Hedge Your Commodity Exposures

OIL & GAS | METALS & MINING | AGRICULTURE | LUMBER

Is commodity price volatility a top concern?

By implementing a commodity hedging program, you can mitigate price risk and protect your bottom line from the impacts of market volatility.

Common Hedgeable Exposures for Producers

Crude Oil

Natural Gas

NGLs

Refined Fuels

Interest Rates

Metals

FX

Ags

Table of Contents

What Is Hedging
Frequently Asked Questions (FAQ)
Why Hedge Exposures?
Why AEGIS?
Contact Us
Case Studies

What is Hedging?

A hedging transaction is a strategic action that companies use to reduce the risk of losing money through the fluctuations of commodities and/or rates.

Create cash flow certainty
Establish a known cost structure
Maintain or enhance your company’s competitiveness within the industry

Hedging is like insurance wherein it is utilized to minimize the chance that assets will lose value while limiting the loss to a known and specific amount if there is a loss.

Speculation vs. Hedging

Speculation involves the practice of trying to profit from price changes in various markets. “Risk Takers”

Hedging involves the practice of mitigating or minimizing the probability of loss from changes in price. “Risk Averse”

A hedger starts with price exposure, buys or sells a futures contract, and offsets the price exposure.

For example, a steel mill is offered a fixed price in a forward month and buys futures in the same month to offset the price risk. A hedger always does the EQUAL AND OPPOSITE of their physical exposure. A speculator - running a scrap yard or a mill. When they have price exposure beyond their normal course of business and do NOT hedge.

Hedge Strategy FAQs

Risk management is a key part of your business whether it is operations, strategy, and/or finance. Every business attempts to mitigate risk. With the right financial hedge strategy, you can still manage your goals while simultaneously managing your risk. Here are a few of the commonly asked questions producers are asking.

We have never hedged, why now?

We have several clients that were once in your place and got tired of running their businesses from chance. There is no need to start hedging 100% of your Proven Developed Producing (PDP). Clients that prefer more risk, generally hedge a lower portion of their PDP which leaves a lot open to upside and taking risk off the table to protect their business, their investors, and their employees.

Do you work with small companies?

Our clients range from production volumes across the spectrum. The minimum contracts are generally 1,000 Bbls per month and 10,000 MMBtu per month. Often, one of the most important aspects of leveraging AEGIS is the advice we can provide on the right counterparties to work with that are more open to building a relationship with smaller producers.

Can I maintain my relationship with my bank and work with AEGIS?

We won’t ask you to step out of your relationship with your bank, we are there to interface with their trade desk when it comes to executing the trades. The best way to get the best trade execution is to align your hedge strategy with the market conditions and then execute with the right counterparties with a hedge advisor at your side.

I like the technology I'm currently using, why change?

In a volatile environment when things can change quickly, having a single source of truth into your portfolio has incredible value. Our platform enables our clients on-demand access to their data in real-time with full accessibility to our research, 300+ price curves, auto-mated trade confirmations and settlement workflows, scenario analysis, and more functionality for more than just managing the portfolio itself.

How AEGIS Helps

AEGIS helps companies involved in the extraction and production of natural resources manage commodity and rate exposures in real-time through objective market views, customized hedge strategies, proactive portfolio monitoring, cost-effective trade execution, and back-office support - all powered by award-winning technology and expertise.

LET'S TALK

Unmatched Technology

We leverage technology to distribute information, improve execution, assess scenarios, and deliver actionable insights through web and mobile apps. And our investment is ongoing.

Best
Execution

We tailor recommendations to specific budgets, underwriting, lender covenants, and investor objectives – and partner with over 40 counterparties to arrive at fair value.

Unique
Insight

The scale of our platform, a team dedicated to studying global commodity and rate markets, and an unmatched client base allow us to offer a unique perspective.

Complete
Focus

It would be easy to pursue compromising activities and fee structures. We are 100% focused on capital and cash flow protection through fixed-fee contracts. No conflicts. Ever.

Why Hedge Raw Materials?

We believe at aegis that a sound business plan should not be affected by volatility in the market. Risk management is a part of every aspect of your business whether it is operations, strategy and/or finance.

Every business attempts to mitigate risk. With the right financial hedge strategy, you can still manage your unique business goals while simultaneously manage your risk.

AEGIS offers unmatched technology and advisory expertise for commodity hedging that can help you implement the right strategy to protect your cash flow and stabilize margins.

Industry-Specific Case Studies

Learn more about how AEGIS has helped customers implement successful strategies.

MARKETS: ENERGY | COMMODITY: OIL & GAS | CLIENT: NYSE LISTED E&P COMPANY

Public E&P Company Sought Database Integrity, Functionality and Reporting Solution

A large-cap public company needed to rerun quarterly analytics on a hedge portfolio of swaps and options for the last two years due to portfolio adjustments. AEGIS worked closely with their team to streamline execution and proactively monitor their hedge portfolio.

MARKETS: ENERGY | COMMODITY: OIL & GAS | CLIENT: E&P PRODUCER

Oil & Gas Producer Streamlines Internal Risk-Management Process by Implementing AEGIS’ CTRM Platform

“The AEGIS software platform enhances our risk management, valuation, reporting, and audit needs for our financial-hedging activity. We feel that AEGIS has built an excellent platform on a modern architecture that allows us to simplify our internal processes.”

See How AEGIS Helped →

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