Hedging Case Study

Problem: Momentum3 was presented with a challenge from an existing customer that hedges their fuel and lubricant products in storage to protect against market moves. The client utilized a manual process that did not support their growth rate or desire for more timely information. The client desired to increase accuracy while executing their hedging strategy as well as more accurately report on and value their inventory in bulk storage facilities, consignment locations, and reserves (i.e. for hurricanes). From a sales perspective they also strived for the ability to better manage fixed price transactions with customers.

Project Summary: Momentum3 developed a solution to resolve their issues while capturing near real-time ticket and pricing information associated with product pick-up and delivery. This system integrates with the clients existing systems to efficiently automate timely collection of ticket information and market prices. Access to current WACOG information allows increased profits and cost-savings when executing sourcing decisions for product sales and delivery based on the cost of their product versus current rack prices.

The ticket information generates physical transactions in the system which are monitored by the Risk Manger so hedges

may be put on or rolled off much more quickly, allowing for efficient and effective hedging. These financial transactions are captured and managed in the new system creating near real-time inventory physical positions, current weighted average cost of products in inventory, and more timely financial transactions to better manage their hedging strategy.

Solution Benefits: The new solution provides integration between systems, more efficient access to physical and financial trades, automated settlement of financial transactions, near real-time WACOG of product, and current inventory levels. All of which lead to more efficient operation of the hedging and risk management business.

BlueMark Energy Case Study

Problem: BlueMark Energy is new energy marketing company that supplies wholesale and retail customers with Natural Gas in the Southcentral United States.  As their business grew it became more difficult to manage the various aspects of their marketing business.  The time required to capture trade information correctly in spreadsheets, manage physical positions accurately, and generate wholesale and retail invoices soon became a concern.  They needed a system to help them capture trades more efficiently, actualize to pipeline statements quickly, and easily generate both wholesale and retail invoices.

Challenge: As the winter season was approaching, BlueMark needed to get a system in place quickly that would allow them to manage their winter business.  There were several obstacles to overcome in order to meeting this aggressive goal.  Finding a partner that not only had the technical expertise to build the necessary system, but that also had the in-depth business knowledge to design a functional system without seriously impacting the day-to-day business operations would be very difficult.  With about eight weeks until the winter season began, their time was very short.

Solutions: Momentum3 worked with BlueMark, with minimal time required by the client, to define what functionality was necessary in order the support the immediate needs.  A solution was delivered in phases over a six week period that allowed the customer personnel to begin using the system in about three weeks.  Over the next three weeks more functionality was delivered regularly that allowed for the continuation of system integration without rework.  This also allowed Momentum3 personnel to work with BlueMark personnel to provide the necessary training to use the system properly.  The system was delivered on-time and under budget.

The solution that was delivered included all functionality outlined in the statement of work plus more robust position management and enhanced billing options.

Wins:

Solution exceeded customer business requirements

Solution was delivered on time

Solution was under budget

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