Corporate > Commodities, Trading and Derivatives

Overview

Futures and derivatives law involves a highly particular set of skills—helping clients determine which financial instruments best meet their needs, negotiating favorable agreements, interpreting myriad regulatory constraints and, when necessary, resolving disputes.

Representative Matters

  • Represented a global commodities trader in several transactions, including:
    • The acquisition of a bunker fuel supply business in the Caribbean, including long-term storage rights and other related project agreements, as part of a strategy to expand its bunker fuel trading business more broadly in the region.
    • The sale of a Permian Basin crude oil gathering and terminating system and related assets.
    • Negotiations with respect of a long-term natural gasoline (C5+) purchase agreement supporting the development and construction of a new U.S. Gulf Coast hydrotreater facility producing low sulphur natural gasoline meeting International Maritime Organization (IMO) 2020 requirements.
  • Advised a project sponsor in executing a physically settled energy swap with a swap dealer from an approximately 150-megawatt wind energy project.
  • Represented large, independent producers in long term sales agreements with:
    • A large Gulf Coast terminal operator for 50,000 barrels of crude oil per day at a Gulf Coast Free on Board (FOB) dock price less certain adjustments.
    • An oil major for 50,000 barrels of crude oil per day with pricing based on calendar dated Brent plus a negotiated differential generally based on Argus West Texas Intermediate (WTI) Houston; costs, insurance and freight (CIF) Rotterdam; and Platts WTI Midland (delivered-at-place [DAP] Rotterdam) less certain adjustments.
    • A major commodity trading house for 150,000 barrels of crude oil per day with pricing based on international crude oil prices less certain adjustments and third party shipper commitments on multiple gathering and processing (G&P) and long-haul pipeline systems.
    • A major pipeline marketing entity for 100,000 barrels of crude oil per day at Magellan East Houston (MEH) Base, Midland WTI and Midland West Texas Light (WTL) pricing less certain adjustments.

Services In-Depth

Our experience encompasses the full range of trading issues, including:

Physical trading. Our team guides clients through the complexities of financially settled and derivative transactions, credit derivative transactions, physically-settled power swaps and hydrocarbon price swaps, including New York Mercantile Exchange (NYMEX) swaps, index swaps, basis FOM swaps, BOM swing swaps and exotic swaps in the exempt and cleared OTC markets.

Cash settled hedging. We assist with financially settled derivative transactions, whether cleared or uncleared, from plain vanilla interest rate and commodity price swaps, to portfolio credit derivative, accelerated stock repurchase, heat rate call options (HRCO) and other more complicated hedging transactions.

Speculative trading. We advise major energy companies, proprietary trading firms, commodities traders and hedge funds with respect to speculative trading of futures, options, swaps and other derivatives.

We support clients with establishing trading and compliance programs and documenting risk management and marketing policies for their hedging groups, including assisting in the hedge committee approval process applicable to the addition of new trading instruments and advising on compliance with hedging exemptions from speculative position limits.

Our team also effectively negotiates counterparty trading relationships and transactions with major investment banks, and advises in financially-settled energy hedges for sponsors, developers and offtakers.

Commodity finance. Our lawyers regularly advise on financing models for commodity purchases and trades.

Securities trading and repurchase agreements. We assist clients with securities lending and repurchase transactions on both US and UK governed industry standard documentation.

Regulatory and enforcement. On the regulatory side, our experience extends to Commodity Futures Trading Commission (CFTC) rulemaking, swaps market requirements, speculative position limits and aggregation, and the regulation of exchanges and products. Our team includes former CFTC staff.

When enforcement activity occurs, we provide effective representation defending against investigations and other actions brought by the CFTC, the National Futures Association (NFA) and U.S. futures exchanges.

We also assist clients with industry standard protocols to address topics such as Dodd-Frank, the Foreign Account Tax Compliance Act (FATCA), the U.S. Resolution Stay Regulations and the transition away from the London Interbank Offered Rate (LIBOR).