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Case Study – Detailed Performance and P&L Metrics for Lease Crude Purchaser

Innovative Transfer Pricing Enhances Supply-Chain Visibility and Improves Marketing and Trading Decisions

The client is a first purchaser of lease crude in the following U.S. regions: Rockies, Gulf Coast, Midcon, Permian, and North Dakota. From each lease, client transports barrels of crude via trucks onto various pipelines and then ships the barrels to various market locations for blending and third-party sales. Along the supply chain, the client owns and operates most of the trucking and pipeline services. Once at the final marketplace, barrels of crude are blended into West Texas Intermediate and Bakken Light Sweet and sold to third parties.

Despite its well-established operation, the client faced a complex business problem: it didn’t understand the full economic picture of its supply chain, and therefore had difficulties in explaining monthly variances in P&L. To overcome this issue, capSpire restructured the client’s book and portfolio structure and developed an automated, scalable transfer pricing methodology that leveraged RightAngle’s In-House Rules functionality. Now, the client has the detailed trading data it needs to understand where it experiences losses and gains, improve trading decisions, and increase margins.