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Oil & Gas Producer Finds Optimal Carbon Credits through AEGIS
MARKETS: ENVIRONMENTAL | COMMODITY: CARBON OFFSETS | CLIENT: OIL & GAS PRODUCER

Situation

After working to reduce Scope 1 emissions associated with its production activities, an oil & gas producer sought to utilize voluntary carbon credits to reduce its remaining emissions footprint. The oil & gas producer approached a project developer to assess available carbon credits and available related pricing.

The project developer had an appropriate project with credits ready to sell. The oil & gas producer had purchased similar credits a year earlier for less than $1.00 per ton; however, with a significant run-up in prices, the credits were offered for $7.00 per ton.

Not comfortable with the pricing, the oil & gas producer reached out to AEGIS for assistance.

Solution

AEGIS performed a broad market assessment for carbon credits that would meet the emission reduction goals as set out by the oil & gas producer.

Carbon credits are not as standardized as commodities. The purchaser has choices: the vintage (the year the credit was created), the location, and the type. One specific project likely has similar projects available that offset the same amount of carbon.

Given the lack of standardization, two similar, equally effective projects could have different prices. In fact, they often do.

AEGIS worked with multiple project developers, trading houses, and other carbon credit holders to counsel the oil & gas producer about the range of credits that would apply.

Outcome

The oil & gas producer was able to procure similar carbon credits at less than $3.50 per ton – a savings of over 50%. The carbon credits were promptly retired and used to offset emissions and deliver on Board and investor goals.

Because AEGIS is an independent advisor with no inventory of projects nor credits of its own, the counsel was not compromised by a conflict of interest. The only goal of casting a broader net was to find appropriate carbon offsets to meet the oil & gas producer’s goals at the best available price.

 

The oil & gas producer was able to procure similar carbon credits at less than $3.50 per ton – a savings of over 50%

 

No representation is being made that any client will or is likely to achieve hedge profits similar to those discussed in this case study. This testimonial is not indicative of future performance or success. Commodity interest trading involves risk and, therefore, is not appropriate for all persons; failure to manage commercial risk by engaging in some form of hedging also involves risk. Past performance is not necessarily indicative of future results. There is no guarantee that hedge program objectives will be achieved. Neither this trading advisor nor any of its trading principals offer a trading program to clients, nor do they propose guiding or directing a commodity interest account for any client based on any such trading program. Hedge advisory services are performed by the registered commodity trading advisor AEGIS-CTA, LLC, a wholly-owned subsidiary of AEGIS Hedging Solutions, LLC. This case study is not required to be and has not been, filed with the Commodity Futures Trading Commission ("CFTC"). The CFTC does not pass upon the adequacy or accuracy of this commodity trading advisor disclosure. Consequently, the CFTC has not reviewed or approved this case study.

 

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