hedging

 

Qantas Nosedives to Loss in Turbulent Airline Industry

By Shane Croucher

August 2012

"In the report titled The State of Airline Fuel Hedging & Risk Management, written by Mercatus Energy Advisors and Airline Economics, 43 percent of participants surveyed revealed they are content having a significant exposure to spot market prices and therefore potential price swings."

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EasyJet fuel hedging

 

EasyJet Shares Soar as Increased Traffic, Fuel Hedging, Lift Bottom Line

By Lianna Brinded

July 2012

"According to a research report from Mercatus Energy Advisors and Airline Economics titled The State of Airline Fuel Hedging & Risk Management, which is comprised of data from 24 different airlines.."

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Should Airlines Hedge Fuel

Should Airlines Hedge Their Bets on Fuel?"

By Martin Rivers

July 2012

"There was a fear that oil prices were going to go to $200 or $300 a barrel," says Mike Corley, president of hedging consultancy Mercatus Energy Advisors. "The fear of being exposed to $200 a barrel was so great that a lot of people convinced themselves prices could not decline. 

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ICE swap energy hedging

Back to the Futures: ICE swap Switch Offers Boon to Big Traders

By Chris Baltimore and David Sheppard

July 2012

"You can't just flip the switch overnight and say 'Okay, now all these things are now futures,'" said Mike Corley, president of Mercatus Energy Advisors, a Houston-based consultancy that advises companies on fuel hedging.

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Emirates fuel hedging

Gambling with a clear game plan

By Martin Rivers

July 2012

"But mitigating fuel volatility is about more than locking in contracts for fear of even higher prices around the corner. As Mike Corley, president of hedging consultancy Mercatus Energy Advisors, explains, effective strategies should deliver predictable returns in all hypothetical market conditions".

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airline economics fuel hedging

Fluid Hedging

By Mike Corley

July 2012

"Many airlines, who were convinced that oil prices were going to continue to increase, are now facing losses as a result of entering into fixed price swaps at levels well above current market prices..."

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opis ngl hedgingOPIS LP Alert

By Mike Angell

June 2012

"The NYMEX WTI contract is the more common proxy hedge in the NGL industry, says Michael Corley, president of risk consulting firm Mercatus Energy Advisors. But producers are facing increasing basis risk as NGL production surges in different parts of the country..."

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fuel hedging price risk

IATA Warns Airlines of Worsening Eurozone Crisis and Oil Price Rise Risks

By Lianna Brinded

June 2012

"A majority of airlines have only implemented a hedging programme for 21 percent and 40 percent of its fuel for 2012, in a bid to mitigate losses from rising oil prices."

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IAG fuel hedging

IAG Losses Soar to €249 Million as Spain Recession and High Oil Prices Hurt

By Shane Croucher

June 2012

"A report from Mercatus Energy Advisors and Airline Economics showed that most of the world's airlines were leaving over half of their fuel costs exposed to future oil price rises without protecting themselves with hedging tools.."

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airlines hedge fuel costs

Airlines Hedge Less than Half of Fuel Costs Against Price Rises

By Lianna Brinded

May 2012

"Interestingly, the Mercatus Energy Advisors report revealed that participants that are currently and / or have utilised various hedging instruments and structures to their fuel purchase programme, favour fixed-price swaps and call options..."

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delta airlines hedgingAnalysts still sceptical of Delta Airlines Refinery Acquisition

By Alexander Osipovich

May 2012

"It's slightly more intriguing and understandable than it was a week ago, but their swapping one risk for another", says Corley.

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airline hedging best practices

Airline hedging falling short of best practices

By Alexander Osipovich

May 2012

"I’ve talked to airlines who admit that they often make their hedging decisions based on emotional views about oil prices,” says Mike Corley, president of Mercatus Energy Advisors, which conducted the study over the winter of 2011–12 and released its anonymised results in April."

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oil gas hedging wall street journal

Once Linked, Oil and Gas Break Up

By Carolyn Cui

March 2012

"We are not seeing as much a reduction as anticipated," said Mike Corley, president of Mercatus Energy Advisors LLC, a Houston-based energy advisory firm. "This is the first time that natural-gas prices have stayed depressed for such a long period of time."

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IP Week London Energy Hedging

IP Week Retrospective

By Petroleum Review

April 2012

"Mike Corley explained that for E&P companies, effective hedging can lock-in future cash flows or acquisition economics as well as increasing their borrowing case and reducing the impact of price volatility on the bottom line."

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school bus fleet fuel hedging

Could Fuel Prices Reach $8 Per Gallon?

By Tony Corpin

April 2012

"According to Mercatus Energy Advisors, large fuel consuming companies enter into hedging contracts to mitigate their exposure to future fuel prices that might be higher than current prices and/or to establish a known fuel cost for budgeting purposes."

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delta airlines refinery hedgingPossible Delta Airlines Refinery Acquisition Raises Eyebrows

By Alexander Osipovich

April 2012

"Still, industry observers are sceptical about the potential value of the deal. "It's a potential disaster," says Mike Corley, president of Mercatus Energy Advisors, a Houston-based consultancy that advises companies on fuel hedging".

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natural gas hedging - energy risk managementLow US Natural Gas Prices Stir Hedging Talk

By Alexander Osipovich

March 2012

"While many end-users view options as an unnecessary expense, they can be quite attractive when prices are trading at such low levels," Michael Corley, president of Mercatus Energy Advisors, wrote in his blog last week."

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fuel hedging - airline economicsFuel Efficiency

By Mike Corley

March 2012

"As everyone in the industry is well aware, high and volatile fuel prices can and do wreak havoc on airline profit margins. However, there are numerous hedging strategies that allow airlines to mitigate this risk".

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oil hedging bbc news

An Oil Spike

By Ed Butler

February 2012

Listen to Mike Corley, President of Mercatus Energy Advisors, speak with BBC's Ed Butler about oil hedging and risk management in the current environment.

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hedging - oil council

On The Spot

By Ross Stewart Campbell

February 2012

"In 2012, we anticipate that the issues that most concern our clients will be regulatory uncertainty, the economic environment and, in North America, low natural gas prices. Regarding regulatory uncertainty, the list is obviously long but, as it relates to hedging and trading..."

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US natural gas hedging

US Natural Gas Hedging: 2012 Outlook

By Pauline McCallion

January 2012

"Over the course of 2012 and beyond, a number of potential events could turn the current price lull on its head, however. Obviously, the economic outlook will play a major role, says Michael Corley, president of Mercatus Energy Advisors".

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companies energy hedging

Companies Cautious on Hedging in Headline-Driven Energy Markets

By Gillian Carr

January 2012

"In addition to economic risk and weather risk, regulatory risk is still on the minds of many, especially in the OTC markets, says Mike Corley, president of Mercatus Energy Advisors in Houston. "There's definitely been an overall decline in trading volumes".

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managing airline fuel hedges

How to Manage Your Hedges

By Mike Corley

January 2012

"It goes without saying that commercial airlines are constantly faced with managing their exposure to volatile fuel prices. A variety of instruments-futures,swaps,options and other derivatives.."

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companies commodity energy hedgingCompanies freeze commodity hedging as Europe teeters

By Jonathan Leff

November 2011

"How do you make a hedging decision today for a year or 18 months forward when you have no idea what the demand from your own customers is going to be for the next quarter?" asks Mike Corley, president of Mercatus Energy Advisors, which works with dozens of corporations on their hedging strategies".

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oil gas investor hedging

Analyzing Counterparty Credit Risk

By Allegro

November 2011

"Michael Corley of Mercatus Energy Advisors, Houston, notes, We’ve received numerous inquiries from oil and gas producers that are being forced to find new hedging counterparties…most often due to credit-related issues.”

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gasoil hedging ICE's Gasoil Contract

By Tom Doggett

November 2011

"Still another factor is the change in the U.S. regulatory environment. According to Michael Corley, president of Mercatus Energy Advisors, a Houston-based energy trading and risk management firm, companies that want to hedge or speculate on petroleum prices are worried about position limits and other regulations that will be implemented by the Commodity Futures Trading Commission..."

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fuel hedging - big gambleThe Big Fuel Gamble

By Victoria Tozer-Pennington

November 2011

"Mike Corley of Mercatus Energy Advisors says: Southwest definitely has the best results from hedging, although its chief executive has recently quoted that the airline is not nearly as well hedged as it used to be and it will slowly lose that competitive advantage".

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natural gas hedging surveyHedging Survey

By Anastasia Gnezditskaia

July 2011

"Smaller- to mid-sized E&P companies that did not hedge at all in the past have become “more aggressive” with their hedging strategies and have significantly increased their hedging volumes, Mike Corley, president of Mercatus Energy Advisors, said".

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to hedge or not to hedge oil and gasTo Hedge or Not to Hedge

By Larry Hickey

June 2011

"Mike Corley, a long-time energy and risk management consultant and president of Houston- based Mercatus Energy Advisors, recounts the story a family-owned, Oklahoma-based oil and gas producer that hedged conservatively".

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global commodities hedging oil and gasTo Hedge or Not to Hedge: Oil & Gas Hedging for CFOs

By Mike Corley

May 2011

"Historically, many have argued that E&Ps serve as vehicles for obtaining exposure to energy commodity prices. However, in recent years, industry best practices have evolved and the new consensus is that E&Ps must take their own proactive steps to mitigate risk, including commodity price risk".

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energy risk management playersEnergy players expect further market fragmentation

By Pauline McCallion

January 2011

"The benefits of working for a big company or a bank do not exist anymore [due to Dodd-Frank regulation]. So we could see more commodity traders leave big energy companies, banks and large hedge funds."

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oil hedging and speculationThe Bright Shining Lie Between Hedging and Speculation

By Larry Hickey

January 2011

"As long time energy and risk management consultant and president of Houston-based Mercatus Energy Advisors, Mike Corley can tell you, Many Hedges look like thinly veiled directional bets".

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oil hedging mitigates price riskHedging Mitigates Price Risk Exposure

By Mike Corley

October 2010

"Hedging has become a fundamental strategic decision for many oil and gas companies, and is the only sound way a producer can significantly reduce its financial exposure to volatile oil and gas prices"

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