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TRANSCRIPT
Energy Update
Changing Gas Dynamics, its impact on the Economy and on Gas Distribution
Utilities
2013
Dr. Jim Duncan Chief Analyst
ConocoPhillips
June, 2013
<On the boats and on the planes…They're coming to America…Never looking back again…They're coming to America>
Cautionary Statement
2
The following presentation includes forward-looking statements. These statements relate to future events, such as anticipated revenues, earnings, business strategies, competitive position or other aspects of our operations or operating results. Actual outcomes and results may differ materially from what is expressed or forecast in such forward-looking statements. These statements are not guarantees of future performance and involve certain risks, uncertainties and assumptions that are difficult to predict such as oil and gas prices; refining and marketing margins; operational hazards and drilling risks; potential failure to achieve, and potential delays in achieving expected reserves or production levels from existing and future oil and gas development projects; unsuccessful exploratory activities; unexpected cost increases or technical difficulties in constructing, maintaining or modifying company facilities; international monetary conditions and exchange controls; potential liability for remedial actions under existing or future environmental regulations or from pending or future litigation; limited access to capital or significantly higher cost of capital related to illiquidity or uncertainty in the domestic or international financial markets; general domestic and international economic and political conditions, as well as changes in tax, environmental and other laws applicable to ConocoPhillips’ business and other economic, business, competitive and/or regulatory factors affecting ConocoPhillips ’ business generally as set forth in ConocoPhillips’ filings with the Securities and Exchange Commission (SEC).
Use of non-GAAP financial information - This presentation includes non-GAAP financial measures, which are included to help facilitate comparison of company operating performance across periods and with peer companies. A reconciliation of these non-GAAP measures to the nearest corresponding GAAP measure is included in the appendix.
Cautionary Note to U.S. Investors – The SEC permits oil and gas companies, in their filings with the SEC, to disclose only proved, probable and possible reserves. We use the term "resource" in this presentation that the SEC’s guidelines prohibit us from including in filings with the SEC. U.S. investors are urged to consider closely the oil and gas disclosures in our Form 10-K and other reports and filings with the SEC. Copies are available from the SEC and from the ConocoPhillips website.
Presentation Outline
• Supply
– Rig Count
– Withdrawal Season Verification
– Imports…Including LNG
– Effect of Hurricanes on Energy Industry • Crude and Natural Gas Inventories
• Prices and the Economics of Energy • WHAT DO I DO?
• DEMAND
Global Natural Gas Prices
8
Industry Conventional Wisdom Circa 2000 and 2013
Year 2000
The U.S. is running out of natural gas
U.S. oil prod. peaked in 1970, has fallen ever since, and will continue to do so
World peak oil is just around the corner
Year 2013
The U.S. has > 100 year supply of natural gas
U.S. oil production is growing rapidly, with no end in sight
World peak oil is not an urgent concern
The U.S. & Global Energy Outlook has Changed Immensely
NYMEX Natgas Weekly Chart
First Cold
Winter
First Real Supply
Glut
First Big Deliverability
Shock…And A Very Cold
Winter
Supply and Drilling
Response To High
Prices…LNG Talk
Series of Geophysical
Shocks – Hurricanes &
Cold Winters
…and Economic
Instability
Finally…Shift Change In
Supply/Demand Dynamics Due To
Shale Gas Development
Source: NYMEX/CQG
10
Drivers Behind the Unconventional Reservoirs Revolution
A New Paradigm New Tools and Methods
Mature, organic-
rich source rocks
Traditional Target
Cartoon cross-section showing elements of a petroleum system
New
Target
11
U.S Total Gas Production (bcfpd)
Natural Gas Production from Shale Reservoirs
Source for Production Data: U.S. Department of Energy, EIA
Barnett
Fayetteville
Woodford
Haynesville
Marcellus
Oil
Gas
High yield gas/volatile oil
Horn River
Montney
Marcellus
Eagle Ford
Barnett
Liard Basin
Fayetteville
Haynesville
Anadarko – Woodford
Super-Giant Shale Gas Plays
0
10
20
30
40
50
60
70
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
0
10
20
30
40
50
60
70
Conventional Reservoirs
Tight Gas
CBM
Shale Gas
Shale Gas Revolution
12
U.S. Oil Production Growth: Driven by the "Big Three" Shale Oil Plays
From 6.5 million bpd in 2008 to 8.8 million bpd in November 2012
0
2,000
4,000
6,000
8,000
10,000
12,000
14,000
16,000
19
60
19
70
19
80
19
90
20
00
20
10
20
20
20
30
History Prediction
U.S. Oil Production (thousands of barrels per day)
1970: U.S. Peak Oil
Sources: Historical U.S. production data from BP statistical review of world energy 2012 and U.S. EIA; oil production numbers
include condensate and NGLs; Production prediction from PIRA Energy; EUR numbers from government & industry reports
Eagle Ford
22-30 BBOE
Permian Basin
10-30 BBOE
Bakken
4-24 BBOE
= Oil Wells= Oil Wells = Gas Wells= Gas Wells = Cond. Wells= Cond. Wells = Dry Holes= Dry Holes
13
Big position in big three liquid rich plays (Eagle Ford, Bakken and Permian Basin)
Also have acreage in the Barnett, Canol Niobrara, Duvernay and other plays
Over 3 billion BOE of resources
Over 21 million acres in U.S. and Canada
Continuing to acquire leases in North America
Oil
Gas
High yield gas/volatile oil
Horn River
Montney
Bakken
Permian
Eagle Ford
Barnett
Niobrara
Duvernay
Canol
San Juan
ConocoPhillips North American Unconventional Plays
ConocoPhillips is an industry leader in unconventional reservoirs
14
ConocoPhillips Eagle Ford Acreage Position
228,000 net acres in liquids-rich portion of the play (77% liquids)
Acreage position secured at low cost prior to industry land rush
1.8 BBOE net resources
Have drilled > 400 wells since 2009
$2.5 billion of investment in 2012
ConocoPhillips Acreage
15
13 14 14
1616 16
1718 18
19 19 19
22
24
25
0
4
8
12
16
20
24
28
ConocoPhillips Eagle Ford Excellence
Spud to rig release data source: IHS Enerdeq Data represents activity from Jan 2011 – Nov 2012
Industry leading results driven by acreage quality and drilling & completion performance
Eagle Ford Competitors
Co
no
coP
hill
ips
ConocoPhillips Eagle Ford Production
0
20
40
60
80
100
120
140
2011 2012 2013 2014
Th
ou
sa
nd
BO
E p
er
da
y
Spud to Rig Release – Days per 10,000 Feet
16
Environmental Benefits of Natural Gas Utilization
Clean-burning (low or no SO2, NOX, PM, VOC)
About half the CO2 emissions of coal-fired power generation
Small water usage footprint
No solid waste
Enables wind & solar power
Enables low CO2 electrification of transportation
Potential transportation fuel
Power Source Pounds of CO2 per
MWh of Power
Biomass 2,988
Coal 2,249
Oil 1,672
Natural Gas 1,135
Source for “Pounds of CO2…” data: California State Polytechnic University Water Intensity Data Source: U.S. Department of Energy, “Energy Demands on Water Resources”, December 2006 * Assumes closed loop cooling tower; **Other use includes water for other process uses such as emissions treatment, facilities.
0
100
200
300
400
500
600
700
800
900
Natural Gas Coal Nuclear Solar
Trough
Steam Cycle*Other Use**Fuel Production
Water Utilization
(Gal
lon
s p
er M
WH
)
(0.37)
(0.18)
(0.58)
(1.14)
U.S. Natural Gas Supply
53
55
57
59
61
63
65
67
69
71
73
75
Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec
Bc
f/d
2008
2009
2010
2011
2012
2013
Total U.S. Supply
2013 YTD. vs. 2012
LNG Canadian Imports Production Supply
Source: Bentek
U.S. Natural Gas Supply
Total U.S. Supply
2012 YTD vs. 2011
LNG Canadian Imports
Production Supply
Source: Bentek. 2012 YTD values are through 7/31/2012
20
Supply Components
Flows Impacted by Shale Supplies
Canada Demand
Mexico Demand SE
Demand
West Demand
Marcellus Production
ArkLaTex Production
West Production
WCSB Production
LNG
Increasing Flow
Decreasing Flow
0.7 / 11% Change from 2010-2015 (Bcfd) / % Change from 2010
NE Demand
LNG
LNG
GOM (1.3) / (22%)
(0.6) / (33%)
(0.2) / 3.8%
(0.8) / 57%
1.2 / 100%
0.6 / 28%
0.3 / 100%
0.3 / 100%
(0.7) / (26%)
0.2 / 6%
22 Source: COP Analysis
Rockies Express allows Rockies gas to flow to NE
Canadian gas is pushed back into California
Source: Ventyx, Wood Mackenzie, and Internal Estimates
Macro Flow Changes
Crude Oil Domestic Production Highest Since 1992
Total Rig Count Signals
North American Shale Deposits
30
(0.92)
0.38
5.28
4.75
U.S. Demand
40
50
60
70
80
90
100
110
120
130
Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec
Bc
f/d
2008
2009
2010
2011
2012
2013
Total U.S. Demand
Power Gen.
Industrial
Source: Bentek
ResComm Total Demand
2013 vs. Jan. 2012
Power Generation
10,000
15,000
20,000
25,000
30,000
35,000
40,000
20 25 30 35 40 45 50 55 60 65 70 75 80 85 90
2011 2012 2013 Prev. 30 Days Prev. 3 Days Storage Week 1/18
Week ending Jan 18th observed ~4bcf/d of switching over 2011
22
18
0.0
1.0
2.0
3.0
4.0
5.0
6.0
7.0
8.0
9.0
10.0
1/1 1/15 1/29 2/12 2/26 3/11 3/25 4/8 4/22 5/6 5/20 6/3 6/17 7/1 7/15 7/29 8/12 8/26 9/9 9/23 10/7 10/21 11/4 11/18 12/2 12/16 12/30
2012 2013
Q1 2012 Avg JV 12 Avg
Q4 2012 Avg
Q1 12 = 4.6bcf/d JV 12 = 4.3bcf/d
Q4 12 = 3bcf/d
Baseline draw of -140bcf to est -176bcf = 5bcf/d under supplied (~4bcf/d = Switching & ~1bcf/d of freeze-offs)
Started the week at $3.33, ended week at $3.56
Generation showing signs of a pull-back
Potential Drivers of Future Demand
Power Generation Regulations 2013 to 2015 5 to 15 (MATS, etc.)
LNG Exports 2015+ 1 to 3
Ethylene Plants 2013 to 2017 0.3 to 1
Other Industrial Growth 2013+ 0.3 to 1 (Fertilizer)
Long-Haul Transportation 2013 to 2015 0.12 to 0.36
(50,000 trucks per year)
Other Vehicles 2014+ 0.06 to 0.18
(50,000 cars per year)
Timing Impact, Bcfd
Total +7 to +20
Source: EIA
LNG Exports in Play ??
42
Location Company Timing Bcfd
Sabine, LA BG / Cheniere 2015 2.6
Freeport, TX Freeport LNG 2015 1.8
Corpus Christi, TX Cheniere ? 1.8
Lake Charles, LA BG /Southern Union ? 2.0
Cove Point, MD Dominion ? 1.0
Coos Bay, OR Jordan Cove Energy Project
? 1.2
Hackberry, LA Sempra ? 1.7
Total 12.1
Source: FERC as of January 10, 2012
Red = Proposed to FERC Grey = Potential site identified by project sponsor
Summary Of Demand Changes
The shale gas revolution is firing up an old-fashioned American industrial revival, breathing life into businesses such as petrochemicals and glass, steel and toys.
Methanex Corp., which closed its last U.S. chemical plant in 1999, is spending more than half a billion dollars to dismantle a methanol plant in Chile and move it to Louisiana.
Nearby, a petrochemical company, Williams, is spending $400 million to expand an ethylene plant.
CF Industries just unveiled a $2.1 billion expansion of its nitrogen fertilizer manufacturing complex, aiming to displace imports that now make up half of U.S. nitrogen fertilizer sales.
Orascom has announced the construction of a large fertilizer plant in Burlington, IA (80,000/day)…rumors of another one new one being built in NW Iowa.
Natural Gas Prompt Month Price
Source: NYMEX, DTN
WTI Crude Prompt Price
Source: NYMEX, DTN
WTI Crude Prompt Price
Source: NYMEX, DTN
Winter 2012-2013
May
Shades Of Summer To Come?
May Storage Dynamics
March & April
combined for an
additional draw
of 400 Bcf vs. LY
& 5YR March is
self explanatory
In April, weather
made up 1 for 1
what we lost in
EG due to
higher price
Apr 12 was
smallest build in
12 years (+116
Bcf)
Apr 13 was on
the same pace
(+120 Bcf)
Things To Watch In 2013
Following major processing investment, Utica production is set to grow rapidly But broader supply questions remain, particularly around future growth in
liquids-rich plays like Utica: How supportive onshore liquids netbacks are of both oil and NGL drilling And although gas prices are likely to rise in 2013, we see two key questions
affecting the pace and extent of gas supply growth in response to these higher prices:
How gas drilling and coal production interact as gas prices rise Whether end-user/upstream joint ventures will emerge as a major source of E&P
funding On the demand side, though, the new direction looks clear: growth will shift to
new sectors and be increasingly driven by policy. Key themes to watch include: Whether housing-market recovery pushes power load growth back toward more
normal levels Feasibility studies and final investment decisions for major industrial projects The Department of Energy’s criteria and pace of LNG export licensing approval How opposition to the Mercury & Air Toxics Standards plays out, possibly
including federal courts Do we see the re-emergence of carbon regulation? Pipeline de-contracting and progress on new directional flow shifts
Q&A
Restricted Confidential – Business
Information
ConocoPhillips Profile
56
Largest independent E&P company in the U.S.
About 17,000 employees worldwide
Operating in nearly 30 countries
HQ in Houston, TX
About 4.5 Bcf/d of natural gas producing worldwide
Assets of over $115 billion
Credit Ratings:
• S&P = A
• Moody’s = A1
Restricted Confidential – Business
Information
ConocoPhillips Gas Production
57
Restricted Confidential – Business
Information
ConocoPhillips
58
TEMAX
LOBO
Restricted Confidential – Business
Information
Eagle Ford Shale Play
ConocoPhillips holds about 223,000 net acres
16 rigs currently in operation
Net Production 50 MBOED
Drilling depths from 4,000 to 14,000 feet
Oil rich zones as well as dry gas
Sub $4/Mcf breakeven cost per well
Unique opportunities involving Lobo Pipeline
59 ConocoPhillips 2012 Spring Fact Book
Restricted Confidential – Business
Information
Products Offered
Product
Full Requirements Service (Commodity, transport, balancing)
Baseload Service
Asset Management (Storage, transport, supply contracts)
Pricing Triggers (Fixed, Basis)
Swaps (NYMEX, Basis)
Index Options (IFERC, GDD)
NYMEX Look-alike Options
• can be embedded in physical transactions
60
Restricted Confidential – Business
Information
East Footprint Supply (MMCFD)
Anadarko 73
Panhandle 71
Bakken 34
Transportation Alliance
ANR
Iroquois
NGPL
Northern Border
Panhandle Eastern
TETCO
TGP
Transco
REX
Marketed Volumes 2.1 Bcf/d
Panhandle
Anadarko
Bakken
Restricted Confidential – Business
Information
ConocoPhillips Commercial Group
East
East
Gulf Coast
West East
Gulf Coast
West
What is Dodd Frank?
▪ 2008 Credit Default Swaps Bailout Triggered
Financial Reform – Signed July 21, 2010
(2,300+pgs)
▪ Provides Comprehensive Authority to the CFTC and
SEC to Regulate Swap’s Trading
▪ Regulations specific to external, financial swaps.
▪ Physical activity is excluded (mostly)
▪ Now Every Market Participant Transacting in Swaps
(Regardless of How They’re Being Used) will be
affected:
• To focus their efforts they are segregating the
market into dealers and non-dealers to identify
which entities should be regulated
64
Objectives of Dodd Frank ▪ Reduce risk to the financial system by imposing
mandatory clearing and increased margin and capital
requirements
▪ Promote efficiency and transparency through real-time
reporting and regulating execution platforms
▪ Further prevent market manipulation, fraud, and other
market abuses through expanded oversight and federal
position limits
▪ Expand protection and fiduciary know your customer
“KYC” responsibilities to less sophisticated
counterparties by establishing strict conduct standards
and those designated as special entities
65
Critical Definitions ▪ Swap – includes exchange-traded swaps, bilateral
swaps (like those done under ISDA agreements) and
puts, calls, caps, floors, collars or other options that are
based on the value of interest rates, commodities,
currencies, securities, etc., but does not include
transactions intended to go to physical delivery-
MOSTLY
▪ Swap Dealer – regularly enters into bilateral swaps for
purposes other than hedging, in particular entering into
swaps as a regular business activity
▪ Major Swap Participant – holds a substantial position in
swaps other than positions used for hedging
▪ End-User – not a Swap Dealer or MSP, only uses swap
to hedge.
Swap Dealer (de minimis)
▪ Activity based measure focused on absolute notional
value of Dealing activity
▪ Excludes:
Physically Settled Contracts (Forwards)
Futures (including ClearPort and now ICE)
Inter-affiliate Swaps
Risk Reducing Swap’s Intended to hedge inherent
commercial risk (purpose Vs effect)
Proprietary Trading as defined by Dodd Frank not
existing tax law
▪ Compare with $3 billion; transition value $8 billion
▪ Compare subset where counterparty is a Special Entity with $25 million (recent non action temporarily expands to $800MM)
66
Chief Compliance Officer Designation
Attestations of Compliance
Criminal Ramifications
Increased Business Conduct Standards
Know Your Customer (KYC) Fiduciary Responsibilities
Required Communications Recording and Surveillance (Voice,
email, & IM)
Physical & financial trade re-construction (contemporaneous
decision level analysis)
Expanded Risk Management Governance/Practices
Mandatory Clearing and Large Trader Reporting
▪ Requirement to Collect and Segregate Margin from certain
Counterparties
Significant Requirements of Being a Swap Dealer
67
Major Swap Participant ▪ Potential credit exposure measure focused on significant
concentrations
▪ Not already a swap dealer
▪ Multi prong test primarily based on credit exposure – what we owe (or
might owe) others:
Substantial uncollateralized position by swap category type excluding hedges
average daily out of the money positions < $1Billion
Average daily out of the money positions + potential future exposure < $2Billion
Substantial uncollateralized counterparty exposure across all categories including hedges
Average daily out of the money positions < $5Billion
Average daily out of the money positions + potential future exposure < $8Billion
Highly leveraged financial entity
68
Entity Definition Comparison Rules That Apply to All Entity Classifications:
Position Limits
Exchange Rules
Reporting
Record Keeping
Anti-Manipulation
Swap Dealer/MSP:
Capital & Margin
Risk Management Program (Inclusive)
Conduct Standards
Communications Recording
Large Trader Reporting
Mandatory Clearing
Business Continuity Plan – 1 Business Day & Tested Annually
Designation of Chief Compliance Officer
Requirement to Collect margin From End Users (can be satisfied by non-cash
collateral) 6
9
Guidance on “Hedging” (For Swap Dealer Definition. Still being reviewed with many
lawyers.) ▪ For the purpose of hedging
▪ Economically appropriate for reduction of risk {from
specified sources}
▪ Substitute for transactions in the physical marketing
channel
▪ Entered into in accordance with sound commercial
practices; and
▪ Not in connection with activity structured to evade
designation as a “swap dealer.”
70
Guidance on Trading vs. Dealing (For Swap Dealer Definition. Still being reviewed with many
lawyers.) ▪ Physicals and futures are out of scope, and hedges are excluded by
rule. Transactions that properly qualify as hedges under the SD rule can be
excluded from this analysis.
ClearPort deals are currently futures, but that may change by the time this rule goes into effect. Therefore my proposal would treat futures and swaps similarly at least preliminarily.
▪ Dealing includes: Market-making
Being paid for providing liquidity, such as Financial sleeves
Back-to-back financials
Establishing a “customer” relationship
Providing advice on the transaction
▪ Trading includes: Transactions where our compensation derives from the future movements
in the value of the transaction – that is, the pursuit of profit from bearing price risk.
71
Trade Options ▪ The CFTC has established a “trade option” exemption for physical
commodity options The exemption provides relief from many rules otherwise applicable to
swaps, subject to certain regulatory conditions. Also, trade options do not count into an entity’s Swap Dealer or MSP calculations.
▪ To be eligible for the trade option exemption The Seller of the Option must either:
(a) be an ECP; or
(b) a producer, processor, or commercial user of, or merchant handling the commodity that is the subject of the commodity option, or the products or by-products thereof, and such seller is entering into the commodity option solely for purposes related to its business as such.
The Buyer of the Option must be producer, processor, or commercial user of, or merchant handling the commodity that is the subject of the commodity option, or the products or by-products thereof, and such buyer is entering into the commodity option solely for purposes related to its business as such.
▪ In addition…the intention of the option must be to settle physically.
72
Reporting Requirements ▪ Swap Dealer to End User - Swap Dealers required to report
▪ Major Swap Participant to End User – MSP required to report
▪ End User to End User – one of the End Users are required to report
• COP is currently has a plan to include the development of a
process to report
▪ Swaps need to be reported
▪ Futures do not need to be reported because they are already
reported through the exchange platforms.
▪ Forwards do not need to be report unless they fall under Trade
Options
Recordkeeping ▪ Phased-in compliance dates
▪ The CFTC may require the retention of a universe of records that is wider than what end-users currently retain
▪ Non-SDs/MSPs are required to: “keep full, complete, and systematic records, including all pertinent data and memoranda, with respect to each swap in which they are a counterparty”
▪ Language is almost identical to the standard imposed on FCMs and other CFTC registrants
▪ Data retention
• Life of swap, plus 5 years
• Record retrieval - 5 business days
74
Back-up
76
▪ An Eligible Contract Participant (“ECP”) is a counterparty that is
permitted by the Commodity Exchange Act to engage in swap
transactions off of CFTC regulated exchanges.
▪ It is illegal to execute off exchange swaps with non ECP’s
▪ ECPs include:
Financial institutions (banking organizations);
Corporations, partnerships and organizations with more that $10MM of
total assets;
Governmental entities with significant discretionary investment and
more that $50MM assets; and
Individuals with significant discretionary investments with more than
$1MM of assets.
▪ Women & Minority Business Enterprises (WMBEs) may not qualify
as an ECP and require careful attention
COP currently has approximately 12 such counterparties
The trade option exemption is required in order to transact with WMBE’s
Eligible Contract Participant (“ECP”)
77
Federal Position Limits ▪ Final rule for the implementation of Federal Position Limits on futures and
swaps was approved on November 18, 2011
▪ On September 28, 2012 the US District Court overturned the rule and sent it
back to the CFTC for revision
▪ Phase one (October 12, 2012) implemented spot month only limits
Spot month starts 3 days before contract expiration and runs through the delivery
month
Natural gas spot month includes 5 days of Bid week plus the delivery month
Contracts directly or indirectly linked, including being partially for fully settled on, or
priced at a fixed differential to, the price of a Core Referenced Futures Contract
Contracts directly or indirectly linked, including being partially or fully settled on, or
priced at a fixed differential to, the price of the same commodity underlying a Core
Referenced Futures contract
Inter-commodity spread with one leg that is a Referenced Contract
Includes all OTC financials which must be converted into futures equivalents
Physical delivery and cash settled contracts are calculated separately (no netting)
▪ Non spot (any and all) month limits originally anticipated in 2nd qtr 2013
78
Position Limits Core Referenced Futures Contract No. of Contracts
NYMEX Light Sweet Crude Oil 3,000
NYMEX Henry Hub Natural Gas 1,000
- Cash-settled contracts 5,000
- Aggregate of cash-settled and physically settled contracts
5,000
NYMEX NY Harbor Gasoline Blend 1,000
NYMEX NY Heating Oil 1,000
79
Includes:
Contracts directly or indirectly linked, including being partially or fully settled on, or priced at a fixed differential to, the price of a Core Referenced Futures Contract
Contracts directly or indirectly linked, including being partially or fully settled on, or priced at a fixed differential to, the price of the same commodity underlying a Core Referenced Futures Contract for deliver at the same location(s) as referenced in the Core Referenced Futures Contracts
Inter-commodity spread with one leg that is a Referenced Contract
Excludes:
Location basis contracts
Commodity index contracts
measured on a “futures
equivalent basis”
Bona Fide Hedge Categories 8 Enumerated Bona Fide Hedges
Owned/fixed price purchases
Fixed price sales
Offsetting/unfixed price purchases and sales
Agent/merchandising purchases and sales
Anticipated merchandising hedges
Anticipated royalty hedges
Service hedges
Cross-commodity hedges
Pass-through Swaps
Requires written representation
Cannot carry into spot-month (unless offset to cash position)
Swaps and Futures
80