Oil & Gas Producer Moves Away from Physical Marketer Selling Natural Gas to Affiliate
Physical Marketing • Hidden Margin Fees
SituationAn oil and gas producer engaged an AEGIS competitor for physical marketing and producer services due to a low headline fee. Because of the low headline fee, the producer felt like it was receiving a “below market fee.” While they were, there was much more to the story. | SolutionThe oil and gas producer was concerned that sales were going to the physical marketer’s affiliate and engaged AEGIS to run a competitive marketing process. AEGIS engaged the affiliate of the physical marketer as well as numerous other potential purchasers in the competitive bidding process. |
OutcomeBids came in ~$.0.05/mmbtu better than the prices the physical marketer had been receiving from its affiliate. This was a multi-million dollar impact for the oil and gas producer. The oil and gas producer better understood the “below market” marketing fees and switched physical marketing services to AEGIS under a transparent agency-based fixed fee deal to competitively bid out the volumes to optimize realized prices. |
