Screen-print style poster of two forward curves one month apart over an LNG carrier

CASE STUDIES / OPTIONALITY · JUL 2​025

How new price curves change the value of the same LNG option.

The study repeats the Asian DES supply analysis using June 2​025 curves instead of May curves.

+45%

REGULAR-VOLATILITY OPTION VALUE · $8.6M TO $12.5M

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Hold the portfolio structure fixed.

01 · COMPARISON

The contracts, vessels and six optional Asian cargoes stay the same. The comparison replaces the 21 May market inputs with those dated 23 June 2​025.

1

Keep the portfolio unchanged

Same 24 US FOB cargoes, same 9 DES purchases into NWE, same demand, same two 174K vessels, same six optional Asia cargoes.

2

Move the curves forward one month

Replace the 21 May forward curves and simulations with those of 23 June 2​025. Keep the contracts and vessels unchanged.

3

Repeat all three volatility tests

Recalculate both portfolios on 1,000 price paths at each of three volatility levels.

CURVES OF 21 MAY VS 23 JUNE 2​025 · HORIZON 2​026 TO 2​027 · PER-MMBTU VALUES ON 22.2M MMBTU (6 X 3.7M)

Compare the updated values.

02 · UPDATED VALUE

Regular-volatility value rises to $12.5M from $8.6M. High-volatility value rises to $21.2M from $13.3M. Low-volatility value rises to $3.7M from $0.6M.

$0M$5M$10M$15M$20M0.63.7+517%LOW VOLATILITY8.612.5+45%REGULAR13.321.2+59%HIGH VOLATILITY21 MAY CURVES23 JUNE CURVES · MEAN FLEX VALUE $MSAME PORTFOLIO, SAME CONTRACTS · ONLY THE FORWARD CURVES CHANGED
May and June option values at low, regular and high volatility. The portfolio stays unchanged.

Compare the median as well as the mean.

03 · MEDIAN VALUE

The regular-volatility median rises from zero to $10.5M. The median describes the middle simulation result; the mean includes all outcomes and can be influenced by large gains.

$0M$5M$10M$15M$20M$0LOW VOLATILITY$0REGULAR$0HIGH VOLATILITYIN MAY THE MEDIAN PATH NEVER USED THE OPTIONMAY MEANMAY MEDIANJUNE MEANJUNE MEDIANFLEX VALUE PER PATH · $M · 1,000 PATHS PER REGIME AND MONTH
Median option value rises from zero in May to $2.16M, $10.49M and $17.22M in June.

New forward curves change when Asian supply is selected.

04 · PRICE EFFECT

The option remains unused at the June forward curve. Across simulated paths, changed relative prices make Asian supply more attractive in more scenarios.

-0.50+0.5JAN 2026JULJAN 2027JULEARLY-2​026 INVERSION, NEW IN JUNE21 MAY23 JUNE · JKM MINUS TTF, $/MMBTUSPREAD SHAPE TRACED FROM THE ENGINE CURVES · DELIVERY MONTHS OF THE PORTFOLIO HORIZON
The changed price spread raises the simulated option value, although the forward prices still do not trigger a purchase.

Separate option value from total portfolio profit.

05 · PORTFOLIO

Both the reference portfolio and the portfolio with optional supply are revalued. The difference between their profits is the option value; neither portfolio’s full profit is the value of the clause.

$0M$100M$200M$300M297.0300.4+$3.7MLOW VOL319.3331.5+$12.5MREGULAR337.4358.4+$21.2MHIGH VOLBASE BOOKASIA-FLEX BOOKAT JUNE FORWARD: $271.5M, BOTHMEAN MC PROFIT $M ON JUNE CURVES · 1,000 IDENTICAL PATHS PER REGIME
Mean portfolio profit on June prices, with and without optional Asian supply.

06 · RESULT

Regular-volatility option value rises from $8.6M to $12.5M, approximately 45%.

The comparison isolates a change in dated market inputs while holding the portfolio structure constant. The percentage increase under low volatility is large partly because the starting value is small.

What this comparison shows.

07 · TAKEAWAYS

✓

Compare the updated values

Regular-volatility value rises to $12.5M from $8.6M. High-volatility value rises to $21.2M from $13.3M. Low-volatility value rises to $3.7M from $0.6M.

✓

Separate option value from total portfolio profit

Both the reference portfolio and the portfolio with optional supply are revalued. The difference between their profits is the option value; neither portfolio’s full profit is the value of the clause.

!

Scope of the result

The comparison isolates a change in dated market inputs while holding the portfolio structure constant. The percentage increase under low volatility is large partly because the starting value is small.

How the study was calculated.

08 · CALCULATION

1

Set up the comparison

The contracts, vessels and six optional Asian cargoes stay the same. The comparison replaces the 21 May market inputs with those dated 23 June 2​025.

2

Calculate the alternatives

The regular-volatility median rises from zero to $10.5M. The median describes the middle simulation result; the mean includes all outcomes and can be influenced by large gains.

3

Review the result

Regular-volatility option value rises from $8.6M to $12.5M, approximately 45%.

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