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Mark to Market Impact in Q1
Tuesday, May 29, 2018

A few weeks ago, the Wall Street Journal published a story on the price of oil being above $70 per barrel, but shale drillers in the United States were still spending more money than they were making!

What gives? The article said cited derivative contracts that the firms entered in late 2017 “that effectively ensured they could sell some of their 2018 output for $50 to $55 a barrel.” Now that prices are higher, the firms aren’t capturing as much of the price gain as they might. Part of the reason is that these firms use mark-to-market accounting to price their positions at the end of the reporting period.

At Calcbench, we decided to dig into the trend a little and see how XBRL could help identify more of these firms. We used a few tools at our disposal.

First is the XBRL US-GAAP taxonomy that FASB maintains. We found four tags that imply the firms mark the difference between the carrying value and the fair value of the derivative instrument. If any of these tags are used, you can flag these firms as vulnerable to fluctuations in the commodities markets for doing nothing more than hedging their positions.

The four tags found were:

  • UnrealizedGainLossOnDerivatives
  • UnrealizedGainLossOnEnergyContracts
  • UnrealizedGainLossOnCommodityContracts
  • UnrealizedGainLossOnDerivativesAndCommodityContracts

In our opinion, using this search mechanism as a tool is far better than just digging into the filings and doing a brute-force search for “mark-to-market” (MTM). That’s naïve.

In fact, if you use a platform like Calcbench (our second tool) to do a search (and look at the results in context), you should be in a better position to understand the magnitude of the impact to the firm-level P&L for the future.

Some of the non-financial firms with bigger impacts to their Q1 2018 P&L are:

Firm Dollar Impact (USD M)
NRG Energy $204
Globalstar $109
Sempra Energy $62
Vistra Energy $59
Encana Corp $50
Exelon Corp. -$259
Newfield Exploration -$79
EOG Resources -$59.8
Noble Energy -$51

Lastly, below is a list of entities that we found using MTM in the first quarter of 2018, but please be aware that some of these entities are investment vehicles (funds), and may not be operating firms:

  • AG Mortgage Investment Trust, Inc.
  • Alcoa Corp
  • Aleris Corp
  • Allscripts Healthcare Solutions, Inc.
  • American Electric Power Co Inc
  • Annaly Capital Management Inc
  • Apache Corp
  • Armour Residential REIT, Inc.
  • Assured Guaranty Ltd
  • Cabot Oil & Gas Corp
  • Carnival Corp
  • Cherry Hill Mortgage Investment Corp
  • Chimera Investment Corp
  • Dr Pepper Snapple Group, Inc.
  • EOG Resources
  • Enbridge Inc
  • Encana Corp
  • Energen Corp
  • First Horizon National Corp
  • GenOn Energy, Inc.
  • Globalstar, Inc.
  • Halcon Resources Corp
  • Hawaiian Holdings Inc
  • Hess Corp
  • HollyFrontier Corp
  • Invesco Mortgage Capital Inc.
  • Lilis Energy, Inc.
  • Macquarie Infrastructure Corp
  • Marathon Petroleum Corp
  • Matador Resources Co
  • Mbia Inc
  • Millburn Multi-Markets Fund L.P.
  • Mondelez International, Inc.
  • MTGE Investment Corp.
  • Navient Corp
  • New York Mortgage Trust Inc
  • Noble Energy Inc
  • Northwest Natural Gas Co
  • Nrg Energy, Inc.
  • Nrg Yield Llc
  • NRG Yield, Inc.
  • ProShares Trust II
  • Protective Life Corp
  • Protective Life Insurance Co
  • Sempra Energy
  • Star Group, L.P.
  • Svb Financial Group
  • Tivity Health, Inc.
  • Uniti Group Inc.
  • Vistra Energy Corp.
  • Zebra Technologies Corp
  • Sprague Resources LP
  • Powershares Db Agriculture Fund
  • Alcoa Corp
  • Cleveland-Cliffs Inc.
  • CNX Resources Corp
  • CYS Investments, Inc.
  • DCP Midstream, LP
  • Energen Corp
  • KBS Real Estate Investment Trust III, Inc.
  • Nextera Energy Inc
  • NGL Energy Partners LP
  • Pdc Energy, Inc.
  • Wgl Holdings Inc

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