An oil and gas producer engaged an AEGIS competitor for physical marketing and producer services due to a low headline fee. Because of the low headline fee, the producer felt like it was receiving a “below market fee.” While they were, there was much more to the story.
The oil and gas producer was concerned that sales were going to the physical marketer’s affiliate and engaged AEGIS to run a competitive marketing process. AEGIS engaged the affiliate of the physical marketer as well as numerous other potential purchasers in the competitive bidding process.
Bids came in ~$.0.05/mmbtu better than the prices the physical marketer had been receiving from its affiliate. This was a multi-million dollar impact for the oil and gas producer. The oil and gas producer better understood the “below market” marketing fees and switched physical marketing services to AEGIS under a transparent agency-based fixed fee deal to competitively bid out the volumes to optimize realized prices.