Fixed Price – Under a fixed price structure, OEMI agrees to buy natural gas from a third party, at a specific location, based a fixed price for molecules. The price is fixed for baseload sales/purchases for one month to multiple-year terms, allowing customers to capitalize on seasonal market price swings while providing price certainty during unexpected market swings. For Oxy Energy Canada (OEC), the price can be calculated either in U.S. or Canadian dollars, and quantities can be in metric or Imperial units determined when the transaction is executed.
Index Price – OEMI agrees to buy natural gas from a third party, at a specific location. The price is based on an industry-based price index that varies each month, allowing full market participation. For OEC, the price index can be calculated either in U.S. or Canadian dollars and quantity can be measured in metric or Imperial units, or determined when the transaction is executed.
Basis – Prices at all North American locations are underpinned by a NYMEX component and a basis component. The basis component is the differential in regional pricing compared to pricing at Henry Hub. OEMI and OEC can buy gas from third parties by fixing the basis number at the time of execution, but letting the NYMEX float until the underlying NYMEX contracts settle. Once the NYMEX contract has settled, the price is then fixed for the molecules. Basis prices can be quoted in either physical or financial terms.
Direct – Direct purchase can be made from third parties such as producers, utilities, pipelines, generators or end users using industry standard contract language and any of the pricing structures mentioned above.
OEC – Natural Gas Exchange (NGX)- OEC can purchase gas from the regulated exchange in Canada known as NGX. This exchange allows multiple buyers and sellers to post and transact in anonymity through the exchange without having direct contracts with each counterparty. Parties on the exchange post initial and daily market margins for the right to transact on the exchange and gain access to a large number of counterparties. The exchange is the counterparty with OEC since it takes title to the gas from the seller and then resells to OEC. This exchange format allows for all pricing structures to be utilized for buying and selling natural gas in Canada.
OEMI - Intercontinental Exchange (ICE) – This exchange is similar to NGX in format but has two main differences. First, when transactions are completed, the counterparties are revealed to each other. Thus only counterparties who have completed contracts with each other can be matched up. Second, ICE takes no title to the gas and thus requires no margining. The ICE format also allows all pricing structures to be posted on the system.