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Razor Energy Corp V.RZE.H

Alternate Symbol(s):  RZREF | V.RZE.WT.H

Razor Energy Corp. is a Canada-based junior oil and gas development and production company, focused on acquiring, enhancing and producing oil and gas from properties primarily in Alberta. The Company produces primarily light oil, natural gas, and natural gas liquids (NGL) in Alberta. Its operations include Swan Hills/Kaybob Region and Southern Alberta Region. The Company's production and development are focused on light oil in Swan Hills Beaverhill Lake and Kaybob Triassic Montney formations. Its production and development are focused on medium gravity oil in the Glauconite formation and natural gas in the Mannville Group. The Company produces various grades of oil, including Swan Hills Sweet/Mixed Sweet Blend (MSW), Peace Sour/Medium Sour Blend (MSB) and Bow River South/Western Canadian Select (WCS). Its Swan Hills/Kaybob Region has over 250,600 (174,100 net) acres of land held by production. Its Southern Alberta Region has around 78,200 (49,600 net) acres of land held by production.


TSXV:RZE.H - Post by User

Post by hawkowl1on Jul 19, 2022 9:24am
284 Views
Post# 34833883

Alberta Power market averaged $122/MWh in Q2/22, up 17%

Alberta Power market averaged $122/MWh in Q2/22, up 17%

TDW on Alberta power market

 
Alberta Power: Market Remains Very Constructive in Q2/22 Average Q2/22 Prices of $122/MWh the Highest Since 2013 
 
We are updating our estimates for the Alberta-based Independent Power Producers (IPPs) to reflect actual Q2/22 power prices and estimated asset-level generation. Our recommendations for Capital Power and TransAlta are unchanged; we are modestly increasing our target prices for both equities. Exhibit 1. Recommendation Summary Current Target Price Dividend Total Risk Company Ticker Price Previous Revised Yield Return Rating Rating Capital Power Corp. CPX-T $46.34 $52.00 $53.00 4.7% 19% BUY MED TransAlta Corp. TA-T, TAC-N $15.07 $17.50 $18.50 1.3% 24% BUY HIGH Note: Priced July 15, 2022 after market close Source: Refinitiv, company reports, TD Securities Inc. estimates Capital Power Corp.'s share price has increased by 17% YTD. TransAlta Corp.'s shares are up 7% since the end of 2021. These compare with an average increase of 1% and 3% for Canadian Renewable IPPs and traditional Canadian utilities, respectively. Over this period, the S&P/TSX Composite has declined by 13%. We believe both Capital Power and TransAlta remain well-positioned to compete in Alberta's energy-only electricity market; we reiterate our BUY recommendations for both equities. Alberta power prices averaged $122/MWh in Q2/22, up 17% from an average of $105/MWh in Q2/21. For context, prices averaged $102/MWh in 2021 (the first year following the December 2020 expiry of Alberta's six remaining coal-fired PPAs). We believe that offer strategies also remained very competitive in Q2/22. AECO natural-gas prices averaged $6.84/GJ in Q2/22, up from $2.92/GJ in Q2/21. With most of Alberta's coal fleet having converted to natural gas, gas now sets the system marginal price in the vast majority of hours (Q2/22 not yet available, but 93% in Q1/22). Alberta's 2022 carbon price of $50/tonne implies carbon costs of approximately $26/MWh for the average remaining coal-fired generator, which should be reflected in offers. We have increased our average Alberta power price assumptions (before asset-level adjustments) to $115/MWh for 2022 (from $95/MWh previously) and $90/MWh for 2023 (from $81/MWh previously). Our assumed 2023 price is approximately 5% below recent forward prices. The impact of these increases on our estimates is mitigated by power hedges put in place by both companies for their anticipated output in those periods. We have also made adjustments to dispatch, O&M, and fuel-cost assumptions for some units. The impact of higher nearterm power price assumption on our target prices is mitigated by more conservative assumptions regarding carbon pricing stringency. For both Capital Power and TransAlta, our revised 2022 estimates are near or above the high end of management guidance (in both cases, guidance was last updated in May 2022)

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