This morning I have adjusted all five of the forecast/valuation models for the companies that get the majority of their revenues from sales of natural gas and NGLs. I am now using the oil & gas price deck that I showed you on slide 15 of my Saturday podcast (around the 16 minute mark). You can also find it on the weekly Sweet 16 Summary Spreadsheet on the EPG website.
Here are my updated valuations:
> Antero Resources (AR) increased from $70 to $74
> Comstock Resources (CRK) increased from $38 to $40
> EQT Corp. (EQT) increased from $60 to $64 < The largest natural gas producer in the U.S.
> Range Resources (RRC) increased from $48 to $50
> SilverBow Resources (SBOW) increased from $104 to $105
All five updated forecast models will be posted to the EPG website this afternoon.
Ovintiv (OVV) is very close to getting more than 50% of its revenues from natural gas and NGLs. We published an updated profile on it this morning.
All four of the upstream companies in our High Yield Income Portfolio (CTRA, DVN, FANG, PXD) sell a lot of gas and NGLs.
The Mother of All Bidding Wars for natural gas supply is now in the 3rd inning of a 9-inning game and it could go into extra-innings if La Nina does her job.
Updated Valuations for all of the Sweet 16 Gassers - Aug 22
Updated Valuations for all of the Sweet 16 Gassers - Aug 22
Dan Steffens
Energy Prospectus Group
Energy Prospectus Group
Re: Updated Valuations for all of the Sweet 16 Gassers - Aug
Ar unhedged in 2022 deserves a 7 x multiple at 10 NG
Re: Updated Valuations for all of the Sweet 16 Gassers - Aug
From one of very smart members based in New York that has contacts all over this topic.
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European natural gas surged to about 15 times the average summer time price and power smashed through records as the threat of Russian supply cuts ripped through the market and threatened to push the German economy into recession.
Benchmark gas futures rose as much as 21%, while German power surged to above 700 euros a megawatt-hour for the first time. The key Nord Stream gas pipeline will stop for three days of maintenance on Aug. 31st, again raising concerns that the link won’t return to service as planned after the works. Europe has been on tenterhooks about shipments through the link for weeks, with flows resuming only at very low levels after it was shut for works last month.
European authorities have repeatedly raised the possibility of a complete shutdown of Russian supplies as the Kremlin retaliates for sanctions imposed because of its war in Ukraine. That would jeopardize the region’s plan to stash away enough gas for the winter and put huge stress on major economies, while households and industries would be left with large bills.
“The catastrophe is already there,” Thierry Bros, a professor in international energy at Sciences Po in Paris, said. “I think the major question is when EU leaders are going to wake up.” < MY TAKE: The Europeans should hang the Climate Change Wackos that got them into this mess. The Paris Climate Accord is what caused this crap, giving Putin leverage over the entire EU. I pray that Americans wake up soon, or we will go down this same path.
Germany warned Moscow could further reduce gas supplies, and reiterated a call to conserve energy. “We have a very critical winter right in front of us,” German Economy Minister Robert Habeck told public broadcaster ZDF in Montreal, during a visit to Canada with Chancellor Olaf Scholz. “We must expect Putin to further reduce gas.”
On Friday, Gazprom said works are needed in the only functioning turbine that can pump gas into Nord Stream. The pipeline has been operating at only 20% capacity for weeks and European politicians insist the curbs are politically motivated. Russia’s Gazprom PJSC said volumes would return to that level following the latest shutdown.
“Whether the reasoning is true or not, the outcome drives a European gas market that tightens further, and one that is left reliant on demand curtailments to find itself in balance,” said Biraj Borkhataria, an analyst at RBC Capital Markets. “The market may disregard Gazprom’s comments and start to consider whether the pipeline may not return to service, or at the very least may be delayed for any given reason.”
The Dutch front-month contract, the European benchmark, was 17% higher at 286.06 euros a megawatt-hour at 3:22 p.m. in Amsterdam. It rose for a fifth straight week on Friday, the longest run this year. The UK equivalent surged 23% on Monday.
Benchmark German year-ahead power rose as much as 27% to a record 710 euros per megawatt-hour, while the French contract jumped 16% to 840 euros. Coal futures also hit unprecedented levels. The near-term electricity market’s tightness is being compounded by nuclear reactor availability in France at near the lowest in years.
Over the weekend, German leaders said the country may struggle to replace dwindling gas supplies from Russia. The government is targeting a 20% reduction in consumption. While the country is one of the worst hit by Moscow’s cuts with the economy on the brink of a recession, the energy crisis has reverberated through Europe.
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European natural gas surged to about 15 times the average summer time price and power smashed through records as the threat of Russian supply cuts ripped through the market and threatened to push the German economy into recession.
Benchmark gas futures rose as much as 21%, while German power surged to above 700 euros a megawatt-hour for the first time. The key Nord Stream gas pipeline will stop for three days of maintenance on Aug. 31st, again raising concerns that the link won’t return to service as planned after the works. Europe has been on tenterhooks about shipments through the link for weeks, with flows resuming only at very low levels after it was shut for works last month.
European authorities have repeatedly raised the possibility of a complete shutdown of Russian supplies as the Kremlin retaliates for sanctions imposed because of its war in Ukraine. That would jeopardize the region’s plan to stash away enough gas for the winter and put huge stress on major economies, while households and industries would be left with large bills.
“The catastrophe is already there,” Thierry Bros, a professor in international energy at Sciences Po in Paris, said. “I think the major question is when EU leaders are going to wake up.” < MY TAKE: The Europeans should hang the Climate Change Wackos that got them into this mess. The Paris Climate Accord is what caused this crap, giving Putin leverage over the entire EU. I pray that Americans wake up soon, or we will go down this same path.
Germany warned Moscow could further reduce gas supplies, and reiterated a call to conserve energy. “We have a very critical winter right in front of us,” German Economy Minister Robert Habeck told public broadcaster ZDF in Montreal, during a visit to Canada with Chancellor Olaf Scholz. “We must expect Putin to further reduce gas.”
On Friday, Gazprom said works are needed in the only functioning turbine that can pump gas into Nord Stream. The pipeline has been operating at only 20% capacity for weeks and European politicians insist the curbs are politically motivated. Russia’s Gazprom PJSC said volumes would return to that level following the latest shutdown.
“Whether the reasoning is true or not, the outcome drives a European gas market that tightens further, and one that is left reliant on demand curtailments to find itself in balance,” said Biraj Borkhataria, an analyst at RBC Capital Markets. “The market may disregard Gazprom’s comments and start to consider whether the pipeline may not return to service, or at the very least may be delayed for any given reason.”
The Dutch front-month contract, the European benchmark, was 17% higher at 286.06 euros a megawatt-hour at 3:22 p.m. in Amsterdam. It rose for a fifth straight week on Friday, the longest run this year. The UK equivalent surged 23% on Monday.
Benchmark German year-ahead power rose as much as 27% to a record 710 euros per megawatt-hour, while the French contract jumped 16% to 840 euros. Coal futures also hit unprecedented levels. The near-term electricity market’s tightness is being compounded by nuclear reactor availability in France at near the lowest in years.
Over the weekend, German leaders said the country may struggle to replace dwindling gas supplies from Russia. The government is targeting a 20% reduction in consumption. While the country is one of the worst hit by Moscow’s cuts with the economy on the brink of a recession, the energy crisis has reverberated through Europe.
Dan Steffens
Energy Prospectus Group
Energy Prospectus Group
Re: Updated Valuations for all of the Sweet 16 Gassers - Aug
Any idea why Natural Gas would have a 4% loss today on news from Freeport? It would seem that delayed supply would be bullish.
Re: Updated Valuations for all of the Sweet 16 Gassers - Aug
It means more supply in US and less supply to be exported. Since there is more supply in US, US prices fall. Since there is less supply in EU it means their prices go up.
We are shipping every molecule we can and with delayed start up it means there will be less exported and more stuff here in US, lessening any potential shortage here in the US.
We are shipping every molecule we can and with delayed start up it means there will be less exported and more stuff here in US, lessening any potential shortage here in the US.