Triple Point Technology®, the leading global provider of multi-market commodity and enterprise risk management software solutions, announced today that Enterprise Products Partners L.P. (NYSE: EPD), with an enterprise value of nearly $21 billion, has chosen Triple Point’s Commodity XL for Hedge Accounting™ to ensure FAS 133 compliance and protect against earnings volatility.
Enterprise’s nod of confidence follows Triple Point’s recent acquisition of INSSINC, the industry’s de-facto leader of software solutions for the energy and commodity derivative industries. The acquisition allows Triple Point to leverage its market reach and provide clients with a software solution that supports a comprehensive risk program, enabling firms to balance between optimal economic benefit, risk management and stable financial statements.
Enterprise, one of the largest publicly traded energy partnerships, manages an integrated natural gas and NGL (Natural Gas Liquids) transportation, fractionation, processing, storage and import/export network within the United States. Its operations are strategically located to serve the large supply basins for NGL-rich natural gas and the major NGL storage hubs in North America and international markets. Enterprise operates more than 35,000 miles of onshore and offshore pipelines.
Enterprise uses financial derivatives to hedge price movements in natural gas, crude oil and NGLs. In order to represent the earnings impact of these hedges coordinately with the sale of the production, they must comply with Financial Accounting Standard (FAS) 133 to achieve optimal hedge accounting treatments. Commodity XL for Hedge Accounting allows Enterprise to take advantage of the solution’s key features including mark-to-market, effectiveness testing, regression analysis and hedge accounting documentation. In addition, the FAS 133 software provides for the deferral of earnings recognition through use of the “Other Comprehensive Income” (OCI) treatment and subsequent reclassification to earnings.
Enterprise also licensed the Natural Gas Storage module which complies with the Derivatives Implementation Group (DIG) Issue G16: designating the hedged-forecasted transaction when its timing involves uncertainty within a date range.
“We look forward to helping Enterprise eliminate unnecessary earnings volatility with the usage of our Natural Gas Storage module,” said Elie Zabal, Triple Point’s senior vice president of treasury management and regulatory compliance solutions. “This module allows Enterprise’s traders to optimize their storage spreads while carrying along OCI, thus eliminating unnecessary earnings volatility on financial statements.”
Triple Point’s hedge accounting system is based on mature, well-tested software solutions obtained in its acquisition of INSSINC. INSSINC, now the treasury management and regulatory compliance division of Triple Point, serves fifty premiere energy and commodity industry leaders throughout North America and Europe including such notable companies as: PacificCorp, TransAlta, TransCanada, SUEZ Energy, Southern Company, Ameren Energy, PPL Corporation (Pennsylvania Power & Light), Scottish Power, The J.M. Smucker Company and Campbell Soup Company.
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