As millions of Americans stayed home to prevent the spread of COVID-19, the oil and gas industry faces excess supply and lower demand, causing drops in crude oil prices not seen since the mid-1980s.
A 100 percent CFC borrower headquartered in Williston, North Dakota, Mountrail-Williams Electric Cooperative (MWEC) worked with CFC in early May 2020 to develop new financial forecasts to craft a financially sound approach to aid their member consumers, including Williston Basin oilfield producers and related industries.
“We recognized the hardships, and we too understood the financial pain our members were facing due to the pandemic response,” MWEC General Manager Dale Haugen said. “We partnered with CFC to produce new financial forecasts to determine how we could aid our members while maintaining our strong financial position.”
Developing Financial Forecasts Virtually
During a two-day virtual meeting, MWEC and CFC used CFC’s financial forecasting software model, Compass 4.0, to develop a long-range financial forecast based on different scenarios. The modeling provides varying degrees of relief to MWEC’s members in 2020 and keeps forecasts in line with the cooperative’s financial goals.
CFC Compass 4.0 is a 10-year financial forecasting software model designed to help rural electric distribution cooperatives analyze a variety of financial strategies. The model—which is free to CFC members—can be used to provide support for new loan applications, budgeting and strategic planning.
“We presented the financial forecast scenarios to the MWEC Board of Directors to give them options of how the cooperative could support its membership through the economic downturn related to the pandemic,” CFC Regional Vice President Sarah Bullock said. “The board adopted the recommended forecast scenario, providing increased member relief.”
MWEC Lowered Capacity Charge for Commercial Members
The board-approved plan allows MWEC to lower its capacity charge to commercial members, including approximately 10,000 well sites and gas processing plants. Additionally, MWEC will return $12.3 million in capital credits to all members for years 2013 and prior.
“While we don’t know how long the pandemic disruptions will last, we are focused on providing short-term aid to our members and maintaining our financial stability,” Haugen said. “We plan to evaluate the situation at the end of the year to see if we need to recommend any adjustments in how we’re supporting our members during the economic recovery.”