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Jeremy McCrea, CFA Profile picture
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Dec 30, 2022 • 4 tweets • 3 min read
NYMEX natural gas prices have recently slumped, but could this reverse? The U.S. has relied on ~5.5 bcf/d of 'cheap' Canadian natgas imports but that may soon end

With W. CDN natgas storage at record lows now (only 64% full), the AECO / NYMEX diff is nearly gone.

A thread: Image
2/ AECO prices are now C$6.85/mcf (to incentivize natural gas to stay in Canada). Previously, when W. CDN storage levels were this low (2019), we saw very little CDN natural gas exports. We likely begin to see a drop in exports, that should be bullish for NYMEX natgas pricing Image
3/ Despite CDN natural gas production at record levels (16.8 bcf/d and ~1 bcf/d higher than last year), summer maintenance issues and other factors have yet to contribute to higher CDN natgas storage levels #AECO #LNG #energy Image
4/ Canadian natgas consumption is ~1 bcf/d higher than last fall/winter, taking up much of this excess production we’ve seen. Overall, good news for many CDN gas-weighted operators and a meaningful reversal from the summer time AECO pricing volatility

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More from @JeremyMcCreaCFA

Jeremy McCrea, CFA Profile picture
Nov 18, 2022
Thread: Why has Oil & Gas been so volatile? Since 2018, the majority of all CDN E&P buying has come from high-turnover funds. Thus any WTI weakness had them rushing to the exits. Encouragingly, low-turnover funds have become the main buyer in 3Q

More energy inst. buying trends:
2/ As CDN Oil & Gas names hinted at bigger dividends & more growth post Q2 earnings, we saw these 'style' of funds be the dominant buyer in Q3. This theme likely continues as balance sheets allow for more ‘shareholder friendly’ items and growth into 2023 #WTI
3/ Importantly, some of the largest global funds are now picking up CDN Oil & Gas names. Given their AUM size, it can take multiple quarters to establish a position, suggesting there is more large block buying to come in future quarters #energy #CrudeOil #OOTT
Read 6 tweets
Jeremy McCrea, CFA Profile picture
Oct 26, 2022
Thread – The unemployment rate within CDN Oil & Gas continues to drop, now at 2.5% (w/ Alberta even lower at 1.8%). This budget season, even if mgmt teams wanted to spend more, finding technical staff is increasingly more difficult, likely capping any large capex plans #yyc #yeg
/2 There’s been quite the hiring spree over the last couple years, with jobs in the Exploration & Production group rising ~20% since Jan 2020. That said, levels have plateaued now, even while WTI oil and NYMEX natgas prices have increased, showing the difficulty in hiring #oott
/3 The issue is a declining E&P labour force, now down 6% from recent highs, (at 104k vs. 111k last June) and more meaningfully below 2016 levels. Finding qualified geologists / engineers is becoming increasingly challenging
Read 4 tweets
Jeremy McCrea, CFA Profile picture
Oct 10, 2022
Could we see a NYMEX natural gas price spike this winter? The U.S. just might not be able to rely on 'cheap' Canada natgas imports w/ western CDN storage near record lows (at only 71% full).

A thread on CDN natural gas dynamics #AECO #oilandgas #LNG #alberta Image
A number of issues why CDN natgas storage is low, but we've already begun to see a reversal, with AECO difs improving dramatically over the last week (now at US$2.50/mcf). Last time storage was at current levels, the differential went on to reach $0.50/mcf a year later; 2/ #NYMEX Image
Despite CDN natural gas producing at record levels (17.2 bcf/d and ~1 bcf/d higher than last year), maintenance issues and other factors have yet to contribute to higher CDN natgas storage levels; /3 Image
Read 5 tweets
Jeremy McCrea, CFA Profile picture
Sep 30, 2022
A thread – Our takeaways from the Dallas Fed Energy Survey (and how sentiment has changed from prior surveys)

Costs: Expected Finding & Development costs have slowed. Only 66% of Oil & Gas companies surveyed expect costs to rise (vs 72% last quarter) #oott #WTI #oilgas #invest
A thread –Dallas Fed Energy Survey
The drop in WTI has ‘Company Outlooks’ falling quite hard from prior quarters – with only 39% reporting a better outlook (vs. a high of 82% seeing a positive outlook in 1Q22). #oott #oilandgas #WTI
A thread –Dallas Fed Energy Survey
The Uncertainty Index continues to move higher and now back to levels seen at 2Q20. This ‘uncertainty’ likely keeps upcoming capex budgets muted, putting a lid on new oil and natgas supply for 2023 #oott #WTI #crude
Read 9 tweets
Jeremy McCrea, CFA Profile picture
Aug 22, 2022
Thread (1/5) Why have Oil & Gas stocks been so volatile? Since 2019, nearly all buying of CDN midcap E&Ps has come from high-turnover funds. Thus the first sign of WTI weakness had them rush to the exits. Encouragingly, low-turnover funds were the main buyer in 2Q buying $1.4 bln Image
Thread (2/5): Since 2019, most buying of CDN midcap Oil & Gas names have been from energy focused funds. Q2 was the moment where the 'Generalist' investor has finally come back (and in size), buying $1.1 bln! The sector is 'investable' again #energy #yyc Image
Thread (3/5): Importantly, some of the largest global funds are picking up CDN midcap Oil & Gas (finally). Given their AUM size, it can take multiple quarters to establish a position, suggesting there is more large block buying to come in future quarters #yeg #energy #CrudeOil Image
Read 5 tweets
Jeremy McCrea, CFA Profile picture
Aug 9, 2022
Thread (1/5): EIA Short-Term Oil Outlook Highlights

A top concern we hear from investors is the "Backwardation in the oil strip". This price reflects a recovery in crude inventories but as the EIA revisions show today, they’re back to revising inventory levels lower again #oott
Thread (2/5): EIA Short-Term Oil Outlook Highlights

Despite recession fears & high gasoline prices, global oil expected consumption was left essentially unchanged (OECD countries revised 0.2% lower; offset by non-OECD countries higher) #crude
Thread (3/5): EIA Short-Term Oil Outlook Highlights

Although no changes were made m/m, oil supply has still been revised down from Jan forecasts. This is despite WTI prices moving higher since then. Overall, shows the discipline with producers and not rushing back to drill #oott
Read 5 tweets

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