Hefty upgrade from TDW this AM!Event Last night, the Shell-led LNG Canada consortium announced a positive Final Investment Decision to build and export LNG from Kitimat, BC. Impact: POSITIVE The group announced a positive FID for the first phase (of a potentially two-phase project) to build, liquefy, and export 14 mmpta (or 1.8 bcf/d) off the Northern coast of BC. Project participants include Shell (40%), Petronas (25%), PetroChina (15%), Mitsubishi (15%), and Kogas (5%). While cost and timing guidance remain in flux, we estimate that gas could be exported as soon as 2023, assuming no regulatory or construction delays. This is meaningful in the context of the WCSB where current production is ~15.5 bcf/d. In our view, the largest winner among the E&Ps on the back of this announcement is Painted Pony. While there may still be uncertainty as to the medium-term impact of LNG exports on WCSB natural gas prices, and even the M&A landscape, we believe that this news should provide a positive lift to Painted Pony for several reasons--current production is meaningful at over 0.3 Bcf/d, the asset base is large, contiguous, and ideally situated from a geographic perspective, and the current 2P RLI is significant at 52 years. Painted Pony offers the greatest sensitivity to narrowing in the AECO/Nymex price differential among our coverage universe; a US$0.50/mcf narrowing in 2019 equating to a 34% improvement in 2019 CFPS (including hedges). Finally, Painted Pony is the most attractively valued E&P on the basis of production, PDP, 1P, and 2P reserves: EV/2019E production of $2,431/mcfe/d versus the Montney peer group average of $5,225/mcfe/d. EV/PDP reserves of $1.12/mcfe versus the group average of $4.02/mcfe. EV/1P reserves of $0.29/mcfe versus the group average of $1.25/mcfe. EV/2P reserves of $0.13/mcfe versus the group average of $0.72/mcfe. TD Investment Conclusion We have revisited our model and valuation on the back of a more optimistic outlook for the company due to last night's announcement. The outcome is an increase to our NAV to $4.72/share (from $4.08), consequently increasing our target to $4.75 (from $3.75). Our BUY recommendation remains unchanged and we view Painted Pony as the single largest E&P to benefit from this news.