RE:Basis Deals - TOU vs PEYThe answer to your question,it is the same some analysts asked darren gee in March 2021, hope it soothes everyone nerves, no doubt, next few quarters are bad, but we would be slowly getting to normal by year end. Kindly read Darren Gee response:
It's obviously much more difficult for investors to look through now because we've got so much diversity in our marketing. We had to obviously put that in place. We're not just as simple as selling gas at AECO anymore. But you're right, the -- it's a bit tricky to try and predict because, of course, the AECO prices trade somewhat independently of NYMEX. And that's that basis differential between those 2 markets that sort of floats around. And so at any point in time, when we talk about what's going to be the market diversification cost for that next quarter, it's based on the future strip for both of those commodities as we're looking forward. And so it moves around a little bit. But I think we're obviously seeing some very strong pricing in Q1. And I think our market diversification cost in Q1 won't be as high as they've historically been. They will look pretty good. And then as we enter into summer, there's some softer prices in both NYMEX and AECO. And we'll see that market diversification cost go up a little bit as we see some softening in the summer NYMEX price. Unless, of course, we see strength in the NYMEX relative to weaker AECO prices, which we could possibly see because the TSP was not extended into the summer of '21 for the Alberta market. So we could see some weakness in volatility there. And storage numbers in the U.S. look like they're headed pretty low. And so if the refill isn't as aggressive as you might predict, then we could see some strength in the NYMEX, in which case, our diversification costs will fall for the next summer, a couple quarters. Right now, we're forecasting them to be the higher parts of the year. And then really, with Q4 of '21, that's when everything starts to fall away, these old basis deals, more and more of them start to fall away, we get a much tighter price. And then entering into 2020, our prediction for the year in '22 is that we would get very close to the current AECO realized price or the current delta really between NYMEX and AECO. So effectively market diversification costs in '22 we're forecasting right now would be very little, if anything, at all. And then actually into 2023, we would actually start to benefit from a lot of the diversification, getting actual prices realized that are superior to that of what the AECO forward strip shows. So it's all this sort of layering and smoothing approach, obviously, to the diversification and then hedging on top of that. But realized prices look like they'll be getting back to normal, as you say, by sort of the fourth quarter of '21 and into all of '22. And then we look to do a better job than just the local AECO market beyond '22 into '23 and after that. So hopefully, that helps a little bit. It's hard to pin it down, of course, because it's moving every day with the forward curves. -----------------------