Managing Energy Price Risk

The Energy Price Risk Practitioner Series are designed to provide participants with an understanding of pricing, risk management, asset valuation and derivatives within the energy markets.

The program “Managing Energy Price Risk” lays a solid foundation for the analysis of issues in energy price risk assessment and management, including the relevant markets, modules and analytical approaches.

Key Takeaways

• Use financial models to analyze and forecast energy prices; extrapolate forward prices beyond the liquidity tenor
• Understand the risk of and return from futures and options contracts on energy commodities
• Manage and optimize their corporations’ energy risk exposure
• Estimate and calculate volatility in energy prices
• Apply option valuation techniques to the energy markets
• Understand and use derivative products to mitigate energy price risk; use structured products to enhance firm value; understand exotic structures unique to oil (e.g., average option) and gas and power (e.g., swing options, weather derivatives)
• Utilize real options theory to value energy assets; use information from futures/option prices to make optimal production decisions: Optimal timing for extraction, optimal rate at which to extract oil (gas) from a field; value oil fields, pipelines and storage facilities, power plants
• Apply Value-at-Risk to the energy industry