Futures Pricing, the first available service under GLJ Insights’ suite of premium data, analysis and knowledge sharing services for the oil and gas industry, empowers users by providing time-savings, convenience, data, and quality control. Launched in early October 2017, Futures Pricing has been helping oil and gas professionals keep tabs on the underlying value of their assets at today's market prices. Currently offered in beta, GLJ is encouraging users to try the tool at no cost, to experience for themselves the significant time savings, convenience and accuracy.
Justin Mogck, Director of Commodities Research at GLJ, highlights the value of Futures Pricing and shares beta user feedback in this helpful Q&A:
Who’s using Futures Pricing and why?
JM: Oil and gas producers make up the product’s largest user base, as it’s important to them to know the current value of their assets at market prices. With Futures Pricing, producers can quickly plug current futures prices into their economic models in order to keep on top of the value of their assets.
For international oil and gas producers who are unfamiliar with the marketing dynamics of the Canadian oil and gas industry, Futures Pricing can be a helpful, cost-saving tool for understanding what their assets are worth. By receiving this information from a reputable Canadian organization that can defend its numbers (including local secondary product prices), companies with less experience in North America and Western Canada can be confident that the prices they’re using are correct.
Business development teams interested in acquiring new assets are also using Futures Pricing. By receiving essential data in four convenient formats, they can quickly and easily integrate this data into their own models, regardless of which software they may be using.
Financial institutions are continually stress testing assets when determining whether a client’s current market value covers its debt obligations or when examining a line of credit and the value they’re lending against. Futures Pricing also helps in acquisitions and divestitures, as banks who are advising clients and overseeing deals need up-to-date pricing data in their valuation. Having accurate and reliable information at their fingertips every morning, natively in the format they need, can offer significant time savings.
Oil and gas industry associations are using Futures Pricing as part of their basket of inputs for industry studies and publications, and appreciate the instant usability of the information.
What are people saying about it?
JM: The resounding feedback we’ve received over the past two months is that Futures Pricing is saving people time. Gathering this data manually can take hours of work, and building a useable price deck that can be loaded into industry software can add significantly more time onto this. With Futures Pricing, oil and gas professionals are reclaiming a significant portion of their day. Our tool affords them more time to analyze the values and cash flows instead of fine tuning the pricing data.
“[Futures Pricing] affords more time to analyze values and cash flows instead of fine tuning pricing data.”
We’ve also heard that users appreciate the format options of Futures Pricing. Previously, most companies were receiving this type of information from their banks, but it only came in spreadsheets or PDFs. With a Futures Pricing subscription, users receive the data in four different formats: ValNav, Mosaic, PDF and Excel. With the data neatly contained in the most common reserves and economics software file types, the user simply needs to import the applicable file to see current, up to date prices – without the risk of typos.
What is “Secondary Pricing?”
JM: GLJ provides a price for secondary products that don’t trade on the futures market, such as Alberta propane. Deriving pricing for certain commodities can be difficult to do on one’s own. To reach a price for a secondary product, GLJ takes our knowledge of current market trends, ratios and differentials (as per our independent price forecasts) and applies it to known futures prices. We also include royalty (par) price forecasts in the ValNav and Mosaic files, which can be difficult to estimate if you’re not familiar with their intricacies.
What does Futures Pricing look like?
JM: Each subscriber receives an email at their desired frequency with four format types in a .zip file, a document outlining our assumptions, and contact information, should anyone have questions or require additional support.
When will the beta period end?
On April 30, 2018, the beta period will end and a price will be attached to this service. The current beta period is designed to give users the chance to try Futures Pricing and provide feedback.
Since it’s a very busy time of year for most oil and gas professionals, it’s a great time to give Futures Pricing a try and experience first-hand how it can make life a little easier.
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