Bellatrix Exploration Ltd (Canada) BXEFF

RE:RE:AECO basis vs. Midwest improves substantially

[dinkdestroyer]

Companies have been very restrained in drilling new wells. The inventory of DUCs in the Marcellus is dropping quite fast as companies bring them on faster than new drilling replaces same. This most likely will continue for the rest of the year as gas is still not profitable at these prices. Most companies have cut capital spending to the bone and are maintaining production as best they can through depleting their DUC inventories. This has the potential of spiking prices this coming withdrawal season if we get cold weather. The upside in gas could surprize people if drilling doesn't pick up enough to meet perceived demand in 2017/18 when new coal fired retirements along with gas exports create new demand not currently in the mix. This company has tremmendous upside in the next 12 months.