Industry Segments
Investment Firms
CAS can provide a range of services to support diligence on acquisitions. This can include providing intelligence on the physical market, reviewing existing asset use agreements, identifying optimal partners for asset usage, putting in place new asset usage agreements and sourcing alternative working capital funding. CAS can also provide support in managing and optimizing portfolio companies through a range of services.
Refiners
CAS has unmatched expertise in structured inventory funding arrangements. The company can assist a refiner in putting in place an inventory ownership agreement which may provide greater funding capacity at a lower cost than conventional facilities. These alternative arrangements may also offer enhanced accounting treatment compared to a standard financing. CAS can also provide support in identifying and structuring margin stabilization agreements such as fixed fee tolling or asset-backed OTC hedging arrangements. Finally, CAS can assist refiners in monetizing the physical optionality inherent in their term crude short or term product length.
Midstream Companies
For asset owners who also engage in proprietary oil movements, CAS can assist with alternative (off balance sheet) inventory funding, commercial optimization, exchange margin funding or other avenues of structured finance. For conventional midstream companies, CAS can assist with optimization of asset usage agreements or project structured finance.
Producers
CAS has significant experience is structures that allow a producer to monetize proved developed producing (PDP) reserves on a non-recourse basis. This can be done through a volumetric production payment (VPP) or through a pre-pay. The VPP will involve a sale of a royalty interest in the PDP assets and will be further collateralized by a lien over the leases or the well bores. A pre-pay can be done either as a forward sale or by a simple pre-paid swap structure (in either case, collateralized by a lien). These structures may be advantaged compared to a reserve-based loan (RBL) by higher advance rates (greater borrowing capacity), minimal covenants and by accounting treatment. They can also be done alongside an RBL as a supplemental source of funding.
Consumers
For consumers with large, concentrated demand, such as transportation companies and wholesalers/retailers, CAS has experience in delivering a solution that will fund working capital as well as generate incremental revenue through commercial optimization. The working capital solution involves putting in place an inventory ownership structure with a bank or trader. A transaction that offers the funding partner an opportunity to also provide supply will likely generate commercial synergy. CAS can help structure a transaction in which the consumer will obtain a portion of this synergy through a share in the associated trading profits.