Propane is soaring

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Fraser921
Posts: 2955
Joined: Mon Mar 22, 2021 11:48 am

Propane is soaring

Post by Fraser921 »

On September 2, the propane to WTI ratio rose to 72% as the price of propane increased and traded as high as 120 c/gal. The ratio is slightly below the 5-year maximum and more than 20% higher than last year this time.

Meanwhile, the governor of Michigan is trying to shut down a pipeline that brings propane from Canada into Michigan and the Midwest.

You can’t make this stuff up.

From an investment standpoint, higher NGL liquids helps Antero Resources AR
dan_s
Posts: 34471
Joined: Fri Apr 23, 2010 8:22 am

Re: Propane is soaring

Post by dan_s »

Natural gas and NGL prices are WAY ABOVE where they were in 2019 pre-pandemic. AR and EQT still trading below book value is impossible to justify. Even the Wall Street Gang has to notice this soon.

For those of you not familiar with how conservative the accounting rules are for US upstream companies, AR, EQT and all of the gassers were forced to record HUGE impairment charge in 2020, writing down the book value of their producing properties to fair value ("mark-to-market") based on extremely low gas and NGL prices in 2020 (~$2.00/mcf). Therefore, these companies have asset valuations that are now half of what those assets PV10 valuation will be at the end of this year.

An audited upstream company should never trade below book value during a booming commodity price cycle like we are in now.
Dan Steffens
Energy Prospectus Group
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