Aspect Enterprise Solutions CTRM Scenario Analysis by Aspect Enterprise Solutions Enterprise Solutions

In this quick 9 minute demo, you’ll learn how to plug in different oil trading scenarios in a sandbox environment to understand the most profitable options.

Watch the video below and contact us to learn more!

Video Transcription

You are looking at Aspect Enterprise Solutions Enterprise Solutions portal. We have the Aspect Enterprise Solutions CTRM solution as well as some portion of the screen dedicated to the AspectDSC module, where you can see real-time and historical prices together based on individual user preference.

At this time, I’m going to go into the Aspect Enterprise Solutions CTRM module, and I’m looking at my strategy by product but I’m going to change it to my Eagle Ford Shale strategy which I’m using for this presentation. Right now I have about 11.4 million dollars in P&L and 870,000 barrels in exposure. This represents my production environment and I have one inventory location that’s worth about 1.5 million dollars in P&L, and I have a few purchases and sales that I put into this scenario to represent this total P&L.

So let’s look at the OLAP module, right now this is a built-in tool that we have that you can drill in and look at P&L or position, pricing, quantity, etc. As you can see I’m making some money in 2013, I’m losing some money in 2014 and then I’m making up for it in 2015. And so, this is what will look at when we compare our scenarios as we go in and make changes.

So let’s go in and look at our first scenario mode which is our backwardation scenario that I created, and this is one where you see my P&L is the same as my production environment because I haven’t made any changes yet, and you see that in the upper right-hand corner there’s a red bar in the case that I’m in my scenario analysis mode and I’m not in production anymore. So the first thing I want to do is modify my price curve to represent this scenario where I want to show prices dropping significantly in the latter part of 2014 and in 2015. So I have a curve here, a Platz curve Eagle Ford Light Planes, and so what I’m gonna do is drag the individual points down to represent this curve basically dropping off in price starting in November of this year. So I’m going to drag down each individual point and then I’m going to save this. And this represents this curve that I want to model in the system and see how my strategies doing with these prices. So now you can see the colors change indicating that these prices have been changed. I’m going to save this and accept these prices, so I can use them in my scenario.

Now you see the prices are yellow, and so let me go in and look, and now you see my P&L is $3 million. So just by changing that price curve since I have most to my deals in 2015, you see that the effect of that curve, just on my position not changing anything else, has an impact that is bringing my P&L down to $3 million and if we go back and look at the OLAP report, you’ll see here that 2014 has not really changed much but 2015 has changed significantly which is driving that decrease. So if we look we see that is mainly concentrating Q1 of 2015 and I’m using the drill down feature of the OLAP report to look at the data in more detail and it’s concentrated in February and March of 2015, and the drill down feature also allows you to drill into each individual component that’s making up that P&L, so you can see a couple physical deals here that are driving this P&L, and this will allow traders or risk managers to actually come in here and say maybe those long-term goals that I had could be modified in the future scenario.

So let me get out of scenario analysis mood and I’m back in production, you see the red bar is missing. And what I’m going to do is I’m going to look at all my trading scenarios together, so right now they’re in order of P&L, where I’m making the most down to where I’m making the least. There’s the backwardation scenario I just modified, you see my baseline represents my true production number and then I also created two scenarios that are just stress testing prices so all prices down 10 percent and all prices up 15 percent, you can see that.

Let’s go look at the export scenario because this one is more interesting and I’m doing a little bit more than you see in production. So as you can see I’m back in scenario analysis mode, I’m on the export mode here and you see I’m making a significant amount of P&L. I also have more inventory locations than I do in production. So in my scenario I’ve taken the liberty to say I expect that I’m going to be holding some inventory priced at different marks, in different places, there’s different quantities in those tanks. I also have my purchases there but I also have sales and what I’ve done is I said let me model selling this product in the US Gulf Coast, as well as in Rotterdam. I’ve created a price curve that’s in my demo environment, in my scenario analysis only, it’s not in production. So you can see that I’m making a significant amount of money on those deals selling them out. So let’s look and see what’s model there in the system. So right now you can see I have Eagle Ford Crude export out of the Gulf Coast curve that I have already modified. So let’s take a look at this one and see what changes are there. So this curve, in particular, this is a curve created just in the export scenario, I have the prices going up for this exporter, this crew significantly higher.

Now we can also take a look at another curve, NYMEX WTI forward curve and I may wanna make some modifications to this. What’s nice about the scenario analysis mode is that I can make whatever changes I need to make for my specific scenario, so, in this case, I could come back in and make changes to WTI if I want to. The important thing here is to make sure you document the assumptions that you make and the changes you make in the scenario so when you go to present these at the strategy meeting or whatever discussions you may have about what direction you want to take the company in the future, you have all your documentation and you can show what changes you actually made. So I’m gonna go ahead and accept these changes, and the curve is only affecting the prices slightly the way that I did in this case and if I go back and look you see my P&L is pretty much at the same as it was before so that didn’t really have the impact that I thought it was gonna have just by making those small changes.

So one of the other important things related to scenario analysis is being able to compare your scenarios to your production version, so this is the screen that shows you all the changes that have been made in the export scenario as compared to production. So if I look at a deal here, let me click on this one, you see that this item existence in scenario but not in standard mode, that means that it only is in my scenario and it does not exist in production. So this is a deal that I created just to play with. Now I’ve click on another deal and this one you can see I have made some changes and changed the status from planned to committed. We scroll down here some, I also changed the mark-to-market curve because I want to use that export curve that I’ve made, and then I changed the dates a little bit and I pushed it out, delivering it a little bit further in the future.

Now at any time I want to take this deal back to the modem production, I can say copy from standard and replace it, and that will basically wipe out any of the changes I made in scenario mode and take that back to production mode. You can also merge changes as well if you want to make some changes in production based on this.

Now the key element here is that while I’m in scenario analysis mode I am not modifying production, so as we go back and look we can see that the production P&L is unchanged, my exposure is the same, and I am looking at the same purchases and sale deals that I started with and no modifications have been made.
So that completes this portion of the demonstration.