Screen-print style poster of a scale weighing upside against risk over an LNG carrier

CASE STUDIES / RISK · DEC 2​025

Similar forward profit, different portfolio risk.

Three LNG contract mixes earn almost the same profit at forward prices. The study compares their results under changing HH and TTF prices.

About $63M

FORWARD PROFIT IN EACH OF THREE CONTRACT MIXES

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Define the three contract mixes.

01 · PORTFOLIO

The first buys on HH and sells on TTF. The second adds spot transactions that can replace costly physical deliveries. The third uses TTF on both sides.

S1 · DUAL INDEX

  • HH-indexed supply against TTF-indexed demand
  • Full exposure to the transatlantic spread
  • No cancellations: every voyage must run or unwind

S2 · SPOT OUTLETS

  • Same portfolio, with optional spot purchases and sales
  • Unwind matches priced slightly unprofitable by design
  • Losses capped: unwind at a small loss instead of sailing a bad voyage

S3 · TTF ONLY

  • Supply switched to TTF: netback pricing
  • The spread exposure disappears by construction
  • Lower profit, and the upside is gone with the risk

NOV 2​025 TO DEC 2​027 · CARGO SIZE 3.4 TO 3.8M MMBTU · ONE CARGO PER MONTH EACH SIDE · X-LNG ENGINE

Use a comparable starting point.

02 · CALIBRATION

The pricing formulas are calibrated to forward profits of $63.6M, $63.6M and $63.1M. All three serve the same underlying monthly programme.

$63.6M

S1 · FORWARD PROFIT · $0.76/MMBTU

$63.6M

S2 · FORWARD PROFIT · $0.76/MMBTU

$63.1M

S3 · FORWARD PROFIT · $0.75/MMBTU

<1%

SPREAD ACROSS ALL THREE STRATEGIES

Compare simulated prices.

03 · MONTE CARLO

At base volatility, average profit is $165.2M for the dual-index portfolio, $112.1M with spot access and $66.7M for TTF-only. Under high volatility, the portfolio with spot access has the highest average.

$0M$50M$100M$150M≈98≈99≈63LOW VOL · 50%165.2112.166.7BASE VOL≈104≈139≈71HIGH VOL · 150%S2 OVERTAKESS1 · DUAL INDEXS2 · SPOT OUTLETSS3 · TTF ONLY · MEAN $M
Mean portfolio profit at three volatility levels, using 1,000 price paths at each level.

Compare the range of simulated profit.

04 · RANGE OF PROFIT

The distributions show how often each profit outcome occurs in the tested price paths. Similar forward profit does not imply similar average simulated profit or downside exposure.

$0M$100M$200M$300M$400MS1 MEAN $165.2MS2 MEAN $112.1MS3 $66.7MPORTFOLIO PROFIT · $M · BASE VOLATILITY · 3 X 1,000 PATHSS1 WIDES3 TIGHT
Range of profit at regular volatility. Curve shapes are illustrative; mean values and ranges come from the study.

Test adverse price combinations.

05 · STRESS GRID

Across the study’s 40% to 160% price grid, the dual-index portfolio falls below a $400M loss in one corner. Spot access limits losses near zero in the tested scenarios. The TTF-only structure varies much less.

S1 · DUAL INDEX40%100%160%HHS2 · SPOT OUTLETS40%100%160%HHS3 · TTF ONLY40%100%160%HH160%100%40%TTF≈ +$600MWORST CELL BEYOND -$400MLOSSES FLOORED NEAR $0≈$63M ACROSS ALL TTF-$400M$0+$300M+$600M
HH and TTF each range from 60% below to 60% above reference prices. Colours are illustrative; labels show study results.

06 · RESULT

About $63M forward profit in each portfolio, with markedly different stress losses.

These are calibrated examples, not general return forecasts. Matching pricing indices reduces the modelled spread exposure but does not remove every operational or timing risk.

What this comparison shows.

07 · TAKEAWAYS

✓

Use a comparable starting point

The pricing formulas are calibrated to forward profits of $63.6M, $63.6M and $63.1M. All three serve the same underlying monthly programme.

✓

Test adverse price combinations

Across the study’s 40% to 160% price grid, the dual-index portfolio falls below a $400M loss in one corner. Spot access limits losses near zero in the tested scenarios. The TTF-only structure varies much less.

!

Scope of the result

These are calibrated examples, not general return forecasts. Matching pricing indices reduces the modelled spread exposure but does not remove every operational or timing risk.

How the study was calculated.

08 · CALCULATION

1

Set up the comparison

The first buys on HH and sells on TTF. The second adds spot transactions that can replace costly physical deliveries. The third uses TTF on both sides.

2

Calculate the alternatives

At base volatility, average profit is $165.2M for the dual-index portfolio, $112.1M with spot access and $66.7M for TTF-only. Under high volatility, the portfolio with spot access has the highest average.

3

Review the result

About $63M forward profit in each portfolio, with markedly different stress losses.

Modelled results depend on the contracts, prices and operating assumptions used.