Page 75 - PRIAA Glossary

FORWARD PRICE CURVE
A data curve representing the price of a particular commodity or a financial instrument for delivery in a future month at a particular location.
FORWARD RATE AGREEMENT (FRA)
An over-the-counter (OTC) contract that requires one party to pay the difference between the agreed forward rate and the relevant rate of interest on the specified fixing date. An FRA
is similar to a futures contract and is used to hedge future interest rate exposure, but the tenor of the contract is bespoke to that specific contract. On a futures contract, the tenor is fixed by the exchange on which the futures contract is traded.
FORWARD START OPTION
An option contract that becomes active on a specified future date. However, the premium is paid in advance, and the time to expiration and the underlier are established at the time the forward start option is purchased.
FRAC SPREAD
The value of propane, butane and condensate less the value of natural gas used to extract the purity products.
FRACTIONATION
The process of separating a natural gas liquids (NGL) mix into its components.
FRACTIONATION PLANT
A facility that can separate a natural gas liquids (NGL) mix into its components.
FREE CASH FLOW YIELD
A measure of how effective a company generates cash from operations. A financial ratio calculated as the cash from overall operations less net cash flow, all divided by net income.
FREE-ON-BOARD (FOB)
A trading contract where the buyer designates the ship onto which the seller must deliver the goods. All cost and risk transfers to the buyer once the goods cross the ship’s rail.
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