Commodity Trading & Risk Management: Brief Case Study Summaries

Commodity Trading & Risk Management: Brief Case Study Summaries

Risk Management: When a highly successful privately-held trader wanted an expert’s view of risk management, they turned to Opportune. Our independent view of the traders’ policies, controls, and risk oversight has provided a roadmap for ongoing improvements, and Opportune also annually provides the traders’ lenders with frank insight into the status of commodity risk management.

Restructuring: Unauthorized trading at a privately-held trader resulted in significant losses, causing serious internal issues and problems with the Company’s lenders. Opportune worked with senior management to provide meaningful information to the lenders about the losses, providing a runway for the Company and lenders to work toward the long-term restructuring of the Company’s primary trade finance, while Opportune worked with management to rebuild lender trust through significant improvements in risk controls, policies, and oversight.

Business Transformation: A Houston-based trader decided to relocate mid-office operations to New York, creating significant challenges in staffing for the new office. Opportune assisted in locating a New York-based team, providing professionals to run the Company’s mid-office operations as new personnel was retained. Opportune trained the traders’ new hires and effectively transitioned mid-office operations to the new team in New York in three months.

Due Diligence: A multicommodity/multinational trader relied on Opportune for its due diligence related to the acquisition of a Caribbean-based refinery. We provided support for the initial bidding phase, including technical and economic due diligence and valuation, and a desktop review of the refinery’s operations, physical condition, and capabilities. During the formal bid phase, we provided a deep analysis of all data room information, interviewed refinery management, conducted a detailed site visit, and managed the environmental review of the site. Our work resulted in a detailed business plan, including capital requirements, and detailed key operating and transaction risks.

Due Diligence: A global energy trader engaged Opportune to provide a technical and economic review of a refined products terminal in Africa which was designed for gasoline, jet/kerosene, and gasoil, as well as heavy fuel oil. Our site work confirmed the transfer and storage capacities of the terminal, which was key to understanding the facility, which had been assembled from a combination of existing assets as well as new-build capacity. Our assessment concluded that recent capital improvements had been well executed. We also evaluated the local storage market, and existing contract terms, concluding that terminal operations would be supported by market conditions and existing contracts. Ultimately, we provided indications of value for the terminal for the trader’s use in negotiating the proposed transaction.

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