Thread by @JamieHeard5

Gas thesis - next 5 years. Poke some holes pls. 🧵

We are going from tight (2022) to balanced (2023) to potentially loose (2024) to very tight (2025 - 2026).

Bull points for 22
- Demand impresses
- Freeze off impact grows every year
- LNG > name plate

https://twitter.com/Oliver_Trpcic/status/1478856854239268865?s=20

Balanced in '23?
Bear points
- Supply from Haynesville should be firm and growing (pls someone cap aethon and take them flat!)
- Permian associated back on the growth path
- No new material LNG
- Did $4 gas coax some tier 2/3 drilling?

Bull points 👇

https://twitter.com/gersonjr/status/1486072245676294144?s=20

Loose in '24
Growth continues with domestic demand doing all of the lifting... but change is on the horizon.

LNG Canada, Golden Pass, and 3 Mexico projects poised to launch in '25 + whatever other FID's we get in 2022

Any NT economic hiccup tightens gas (oil prod slows)

2025/6 sees an explosion of LNG growth 2-3 Bcfpd per year for ~3-4 years in a row. NAM LNG goes from 13 to 16 to 20 in quick succession. This has big structural changes.

These include:

(1) NAM gas price now linked to global gas price because can't run LNG at 100% all year anymore. Need to price HHUB to keep some gas at home vs export if weather is cold. If Euro shoots to $30 now HHUB needs to shoot to $24 if balances tight. Upside risk totally diff than today.

(2) consumption of inventory accelerates right when inventory is shifting from tier 1 to tier 2 in many US basins. As supply costs shifts up so does price. Remaining large resource basins get a big win (pending t-port). Montney. Permian.

https://twitter.com/JamieHeard5/status/1466892749290962947?s=20

(3) #2 means resource has scarcity again. This has big implications for energy equities. Last time the market thought resource was scarce CF multiples were 6-8x.

As a result gas equities should enjoy multiple expansion in 2022/3/4 in anticipation of the price and growth in 25/6

The cherry is rotation. Oil is the 2022/3 catalyst with the return of demand. But 2024/5/6 holds more ? for oil than gas (gas needed to support renewable build).

Investors will rotate oil bets to gas bets. But as or more importantly oil companies will rotate to gas.

Lot's of examples of this happening already. $CNQ buying montney assets left and right last two years. $CHK going firmly back into gas after years of drifting into oil. $COP buying Montney. $EOG looking at dry gas again.

These pivots will create resource value in gas assets.

Net/net we should trade a mid term thesis in what has been very short term markets. The NYMEX strip should start to reflect upside premium mid decade as the LNG forward strip drifts up to reflect all of the fixed priced deals and demand being secured.

https://twitter.com/Energy_Tidbits/status/1484207801253564419?s=20

Long resource rich gas companies
Long low supply cost gas companies
Long upside convexity situations 26/27
Long infra / LNG build out 23-26