News | March 14, 2018

Drillinginfo Delivers The Next Generation Tool For Real-Time Risk Management

Creates first real-time curve-building product to increase market price transparency and enable collaboration across commodity risk managers and traders

Drillinginfo, the leading energy SaaS and data analytics company, has announced the release of a new product providing unparalleled price visibility, namely real-time synthetic forward curves that can be easily shared from the risk team to traders. Combining the cutting-edge market data management platform of MarketView with the complex forward-curve capabilities of recently-acquired DataGenic, today Drillinginfo unveiled MarketView’s CurveBuilder, a product focused on addressing the underserved needs of energy traders, analysts, and risk management officers.

A major reason for developing MarketView’s CurveBuilder is that forward curve pricing in the energy industry frequently lacks transparency, such as for thinly-traded hubs or delivery dates, trading the spread between two products, or trading time periods that do not match internal risk assessment periods. Limitations in forward price visibility prohibit profitable trade decisions and prevent risk managers from accurately assessing risk associated with trade decisions.

To address these problems, MarketView’s CurveBuilder includes a robust, customizable rules-based engine to generate forward curves, accompanied by audit trails and process logs to facilitate compliance. The software tool allows users to easily blend their own proprietary data with market data from third party sources, which enables traders and risk managers to build curves that reflect their own interpretation of the market. Furthermore, positions can be marked intraday or on a faster end-of-day basis because traders and risk teams are sharing the same forward curve information in real-time.

As a key application for MarketView’s CurveBuilder’s capabilities, Drillinginfo points to the growing demand for trading liquefied natural gas (LNG), which currently has no established forward price curve in the market.

“If you are going to sell a shipment of Liquefied Natural Gas (LNG), there is no forward price benchmark to figure out how much to sell it for, and vice versa if you’re looking to buy. The price curve needs to be built from price and cost inputs associated with buying natural gas, liquefying, transporting, and regasifying, which makes determining a price six months from now very tricky,” said Juan Pedraja, Vice President of Professional Services for Trading and Risk.

“Our CurveBuilder can be used to construct rules for a synthetic real-time LNG forward curve so that traders have a price benchmark to buy and sell, and the positions can be marked in a timely fashion to determine impact on profit/loss and value at risk,” said Pedraja.

While building forward curves isn’t new in business or trading, curve construction often utilizes end-of-day pricing or requires manual updates, which means the prices will not reflect the most recent market conditions. Moreover, as the industry trends towards algorithmic trading, automatic generation of thousands of curves per minute enables companies to design and execute trade strategies based on CurveBuilder real-time price signals. In addition, current methodologies for building curves generally do not allow traders and risk teams to share curves or maintain an audit trail of changes to curve calculations.

“How trades are made, when, why, and under what pretense, must be accounted for, especially as regulatory burdens increase,” said Jeff Hughes, CEO of Drillinginfo. “MarketView’s CurveBuilder functions as an archiving tool to deliver an important data trail for regulators and auditors, if ever needed.”

Shared Benefits of MarketView's CurveBuilder

Traders and Analysts: Risk Management Officers:
  • Creates alpha with visibility into forward prices that are not covered by available price data
  • More timely and better management of risks
  • Full control and clarity over curve calculations and methodologies
  • Address compliance requirements with an audit trail on historical curves used to mark positions and changes to the curves
  • Ability to schedule curve generation to match your trading needs
  • Process logs and reports on any curve changes and versions
  • Real-time capabilities enable intraday marking and faster end of day close
  • Support for marking positions with thinly traded delivery dates, derivative products, locations, etc.

About Drillinginfo
Drillinginfo delivers business-critical insights to the energy, power, and commodities markets. Our state-of-the-art SaaS platform offers sophisticated technology, powerful analytics, and industry-leading data. Our solutions deliver value across upstream, midstream and downstream markets, empowering exploration and production (E&P), oilfield services, midstream, utilities, trading and risk, and capital markets companies to be more collaborative, efficient, and competitive. Drillinginfo delivers actionable intelligence over mobile, web, and desktop to analyze and reduce risk, conduct competitive benchmarking, and uncover market insights. Drillinginfo serves over 3,500 companies globally from its Austin, Texas, headquarters and has approximately 550 employees. For more information, visit drillinginfo.com.

SOURCE: Drillinginfo