Kelt Exploration Ltd T.KEL

Jamie Heard on AECO strip

[teashade]

https://x.com/JamieHeard5/status/1803849082638651398

Worth a read as to what is weighing on the strip. I don't think prices recover to C$4 as he suggests without a supply response, but in the NG market sellers seem to come before buyers in the queue

I'm not certain NG production growth comes in at his sub 1BCF/d numbers with so many production companies ramping up. His own employer TOU has substantial growth lined up comparing 2026 to 2024 guidance.

 

Why so cheap? It's the 24 hedging programs. Operators have taken advantage of the contango and squared away open AECO exposure with 2024 - 2025 blended swaps. The resulting strike isn't "that bad" vs most operators cost structure and definitely an improvement vs current cash AECO. But there isn't a large enough spec market to keep 2025 propped up (+ there would be increasing worry of 2025 oversupply if they did!)

[PabloLafortune]

I'm not familiar with the Canadian natgas market but in the US, I opine as follows: - storage is gradually coming down. This morning's EIA report shows we're 314 BCF above '23 and 528 above the 5 year.  We have 11 weeks (reports) to labor day so I think by then storage will be less than '23 and maybe a bit more than 5 year. - Production is starting to creep back up again