What Companies Need to Succeed in Today’s Energy Markets

DALLAS, TX, September 30, 2009 – A new white paper by Oil & Gas Investor – Assessing Credit Risk in Today’s Post-Crisis World – explores the multiple challenges energy companies are facing in analyzing and predicting credit risk, made even more complicated by the collapse of several major financial institutions and the resulting paradigm shift in credit risk management procedures.

The “perfect storm” of worldwide economic crisis, financial institution instability and record price volatility in energy markets has oil and gas producers, bankers, traders and large energy consumers like airlines and utilities operating at a heightened “state of alert” as they seek to gain timely, reliable credit information about their counterparties.

In analyzing the current energy market landscape, Oil & Gas Investor notes that, “extreme volatility in oil and natural gas markets adds complexity to transactions where buyers and sellers – or trading counterparties – have to meet somewhere in the middle to do a deal…as exposure grows, the need for greater depth of counterparty credit information is apparent.”

Further complicating the process is the participation of private investors in energy markets through commodity index and energy hedge funds.  Many of these market participants are highly leveraged and have substantial contractual commitments, leading to heightened credit risk and extended collateral commitments.

The white paper references recent surveys that indicate many companies still seek to manage credit risk through internally developed spreadsheets or custom software applications, which falls far short of the functionality and integration needed in today’s energy trading environment.  Credit risk management incorporated into a company’s energy trading and risk management (ETRM) platform supports the evaluation and forecast of counterparty credit, including:

• Market and credit event liquidity adequacy stress testing
• Credit Value-at-Risk analysis
• Potential future exposure analysis
• Walk forward analysis

Credit risk management software solutions can provide the tools and transparency that managers need to function at their peak in a constantly evolving marketplace.  Users can analyze current point-in-time and historical counterparty credit profiles, as well as forecast potential future credit situations by capturing real-time credit information from multiple sources to analyze counterparty liquidity, collateral, default and recovery potential.

As Oil & Gas Investor notes, “The energy industry must change its approach toward credit risk management.  The limitations of today’s way of doing things, in light of significant market changes, are all too readily apparent.  The credit risk function must be a full-fledged member of any program and tool set for energy trading and risk management.”

Assessing Credit Risk in Today’s Post-Crisis World is now available for download at www.allegrodev.com/credit-risk.

About Allegro Development

Allegro is a global leader in energy trading & risk management solutions for power and gas utilities, refiners, producers, traders, and commodity consumers. With more than 27 years of deep industry expertise, Allegro’s enterprise platform drives profitability and efficiency across front, middle, and back offices, while managing the complex logistics associated with physical commodities.  Allegro provides customers with agile solutions to manage risk across natural gas, power, coal, crude oil, petroleum products, emissions, and other commodity markets, allowing decision makers to hedge and execute with confidence. Headquartered in Dallas, Texas, Allegro has offices in Calgary, Houston, London, Singapore, Sydney, and Zurich, along with a global network of partners.

For further information please contact Christie Lindstrom at media@allegrodev.com or +1.214.237.8117.