EBF 301 - Global Finance for the Earth, Energy, and Materials Industries
This is a sample syllabus.
This sample syllabus is a representative example of the information and materials included in this course. Information about course assignments, materials, and dates listed here is subject to change at any time. Definitive course details and materials will be available in the official course syllabus, in Canvas, when the course begins.
Overview
The course will cover the physical and financial aspects of the following energy commodities – crude, natural gas, natural gas liquids, gasoline, and power. The physical “path” of each commodity from the point of production to the point of use will be explained, as well as, the “value chain” that exists for each. Commodity market pricing, both cash and financial, will be presented, encompassing industry “postings” for cash, commodity exchanges, and “over-the-counter” markets. The use of financial derivatives to reduce market price risk (“hedging”) will be presented, and “real world” examples will be utilized.
The course will largely be comprised of online narrative, audio lectures, and required readings. Students will use standard pricing and hedging models to work “real world” problems from both producer and consumer perspectives. There will also be several case studies presented involving disastrous trading results where a lack of risk controls were present.
Objectives
Students who excel in this course are able to:
- understand the nature of energy commodity logistics, i.e., the ways in which energy production is delivered to the ultimate consumer;
- establish costs and revenues associated with the movement of energy commodities from point of production to point of consumption, (the so-called economic “value chain”);
- describe market pricing both “cash” and financial, including how prices are established; identify key industry pricing publications, financial exchanges, and “over-the-counter” markets;
- define energy financial derivatives, including futures, forwards, swaps, spreads, and options; illustrate how they are traded and their use for “hedging” market price risk and which industry segments utilize them;
- list the “do’s and don’ts” of energy commodity trading, i.e., risk controls and trading limits.
Required Materials
The materials listed here represent those that may be included in this course. Students will find a definitive list in the course syllabus, in Canvas, when the course begins.
The following text books are optional.
Energy Trading & Hedging: A Nontechnical Guide, Tom Seng, Pennwell, July 2019, ISBN: 9781593704742 (Core text on trading.)
Fundamentals of Trading Energy Futures & Options, 2nd Edition, Steven Errera and Stewart L. Brown. Pennwell, 2002. ISBN 0878148361.
Energy Trading & Investing: Trading, Risk Management, and Structuring Deals in the Energy Markets, 2nd Edition, Davis W. Edwards, McGraw-Hill, 2017. ISBN-13: 978-1259835384, ISBN-10: 1259835383.
Prerequisites
None
Expectations
We have worked hard to make this the most effective and convenient educational experience possible. How much and how well you learn is dependent on your attitude, diligence, and willingness to ask for clarifications or help when you need them. We are here to help you succeed. Please keep up with the class schedule and take advantage of opportunities to communicate with us and with your fellow students. You can expect to spend an average of 7 - 9 hours per week on class work.
Major Assignments
EBF 301 will rely upon a variety of methods to assess and evaluate student learning, including:
Quizzes (10% of total course grade)
Quizzes allow you to demonstrate your mastery of the terms and concepts in the lessons. Quizzes are closed-book examinations taken online through Canvas.
Lesson Activities (18% of total course grade)
Lesson activities will ask interpretive questions on each week's material.
Fundamental Factors (22% of total course grade)
Fundamental Factors assignments ask you to research and think about how current events affect prices in energy commodity markets.
Midterm Exam (25% of total course grade)
The midterm evaluates your ability to synthesize and apply terms and concepts from throughout the course.
Final Exam (25% of total course grade)
The final exam evaluates your ability to synthesize and apply terms and concepts from throughout the course.
Course Schedule
| Week | Topic | Assignment |
|---|---|---|
| Orientation |
| |
| 1 | The Energy Industry - Overall Perspective |
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| 2 | Supply/Demand Fundamentals for Natural Gas & Crude Oil |
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| 3 | The New York Mercantile Exchange (NYMEX) & Energy Contracts |
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| 4 | Cash Market Pricing Methodologies & Publications |
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| 5 | Crude Oil Logistics & Value Chain |
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| 6 | Natural Gas Logistics & Value Chain/US LNG Exports & Global Markets |
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| MT | Mid-Term Exam |
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| 7 | Energy Risk “Hedging” using Financial Derivatives |
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| 8 | Quantitative Methods and Energy Risk Management |
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| 9 | Technical Analysis |
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| 10 | Advanced Financial Derivatives - Swaps, Spreads, and Options |
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| 11 | Risk Controls in Energy Commodity Trading |
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| 12 | Risk Management in the Electricity Market |
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| Final Exam | ||