LDC SERVICES

Appalachian Producer Services, LLC ("APS") currently manages risk, supply purchases, pricing options, credit requirements and hedging strategies for four small LDC's in the Appalachian Basin.  APS also manages the same factors for three natural gas marketers, two unregulated pipelines and forty-seven producers.  APS has a staff of five people with a combined 100 years of experience in Appalachian production, marketing, supply, pipeline issues, and who have experience as employees of LDC's and the management of LDC supply needs.

APS is trading gas for hours everyday, and would like to share this exposure and intelligence, to the benefit of your LDC.

RISK

- APS manages risk portfolios via use of live NYMEX screens, live basis accounts and futures accounts.  APS tracks daily fluctuations in the cash market @DEOG, COH,  TCO, DTI, TETCO, National Fuel, Texas Eastern, Transco, Chesapeake, Equitable, and Tennessee Gas by virtue of utilizing the Intercontinental Exchange (ICE).  

- APS utilizes financial reports and 4 separate daily publications to determine the daily and long term trends in futures pricing and cash prices.  We do this by analyzing storage technical trend factors, FT contracts, rig counts, weather trends, commitment to trader's reports, and industrial manufacturing statistics.  In addition, we are in the market trading each day, so we have a good handle on the trends in the market by virtue of live trades and fresh market intelligence.

- Evaluation of Credit; this is the dominant issue in our business right now and we continue to monitor this very closely.  We are very aware of the effect that credit has on your business.

SUPPLY

- APS purchases daily supply and long term supply as agent for the entities listed above based on the needs and requirements of each client.  APS will sit down with you, analyze your potential supply needs, and structure a program to buy supply that fits your load profile and economic requirements.

- In most cases, APS can buy supply for your LDC with no pre-pay terms, under normal credit terms, and within certain parameters.  Your LDC will need to furnish audited financials to APS prior to the initial purchase and provide quarterly updates thereafter.

PRICING

- APS buys your daily, monthly and seasonal cash gas purchase needs on the pipes listed above.  We watch prices throughout the day, the week, and the month, and decide when it is the best time to buy supply with your input.

- APS charges a nominal fee per dth for any spot purchases or one time purchases, and a lesser amount for one time purchases over 30,000 dth/month.  APS charges on a nominal "per-dth" basis to purchase and manage any capacity requirements you may have.

MISCELLANEOUS

- Hedging strategies: APS provides market intelligence and options concerning strategies to hedge and can set up the options/futures accounts if you wish.  APS can execute triggers and will watch to make sure the execution is done properly.

- Pool management: APS can operate the pools on each pipeline to move volumes in and out of the pools and can arbitrage values at each point.  APS would charge an additional fee if you're LDC agreed to utilize this service.

- Capacity: APS can evaluate, purchase and manage capacity on each pipe.

We believe that LDC's benefit by utilizing APS, gain market intelligence, and enhance management and control over gas supply and price fluctuations---which allows you and your staff more time to expand and enhance your core business.