Canadian Energy. Former sell side scrub, IR punching bag, corporate schmuck.
Joined October 2014
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Canadian Energy Analysis retweeted
I asked AI to write a haiku for $TOU:
Tourmaline drifts low,
Charts whisper unmet promise—
Patience thins like fog.
Canadian Energy Analysis retweeted
Are you serious? I don’t know your CAGR and you don’t know mine — nor do I care. You could be -99% or +9,999% on the year and I’d still engage because this is my sector.
Why not take a minute to wonder why it's just accumulating there? In January of 2026, FOB Vancouver pricing was ~$500/t, that 10 million tonne pile would be $5 billion! So why weren't they selling it then?
There’s a reason that it sits there; because you transport sulphur via rail to Vancouver, and then you need space at a dry bulk terminal. The Port of Vancouver can handle 3 million tonnes a year of sulphur exports. At that rate, if *just* Suncor owned the terminal (they don't), it would have >3 years to export their Suplhur.
But, Suncor isn't the only Sulphur exporter from Vancouver; and they're not the only oil sands mine in Fort Mac. In terms of free terminal space, there's ~2,000 tonnes a day of export capacity, if you're lucky, or 0.73mt/yr, so at that rate it'd take Suncor almost 15 years to sell their Fort Mac inventory.
But Suncor isn't the only Oil Sands mine with Sulphur, nor the only Sulphur producer in Alberta! So they're competing with everyone else for that terminal space.
And to even get to the Vancouver terminal; you need to rail your Sulphur. So you have 3 bottlenecks to get your Sulphur from Fort Mac to the Port of Vancouver; your rail terminal/transloading capacity, your ability to book rail cars, and your actual dry bulk terminal capacity in Vancouver.
And every single Sulphur producer in the province (i.e. everyone with an oil sands mine, refinery, or sour gas plant), is trying to export their Sulphur.
So you end up with highly depressed local prices for Sulphur (why Cavvy/Pieridae did their infamously poor deal with Shell) -- much like AECO gas, it's trapped in the province. You're effectively using TTF pricing to mark AECO reserves in the ground with no ability to land that gas in Europe. It's ridiculous and a fundamental misunderstanding of commodity markets.
Again, I don't know your returns, nor do I care; but if you're going to be so freaking cocky about a claim so bold, and tell me to "google it" -- at least make sure you're right, and have done at least one second-order google search yourself.
Canadian Energy Analysis retweeted
Please for the love of everything holy if you are an E&P do not do anything stupid.
Do not buy back your shares after running your cashflow at $110/bbl WTI. No they're not cheap. The time to buy back stock was every day over the last year.
Do not buy new assets. The time to buy new assets was every day over the last year.
Do not grow. If you couldn't grow over the last year economically, you are almost certainly not going to be able to maintain your new-found production levels when the market reverts. You are not the low cost producer.
Canadian Energy Analysis retweeted
A thread with some thoughts on $GFR Greenfire Resources Ltd.
TL/DR: I think their 12% notes offer a better risk/reward than the equity.
Canadian Energy Analysis retweeted
#natgas - for those who care to read an informed back and forth on natgas fundamentals in L48 medium to long term. Read the whole thread (this is the last post in chain atm). Discussion between @ShaleTier7 and @NextWaveEFT .
Man, I appreciate the view, and a year ago I would have fully agreed with you, and argued against myself with the same "people miss the Tier 2 rock" case, but you're making some fairly dangerous implicit assumptions that I think you'd even agree are not defensible.
Let's say you're right, and those collective plays get to 17 Bcf/d over the next 10 years, while maintaining current production (so 40 rigs, not 30). I'm assuming a generous 17 day cycle time for 615 wells a year, in reality downdip OK is deeper and has a median spud to rig release of 46 days, so I'm giving you a ~30 day drilling advantage. All-in, that's 15,000 locations and 3.2 million acres of undrilled rock, *on top* of maintaining current volumes.
On an 11.5 MMcf/d IP type curve, and a 12 Bcf sales EUR (14 Bcf raw) you're going to get ~17 Bcf/d of growth running 30 new rigs nonstop for 20 years. But you need 15,000 locations. Where are there 15,000 locations in the midcon that are going to do 1.4 Bcf/1K' and IP at >12 MMcf/d raw -- and why haven't they been drilled yet? Assuming it's rich gas at even 30 Bbls/MMcf that's a 415 MBO EUR.
In OK, the IP90 rate for *only wells with an EUR >0.5 Bcf/1K'* was ~5 MMcf/d, so I'm also giving you an 8 MMcf/d IP advantage and ~0.5 Bcf/1K' advantage. IN DJ/PRB it's closer to 2-3MMcf/d IP90 rate, so I'm giving a massive advantage there. In the Barnett the IP90 average is ~4 MMcf/d. In 2022 the Barnett averaged 3 rigs and grew <50 MMcf/d.
If I slash that type curve in half, and cycle times to 23 days (WAY more reasonable), which is still a 7 Bcf EUR, that growth tops out ~7 Bcf/d, not 17 Bcf/d. The economics on that more reasonable type curve at ~3.2 year pay out and 29% IRR at $3.50 realizing 100% HH ($8MM D&C, $9/BOE GP&T OPEX, 55B/M liquids). And you're right, there needs to be more infra, so that 1.6x recycle ratio well also needs to build new plants, compression, etc.; at $4.50 it's more reasonable, 2.0x recycle, 55% IRR, and at $5 it's definitely doable. But it's absolutely not in the money at $3.50, unless you have a problem with these assumptions.
So the statement that "they will grow 10-20 Bcf/d over the next 10 years" assumes that;
- 30 new rigs are added, ontop of maintaining volumes, and there's inventory to support that growth and that we'll drill wells in 17 days instead of the typical 50 days
- IP rates/EURs are going to be competitive with the Texas Haynesville but didn't breakeven below $3 before but will break even at $3.50
- At 35 Bbls/MMcf, that somewhere there are 15,000 locations that have a 2.5MMBOE EUR that *haven't* been drilled yet despite breaking even in the $2s
- There is enough margin to support the infrastructure required to grow, and the cost structure to reach the USGC all-in is $1.50/MMBtu
I think none of these implicit assumption are correct. The Barnett doesn't have inventory that will do 1.5 Bcf/1K', nor do the other plays have 15,000 locations like that. It's a dangerous generalization IMHO.
Canadian Energy Analysis retweeted
Last month in our conversation with @sama, he predicted that most new datacenters will be powered by natural gas – at least for now.
Natural gas has become a crazy story recently, as it's central to both AI and LNG, two huge capex builds with geopolitical implications.
We asked Michael Spyker of HTM Energy to teach us everything we need to know about natural gas. Here's part one of his fascinating deep dive: a16z.news/p/gas-fired-intell…
@ShaleTier7
Canadian Energy Analysis retweeted
Wells underperforming an aggressive type and they are struggling with balancing load fluid and right sizing fracs. Reservoir energy used to recover water initially; stunts long term EURs. Would say a good analogue is something like Veren Karr right east of the overpressure line.
Canadian Energy Analysis retweeted
I am not sure what direction we take the research -- but I do know it feels like our duty to defend MEG against some of the absolute dipshits like this out there.
Here is a thread on it, and here is part of our paper on MEG: htmresearch.s3.us-east-2.ama…
Enjoyed this episode with @Cole_Smead
I think he’s right that $SCR.TO will win the day with $MEG.TO. He thinks they need to bump but they already have “bumped” by $1.80 in the past week as SCR shares moved up.
To me the obvious move is for MEG shareholders to buy SCR too.
Canadian Energy Analysis retweeted
What impact would tariffs have on the profitability of a complex US mid-con refinery who imports the majority of their crude from Canada? This is purely illustrative (not real), but I estimate every US$1/bbl increase in feedstock costs would reduce their operating margin by 5-6%.
Canadian Energy Analysis retweeted
Am I incorrect in reading this as one long, drawn out negotiation that causes a lingering overhang on these countries? In my experience, you can never properly handicap a broad government study or regulatory review of something like this. 🤷♂️
Canadian Energy Analysis retweeted
Western Canada's #naturalgas output reached a new daily record high at 19.6 Bcf on October 30 just before the start of the heating season...For more, see: rbnenergy.com/analyst-insigh…
Canadian Energy Analysis retweeted
Recent US Lower 48 production growth shows gas growing while oil is flat to declining. Is this the beginning of the end for US shale, or a red herring?
The idea is that basins “going gassy” is due to diminished inventory quality or declining reservoir pressure. After a basin goes gassy, oil production tends to decline.
We studied oil and gas growth rates over time in the major US liquids basins. By examining past patterns, we can assess how predictive GOR trends are for future oil growth.
In these charts, red and green lines plot year-over-year gas and oil growth, respectively. Yellow highlights periods where gas growth outpaces oil, indicating an increasing gas-oil ratio (GOR). We’ve plotted well count growth (right-hand scale) to show activity levels.
Periods of increasing GOR (in yellow) generally coincide with declining D&C activity (downward arrows). As fewer wells come online, average well age rises, and GOR increases because older wells have much higher GORs.
For example, a 5-year-old Permian well has a GOR ~3x higher than a 6-month-old well. By comparison, a 2023 Permian well produces just ~10% more gas than a 2017 well after one year.
Let’s look at cases where gas growth exceeded oil growth:
- From 2014-2017 in the DJ, gas kept growing while oil dropped. Oil later grew 83%, and today, production is ~100k bbl/d higher than the 2014 peak.
- In the Williston, gas sharply outpaced oil in 2007-2008. Since then, the basin added ~1.3 million bbl/d. Gas also outgrew oil in 2014-2015, with oil production recovering, peaking at 300k bbl/d more than in 2014. Today (TEN YEARS LATER), production remains around the same as the 2014 peak.
- In the Permian, gas grew from 2019 through 2020, while oil declined. Since then, operators have added ~2 million bbl/d.
Our analysis finds operator activity levels, driven by oil and gas prices, are the main drivers of GOR in unconventional oil plays. The second derivative of well count is key – GOR often rises when activity is flat after a significant increase. While efficiency gains offset much of the rig count decline since late 2022, we’re now seeing the effects of the pulse of wells drilled starting in late 2020.
In other words: rising GOR is primarily an effect of dropping activity levels, not a cause of it.
Canadian Energy Analysis retweeted
Wrapping up two weeks of marketing and have some general impressions on energy investors mindset.
- the oil outlook is frightening some with a 10-20% chance of a repeat of “black thanksgiving” (OPEC fights for market share again) and a 80-90% chance of “okay” pricing in a highly managed and more and more contentious S&D with OPEC conceding share to Brazil, Guyana and to some extent shale. Canada oil growth also hitting some meaningful adds over the next 5 years. Saying all this, stocks are reasonably priced and “flat” is still a good return for most.
- hard to find a 1H25 gas bull, easy to find a 2H25 gas bull. A “real” (2014 style) winter is not priced into gas or gas equities. Worries of global gas oversupply on 27/28 common. 2026 could be great; so could 29/30. Gas volatility is the obvious conclusion. Marketing will matter more than ever.
- domestic demand for gas has impressed; most don’t expect to see it make a step change higher until 28/29/30 (data centres start hitting) nobody had good math on how this could hit internationally; it’s like AI investment won’t exist in Asia?!
- lower interest rates will mean better performance for pipes and royalty stocks; we aren’t done this rerate yet. Utes too?
- there is a wall of worry on potential oversupply on gas in ‘25. “We always see supply immediately respond” is standing in for the obvious apathetic activity set up (rigs, wells, capex are all looking much more like a small growth year at best in ‘25). With high conviction I believe we are talking about how long it’s taking for gas basins to come back to meaningful growth in 2025; Canada included.
The mood is a little ho hum. Commodity length at record lows, and the lack of imagination (or discussion) of what can go right vs what can go wrong, lead me to believe energy stocks have more room to impress than disappoint over the next 12 months. A relatively expensive broader stock market and debt that will no longer offer 5-7% but 3-5% will further highlight the 8–12% FCF + growth yield offered by high quality energy businesses is worth owning.
Canadian Energy Analysis retweeted
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$step.to
A couple of days ago, I sent questions to STEP Energy's IR email address which led to a helpful phone call with STEP's CFO, Klaas Deemter.
It was very generous for Klaas to take the time to personally answer my questions.
Thread on highlights and my thoughts.