Unit Corporation (Unit Corp) uses financial collars and swaps derivatives to hedge price movements in natural gas, crude oil and natural gas liquids. In order to represent the earnings impact of these hedges coordinately with the sale of the production, Unit Corp. must comply with Financial Accounting Standard (FAS) 133 to achieve optimal hedge accounting treatments, said Triple Point.
According to Triple Point, the Commodity XL for Hedge Accounting allows Unit Corp to comply with hedge accounting standards and reduce earnings volatility by taking advantage of the FAS 133 software solution’s key features including mark-to-market, regression analysis, effectiveness testing and hedge accounting documentation. Through use of cash flow hedge accounting treatment and subsequent reclassification of ‘other income’ to earnings, Unit Corp will achieve a smooth level of reported earnings.
Elie Zabal, senior vice president of treasury management and regulatory compliance solutions at Triple Point, said: This contract with Unit Corp further affirms that energy companies trust Commodity XL for Hedge Accounting to manage all of their FAS 133 needs. We currently hold the largest market share of E&P energy companies and continue to grow our leadership position as we partner with companies such as Unit Corp.
