Commodities research house of the year: Mobius Risk Group

Energy Risk Awards 2022: Firm’s deep sector expertise and cutting-edge analytics produce bespoke research that can drive strategy

Soaring energy prices, severe weather events and supply-chain disruptions were just some of the challenges facing commodity firms in 2021, creating a critical need for accurate and timely information. A plethora of environmental regulations and a need to understand climate risk exposures added further challenges.

Commodities advisory firm Mobius Risk Group, winner of Energy Risk’s 2022 Commodities research house of the year award, addresses all these challenges. Its unique offering combines detailed fundamental research with clear insights into how client businesses might be impacted by these external factors. Using cutting-edge analytics and proprietary technology, Mobius’s research is tailored to individual firms and takes a risk-based approach, enabling optimal decision-making and even informing operating strategy.

“Finding a commodities research house that provides quick, timely and relevant research isn’t difficult,” notes John Saucer, vice-president and head of crude oil markets at Mobius Risk Group. “However, partnering with a research team to deliver bespoke insights for your executive team on where to take action in ways that deliver value is a rarity.”

Mobius’s research is underpinned by the team’s extensive market experience and the firm’s 20-year history operating in the energy markets to deliver hedging and risk management services. In 2021, Mobius provided transaction support for $30 billion in annual transactions on behalf of clients and was among the earliest firms to develop and execute carbon and compliance strategies. As a result, its research benefits from a nuanced understanding of energy markets.

“It’s not unusual for us to get way down in the weeds in terms of local supply and demand, on a county-by-county level or sometimes on a township level,” says Saucer.

The company’s research also benefits from Mobius’s proprietary risk-pricing methodologies. M-Risk, which was launched and trademarked in 2019, was designed to price market-based deal risk, addressing some of the shortcomings of value-at-risk and other pricing methodologies, says Eric Melvin, Mobius Risk Group chief executive.

Partnering with a research team to deliver bespoke insights for your executive team on where to take action in ways that deliver value is a rarity

John Saucer, Mobius Risk Group

Mobius’s research, combined with M-Risk, created value for clients during the dramatic February 2022 Nymex natural gas contract expiration where prices increased almost 50% on the last day of trading. By actively managing upside derivatives exposure in late 2021 and diligently matching first-of-month physical sales needed to match remaining derivatives positions, Mobius’s clients were able to meet or exceed their revenue forecasts no matter where the February contract expired.

“Mobius’s technology allowed us to visualise potential outcomes of the February settlement and the impact on our expected cash receipts from physical sales, as well as the impact on our risk and credit parameters,” says Greg Boxer, chief financial officer of Oklahoma-based Flywheel Energy. “Mobius provided clear, concise, actionable analytics that resulted in a multi-million-dollar risk-reducing and value uplift.”

Mobius launched its second risk methodology, G-Risk in 2021. It is based on proprietary technology that enables the tracking of factors playing into the carbon footprint of an enterprise, as well as tracking financial instruments for valuation, visualisation and analysis. Combined with Mobius’s research, clients receive reports and actionable analytics.

G-Risk also provides an aggregate view of markets for compliance credits, renewable energy credits and voluntary offsets, allowing fair valuations for credits and other types of carbon offsets. G-Risk can also help firms reach their net-zero and environmental, social and governance (ESG) goals.

“The functionality of G-Risk coupled with our human talent is a powerful engine to drive ESG strategy,” says Drew Lichter, vice-president, corporate strategy and development at Mobius Risk Group. “The end result is incisive, bespoke analysis for each client and the expertise to put net-zero and other carbon management goals well within reach,” he adds. “Getting to net-zero requires more than ideals. It requires reliable data, knowledge to sort the signal from a sea of analytics, and the correct expertise for crafting strategy among stakeholders with diverse interests.”

In 2021, Mobius released “7 Steps to Carbon Neutrality”, its most recent risk management methodology. The company continues to publish the daily market update, a four-times a week email of natural gas and crude research. These go alongside the firm’s Friday Focus for deeper dives into current issues affecting carbon and commodity markets. Mobius also provides clients with an in-depth monthly market update, financial and operational reports, and offers a custom report builder within RiskNet, the firm’s risk management platform.

Mobius’s mission is to help firms add value to their organisations by extracting meaningful and actionable information from the world’s ever-expanding sea of data.

“We want to see the industry and, actually, everyone succeed by having better access to information and new ways of thinking,” says Lichter.