AEGIS Webinar Notes - Mar 4

[dan_s]

Natural gas
> VERY BULLISH Supply/Demand fundamentals for this summer.
> At the current NYMEX strip, we are on a path to a ngas storage level that in the Real World just cannot happen. To low to make it through a normal winter.
> We will start the refill season late this year and since there is no near-term production growth potential the market will be ~2 Bcfpd undersupplied. U.S. production is down ~3 Bcfpd YOY.
> When summer demand picks up for power generation, ngas prices will need to move higher to lower power generation demand by bringing back lots of coal fired plants. There goes The Green New Deal!
> If ngas storage moves below the bottom of the 5-year range (likely in July/August at current strip) we may see ngas over $4/MMBtu. Over $4 will bring back lots of coal power plants.
> If we need to bring down LNG exports it will take even higher ngas prices to keep the gas in the U.S. Demand for U.S. LNG won't drop off this summer at the current strip.

NGLs
> Even more bullish than ngas
> Propane inventories at extremely low level and inventories were falling even before the Big Freeze.
> Lots of export demand for U.S. propane.
> Propane is already at more than 60% of WTI price, from 20% six months ago.
> Butane prices going up
> Ethane inventories are high but lots of demand coming in a few months

We have plenty of ngas to make it through March and April, but if refills start slow we could see utilities start increasing their bids for summer and next winter NYMEX contracts. "The stars are starting to align for the gassers".

Antero Resources (AR) is the #1 producer of NGLs. It is very important that you know the production mix of your upstream holding.