The following is an excerpt from Canaccord Genuity’s Morning Coffee newsletter.
Shares of natural gas producers have had a powerful rally over the quarter, as the price of natural gas posted a stealthy rally.
This move has caught traders off guard, as many thought that entering the injection season, the price of natural gas may go no-bid.
With winter only a few months away and home owners ready to switch on the furnace, the no-bid scenario appears to be off the table.
The U.S. natural gas rig count is also down approximately 75% from highs and approximately 50% year-over-year.
While gas storage is still high, it appears that producer’s ability to ramp up production in the event of a cold winter may not be as quick as many had expected. It appears as if these potential events are not being priced into natural gas.
So far, the high quality names such as
Peyto Exploration and Development Corp. (
TSX: T.PEY,
Stock Forum),
Tourmaline Oil Corp. (
TSX: T. TOU,
Stock Forum) and
Celtic Exploration Ltd. (
TSX: T.CLT,
Stock Forum) have been the biggest beneficiaries of the move in natural gas.
Other names that have missed the rally could not be playing catch up include
Bonavista Energy Corp. (
TSX: T.BNP,
Stock Forum),
Crew Energy Inc. (
TSX: T.CR,
Stock Forum) and
Bellatrix Energy Ltd. (
TSX: T.BXE,
Stock Forum) on the intermediate site and
Cequence Energy Ltd. (
TSX: T.CQE,
Stock Forum),
Crocotta Energy Inc. (
TSX: T.CTA,
Stock Forum) and
Delphi Energy Corp. (
TSX: T.DEE,
Stock Forum) on the junior side.