case studies
Unveiling the Hidden Truth in Gas Price Forecasting
Senior management at a leading gas company was facing a crossroads: “lock in” their long-term contracts at current market prices so they would get those same prices in the future, or terminate their fixed contracts altogether so they could play the spot market they thought was going to increase? At the time, conventional wisdom suggested that, as OPEC tightened supply, the market price for oil would increase, and it would drag gas up with it. With the fixed price contracts, the company feared significant losses as their gas could potentially be sold well below rising spot market rates, and they would be faced with the volatility and uncertainty of the spot market. Then ArrowHead stepped in to provide clarity and in fact quite an astounding answer.
Challenges
- 01
Supply & Demand
- 02
Price
- 03
Risk
Armed with their formidable World/North American gas model, Arrowhead embarked on a series of "What if?" analyses, challenging the prevailing wisdom.
The results spoke for themselves, and the company reaped the rewards of their analytics-driven, data-driven decision-making. By relying on the model's price trends, they secured above-market contract prices for their gas, generating hundreds of millions of dollars in revenue over the ensuing years.
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