RE:RE:RE:Does this make sense? 24 month highMy 2 cents (and personal investment thesis):
- TCW is unlevered so relative to all other competitors, in this environment, it is by far the most attractive from a downside perspective
- The story for Canada for the next 5 years is the Montney - this liquid rich region (specifically condensate) makes the Montney a cost competitive resource not only in NA but globally. Proof of this is the green light on LNG Canada export facility
- Alberta coal retirements (increased requirement for natural gas baseload power) + Transmountain online + LNG Canada development all support the growth of natural gas and condensate over the next 3-5 yrs (ie. the most economic plays will benefit most which are condensate rich areas). For the longest time dry gas plays have been uneconomic.
- The question is what's the risk of condensate demand faltering and what could potentially offset the demand increase from LNG Canada and coal retirements. So long as the oil sands are producing oil it is needed for transportation and it will continue to trade at a premium (companies would rather oil be transported by pipeline vs rail which supports the need for condensate). The probability of Transmountain not happening is so low because if the liberals mess that up they are committing political suicide for the next decade. It's pretty hard to see how demand for natural gas is going to go down againstthe backdrop of coal retirements and LNG Canada. In all likelihood, the reverse is probably true in that natural gas demand will increase significantly as we get to mid decade.
- the backstop - this thing has been trading below tangible book value for so long. Management has clearly articulated they are not deploying use of assets if they are not generating a return. Seems a bit counterintuitive then that it has been trading below tangible asset value - doesn't it?
TCW isn't a short-term play. It is a 4-5 year play where the payoff, if it comes, will be mid decade. Being patient hurts sometimes, but if the above holds true locking in the low cost base is what is going to create substantial value for holders.
Good luck to all those invested - hope it works out for everyone.