RE:RE:RE:46.4 MMcf Day - Second Quarter Wembley/PipestoneI don't disagree actually. Just that '24 is almost a write off for Kelt shareholders except for what will come in '25.
But '25 could be another write off if commodity prices don't cooperate - if you recall when they sold Inga, they had few hedges in place in Q1 '20 (I was in Europe, dumped all my oil stocks late January and early February), they were hedging at C$30 in Q2...a little late to the party back then.
There's really minimal benefits to not hedging some (25-50%) oil at all medium term (1 year) but potentially a lot of cost (as commodity price downturns usually only last a year, USUALLY).
NG seems will stay low for a while, Canada will get a boost from LNG but my guess is we're probably looking at $3ish in '25. I'm expecting HH strip to be $3 for '25, so net of typical basis ($1.20), US$1.80 x 1.36 = $2.44 = ~ '23. prices.
You have to realize the US is running a big deficit, interest on the debt is massive, I think they're trying to hold inflation down because they absolutely know they have to get interest rates down asap before ~!@#$ hits the fan - the economy has been running on 2 things - deficits and the stock market - that are simply not sustainable long term.
In that environment, you must hedge. I said it before, $83-$84 was a good place to hedge 25-35% but no, they choose not to. The Kelt way. Which is how they ended up selling Inga IMO.
There are things we are not privy to with respect to Oak for sure. Fundamentally its a good asset but should be on the back burner. They should report it separately, allocate capital to it based on what it generates, continue a little delineation and make a proper plan FUNDED by Wembley/Charlie Lake/Alberta cashflow that should include own plant. Ie 2027.
Pouce Coupe West they should eventually unload, they don't have enough gas processing capacity to begin with, plus they could use the cash to fund more Wembley and Charlie Lake expansion acceleration.
I know PCW is a lot of booked reserves (50-60M) but you simply cannot run dry gas assets on 3rd party plants without an expertise in hedging on top of it (that other 1,400 boepd should be unloaded this year).
Its a little sad for taxpayers (reclamation) but a lot of this high cost dry gas days are definitely numbered (not that PCW is high cost). EQT reported yesterday and what stood out was how fewer wells they're running yet Q3 production will be Q2 + up to 10%. Draw your own conclusions on NG.
Anyway, still long Kelt and enjoy the convo