Decatherm: A measurement of the heat equivalent to one million BTUs (Dth)

NYMEX : New York Mercantile Exchange

12 Month Strip : Contract for 12 months of natural gas futures based on NYMEX natural gas futures

Firm Physical: The transaction is guaranteed physical natural gas delivery to a specific point for a specific maturity (time) for a specific fixed price or indexed price. Transaction locations are across the United States and Canada.

EFP: Exchange for Physical is a transaction using the New York Mercantile Exchange (NYMEX) natural gas contract. Trader brokers the location for physical delivery and the differential to the NYMEX. The counterparties exchange the physical product for NYMEX natural gas contracts to offset each counterparties’ exposure.

Basis Swaps / Fixed Price Pipeline Swaps: The derivatives are brokered using natural gas locations across the US & Canada. Trader primarily focus on basis swaps in which counterparties agree on the differential to the NYMEX natural gas contract for a specific trading point location. The same transaction can replace the differential with a fixed price, which is called a fixed price pipeline swap. The transactions are primarily based on indexes published in Gas Daily, Natural Gas Intelligence, Canadian Gas Price Reporter and Inside FERC. They are financial swaps and are currently in the over-the-counter (OTC) market only which means they are not regulated. The transactions settle monthly against the specified index.

Gas Daily Swaps (Swing Swaps): These derivatives are based on the Gas Daily Publication from Dow Jones Publishing. Gas Daily publishes natural gas prices for each day of trading for approximately 70 locations across the United States and Canada. The derivatives can be fixed price or indexed price based on a specific location settling daily against the Gas Daily index for that specific location.  These transactions can be financial or physical in nature and are OTC only.

NYMEX Swaps: These derivatives are based on the NYMEX contract.  They are fixed price transactions for a specific maturity and they settle against the last day settlement of the NYMEX natural gas contract for each month. They are financial transactions only and are in the OTC market. Transaction maturities range from one month forward to ten years.

NYMEX Options: These derivatives are also based on the NYMEX natural gas contract and are a close sister to NYMEX swaps.  The options are financial transactions. Traders broker options in the OTC market only.

Basis / Pipeline Options: These derivatives are based on various pipeline locations across the United States and Canada. They are options based on either the natural gas basis for a particular location or a fixed price for that location. These are financial in nature and are currently in the OTC market only.

TRADERS  WISDOM

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