Crew Energy: The LNG Canada Wait Is Almost Over

seekingalpha07-12

Crew Energy stock has fallen ~50% due to gas industry challenges and missed Q1 estimates, but analysts predict a potential double in price.Market conditions for gas-focused energy companies have ...

Source Link

Disclaimer: Investing carries risk. This is not financial advice. The above content should not be regarded as an offer, recommendation, or solicitation on acquiring or disposing of any financial products, any associated discussions, comments, or posts by author or other users should not be considered as such either. It is solely for general information purpose only, which does not consider your own investment objectives, financial situations or needs. TTM assumes no responsibility or warranty for the accuracy and completeness of the information, investors should do their own research and may seek professional advice before investing.

Comments

We need your insight to fill this gap

Leave a comment

{"i18n":{"language":"en_US"},"isChannel":false,"data":{"share":"https://ttm.financial/m/news/2450581487?lang=en_US&edition=fundamental","thumbnail":"https://static.seekingalpha.com/cdn/s3/uploads/getty_images/1579919464/image_1579919464.jpg","is_english":true,"pubTime":"2024-07-12 20:00","share_image_url":"https://static.laohu8.com/5a36db9d73b4222bc376d24ccc48c8a4","id":"2450581487","market":"hk","top_or_hot":-1,"title":"Crew Energy: The LNG Canada Wait Is Almost Over","media":"seekingalpha","content":"<div>\n<p>Crew Energy stock has fallen ~50% due to gas industry challenges and missed Q1 estimates, but analysts predict a potential double in price.Market conditions for gas-focused energy companies have ...</p>\n\n<a href=\"https://seekingalpha.com/article/4703349-crew-energy-the-lng-canada-wait-is-almost-over\">Source Link</a>\n\n</div>\n","source":"seekingalpha","html":"<!DOCTYPE html>\n<html>\n<head>\n<meta http-equiv=\"Content-Type\" content=\"text/html; charset=utf-8\" />\n<meta name=\"viewport\" content=\"width=device-width,initial-scale=1.0,minimum-scale=1.0,maximum-scale=1.0,user-scalable=no\"/>\n<meta name=\"format-detection\" content=\"telephone=no,email=no,address=no\" />\n<title>Crew Energy: The LNG Canada Wait Is Almost Over</title>\n<style type=\"text/css\">\na,abbr,acronym,address,applet,article,aside,audio,b,big,blockquote,body,canvas,caption,center,cite,code,dd,del,details,dfn,div,dl,dt,\nem,embed,fieldset,figcaption,figure,footer,form,h1,h2,h3,h4,h5,h6,header,hgroup,html,i,iframe,img,ins,kbd,label,legend,li,mark,menu,nav,\nobject,ol,output,p,pre,q,ruby,s,samp,section,small,span,strike,strong,sub,summary,sup,table,tbody,td,tfoot,th,thead,time,tr,tt,u,ul,var,video{ font:inherit;margin:0;padding:0;vertical-align:baseline;border:0 }\nbody{ font-size:16px; line-height:1.5; color:#999; background:transparent; }\n.wrapper{ overflow:hidden;word-break:break-all;padding:10px; }\nh1,h2{ font-weight:normal; line-height:1.35; margin-bottom:.6em; }\nh3,h4,h5,h6{ line-height:1.35; margin-bottom:1em; }\nh1{ font-size:24px; }\nh2{ font-size:20px; }\nh3{ font-size:18px; }\nh4{ font-size:16px; }\nh5{ font-size:14px; }\nh6{ font-size:12px; }\np,ul,ol,blockquote,dl,table{ margin:1.2em 0; }\nul,ol{ margin-left:2em; }\nul{ list-style:disc; }\nol{ list-style:decimal; }\nli,li p{ margin:10px 0;}\nimg{ max-width:100%;display:block;margin:0 auto 1em; }\nblockquote{ color:#B5B2B1; border-left:3px solid #aaa; padding:1em; }\nstrong,b{font-weight:bold;}\nem,i{font-style:italic;}\ntable{ width:100%;border-collapse:collapse;border-spacing:1px;margin:1em 0;font-size:.9em; }\nth,td{ padding:5px;text-align:left;border:1px solid #aaa; }\nth{ font-weight:bold;background:#5d5d5d; }\n.symbol-link{font-weight:bold;}\n/* header{ border-bottom:1px solid #494756; } */\n.title{ margin:0 0 8px;line-height:1.3;color:#ddd; }\n.meta {color:#5e5c6d;font-size:13px;margin:0 0 .5em; }\na{text-decoration:none; color:#2a4b87;}\n.meta .head { display: inline-block; overflow: hidden}\n.head .h-thumb { width: 30px; height: 30px; margin: 0; padding: 0; border-radius: 50%; float: left;}\n.head .h-content { margin: 0; padding: 0 0 0 9px; float: left;}\n.head .h-name {font-size: 13px; color: #eee; margin: 0;}\n.head .h-time {font-size: 11px; color: #7E829C; margin: 0;line-height: 11px;}\n.small {font-size: 12.5px; display: inline-block; transform: scale(0.9); -webkit-transform: scale(0.9); transform-origin: left; -webkit-transform-origin: left;}\n.smaller {font-size: 12.5px; display: inline-block; transform: scale(0.8); -webkit-transform: scale(0.8); transform-origin: left; -webkit-transform-origin: left;}\n.bt-text {font-size: 12px;margin: 1.5em 0 0 0}\n.bt-text p {margin: 0}\n</style>\n</head>\n<body>\n<div class=\"wrapper\">\n<header>\n<h2 class=\"title\">\nCrew Energy: The LNG Canada Wait Is Almost Over\n</h2>\n\n<h4 class=\"meta\">\n\n\n2024-07-12 20:00 GMT+8&nbsp;&nbsp;&nbsp;<a href=https://seekingalpha.com/article/4703349-crew-energy-the-lng-canada-wait-is-almost-over><strong>seekingalpha</strong></a>\n\n\n</h4>\n\n</header>\n<article>\n<div>\n<p>Crew Energy stock has fallen ~50% due to gas industry challenges and missed Q1 estimates, but analysts predict a potential double in price.Market conditions for gas-focused energy companies have ...</p>\n\n<a href=\"https://seekingalpha.com/article/4703349-crew-energy-the-lng-canada-wait-is-almost-over\">Source Link</a>\n\n</div>\n\n\n</article>\n</div>\n</body>\n</html>\n","isBrief":false,"type":0,"news_type":1,"symbol":"IE00B19Z3581.USD","symbol_name":"Legg Mason ClearBridge - Value A Acc USD","start_time":0,"source_url":"https://seekingalpha.com/article/4703349-crew-energy-the-lng-canada-wait-is-almost-over","article_id":"2450581487","we_media_id":null,"thumbnails":["https://static.seekingalpha.com/cdn/s3/uploads/getty_images/1579919464/image_1579919464.jpg"],"rights":null,"url":"https://stock-news.laohu8.com/highlight/detail?id=2450581487","pubTimestamp":1720785600,"sourceInfo":{"source_id":"seekingalpha","name":"Seeking Alpha"},"weMediaInfo":null,"summary":"The LNG, summer power and AI data center themes for gas By virtue of its southern location, the U.S. is just hotter than Canada. The cooling season kicks into high gear here in mid-May and doesn't let up until November. Here in Mississippi, it's not uncommon to switch back and for into mid-December before moving thermostat to heat for the next couple of months. Not so for Canada, where summer temps are only just arriving and generally much more moderate than in the U.S. So there goes one leg of the thesis for the Canadians.   Canadian temp map  Nor does Canada have the AI potential that the U.S. does. With only about 12% of the U.S. population, Canada just doesn't have the critical mass to be an AI hub. The Kitimat Catalyst That leaves LNG primarily, and that's a story that's just beginn","collect":0,"end_time":0,"defaultTopTitle":"seekingalpha.com","property":[],"viewcount":null,"language":"en","relate_stocks":{"IE00B19Z3581.USD":"Legg Mason ClearBridge - Value A Acc USD","BK4213":"石油与天然气的勘探与生产","LU0251142724.SGD":"Fidelity America A-SGD","BK4144":"石油与天然气的储存和运输","LU0314104364.USD":"MANULIFE GF AMERICAN GROWTH \"AA\" (USD) INC","AETUF":"Arc Resources Ltd.","ENB":"安桥","BK4585":"ETF&股票定投概念","IE0002270589.USD":"LEGG MASON CLEARBRIDGE VALUE \"A\" (USD) INC","IE00B29SXL02.USD":"FIRST SENTIER GLOBAL LISTED INFRASTRUCTURE \"I\" (USD) INC","LU0006061336.USD":"Blackrock US Small and MidCap Opportunities A2 USD","IE00B29SXK94.USD":"FIRST SENTIER GLOBAL LISTED INFRASTRUCTURE \"I\" (USD) ACC","AR":"Antero Resources Corp","LU2449327464.USD":"HSBC GIF GLOBAL INFRASTRUCTURE EQUITY \"AC\" (USD) ACC","LU0742534661.SGD":"Fidelity America A-SGD (hedged)","LNG":"Cheniere Energy Inc","BK4588":"碎股","CWEGF":"Crew Energy Inc.","IE00B7SZLL34.SGD":"Legg Mason ClearBridge - Value A Acc SGD-H","LU0238689110.USD":"贝莱德环球动力股票基金","LU0170899867.USD":"EASTSPRING INVESTMENTS WORLD VALUE EQUITY  \"A\" (USD) ACC","LU2237443382.USD":"Aberdeen Standard SICAV I - Global Dynamic Dividend A MIncA USD","LU0048573561.USD":"FIDELITY AMERICA \"A\" (USD) INC","LU2237443549.SGD":"Aberdeen Standard SICAV I - Global Dynamic Dividend A MIncA SGD-H","IE00B19Z3B42.SGD":"Legg Mason ClearBridge - Value A Acc SGD","LU2237443622.USD":"Aberdeen Standard SICAV I - Global Dynamic Dividend A Acc USD","LU2237443978.SGD":"Aberdeen Standard SICAV I - Global Dynamic Dividend A Acc SGD-H","EQT":"EQT能源"},"translate_title":"Crew Energy：加拿大液化天然气公司的等待即将结束","themeId":null,"isJumpTheme":false,"ttsUrl":null,"symbols_score_info":{"AR":1,"LNG":1,"EQT":1,"ENB":1,"CWEGF":1,"AETUF":1},"content_text":"Crew Energy stock has fallen ~50% due to gas industry challenges and missed Q1 estimates, but analysts predict a potential double in price.Market conditions for gas-focused energy companies have improved in the U.S. but not in Canada, with LNG projects in Canada showing promise.Crew Energy's focus on Montney gas and upcoming projects like LNG Canada and Groundbirch could lead to growth opportunities, making it a buy at current levels.   Windzepher/iStock via Getty Images Introduction It's been almost a year since we covered Crew Energy Inc. (OTCQB:CWEGF)(TSX:CR:CA). In our last article, despite what appeared to be some positive catalysts, we rated it a hold. This looks like a good call on our part, as the stock of Crew Energy has fallen ~50% from the September 2023 level. As a gas producer, Crew has fallen victim to the vicissitudes of the beaten-down gas industry in North America.   Crew Energy price chart (Seeking Alpha) It may have also made some missteps of its own that contributed to the lackluster performance of the stock. Analysts rate Crew as an Overweight, with price targets ranging from $5.00 to $8.50. The median is $6.00, which would be a double from current levels, and implies some sort of catalyst to get there. The company missed estimates bigly for Q-1, 2024 which probably accounts for much of the decline in shares since the release, but forecasts are for a rebound in Q-2. Does that spell opportunity for risk tolerant investors at current levels? It may, and we will look for catalysts that might deliver at least the midpoint of analyst estimates. Market conditions for gas focused energy companies First, let's take a look at the macro picture. Part of the current problem with Crew-and every other gas focused entity, is the sheer volume of gas in storage.   Canadian gas storage (RBN Energy-used with permission) That said, we have seen the gas market rally from the sub-$2.00 depths of a few months ago, and breathe new life into shares of American gas producers like EQT (EQT), Antero Resources (AR) and others. Not so for the gas focused Canadians, like ARC Resources (OTCPK:AETUF) and Crew. What drove that, and why did it miss the Canadians? The LNG, summer power and AI data center themes for gas By virtue of its southern location, the U.S. is just hotter than Canada. The cooling season kicks into high gear here in mid-May and doesn't let up until November. Here in Mississippi, it's not uncommon to switch back and for into mid-December before moving thermostat to heat for the next couple of months. Not so for Canada, where summer temps are only just arriving and generally much more moderate than in the U.S. So there goes one leg of the thesis for the Canadians.   Canadian temp map (Accuweather) Nor does Canada have the AI potential that the U.S. does. With only about 12% of the U.S. population, Canada just doesn't have the critical mass to be an AI hub. The Kitimat Catalyst That leaves LNG primarily, and that's a story that's just beginning to hit its stride. LNG Canada is scheduled to begin taking gas later this year, and will be followed soon by Cedar LNG-2028, Enbridge's (ENB) Woodfibre LNG-2027, and Ksi Lisims LNG-2029. Some of these projects are still in final FID phase, but the odds are, as we close out this decade, the west coast of Canada will be a major LNG export hub, shipping as much as 42 MPTA to points east.   Canadian LNG infrastructure map (RBN Energy-used with permission) Obviously, the short-term thesis for Crew's Montney gas is the 14 MPTA that LNG Canada will require. Fortunately, as the RBN graphic shows, the Coastal Gas link is mechanically complete and ready to begin shipping 2.1 BCF/D westward to LNG Canada. Other pipeline projects are in various stages of construction or approvals. The thesis for Crew Ok, with that preamble out of the way, we can discuss whether Crew makes a viable case for investment at current levels. I am not going to run through a complete detail of the company's assets in this article. That was done in the previous report, which you can access here. Crew is a Montney gas driller that has focused on organic growth (22K BOEPD in 2020 to 31K BOEPD in 2023) with an acreage footprint that offers easy takeaway on the Coastal Gas Link and other trunk line export. The company has done a good job deleveraging over the past couple of years. On the downside, cash flow failed to cover capex in recent quarters, leading to some backsliding on the debt. At half a turn of TTM EBITDA, it is not of particular concern. The company's upcoming capital program focuses on the liquids rich Greater Septimus area to improve the company's production mix-currently 72%. About 1,700 BOEPD of dry gas is currently curtailed, waiting for better pricing.   Crew Energy Investment thesis (Crew Energy) With 2,500 2P drill sites identified, the company estimates it has a 42-year reserve life without further acquisitions. Plans are to keep output in the 29-31K BOEPD range for the next year, with capex in the $165-185 mm (CAD) range. The company's low field cash costs of $10.00 per barrel enables through the cycle operations and facilitates much higher margins in times when gas prices are higher. Even with today's depressed prices, Crew is yielding about 8% on Adjusted Free Cash. This recent chart by Eric Nuttall shows the Free Cash Yield on a list of Canadian and American E&P's.   E&P Free Cash Yield Chart (NinePoint Energy Partners) Crew has also done a good job building out gas processing infrastructure to minimize third-party risk. The Groundbirch Catalyst for Crew Largely untapped Groundbirch is the company's ace in the hole for a transition to rapid growth as LNG Canada ramps up. Groundbirch production is accessed via 3,000-plus meter hz wells, which minimizes direct well costs. These wells deliver 12 BCF per well with IP-30 rates at 12 mmcfd, setting up low F&D costs of $8.29 per BOE and recycle rates of 2.7X.   Groundbirch (Crew Energy) Risks Canadian companies experience stranded production risk, and more pipelines will be needed to efficiently transport Montney gas to markets. Crew manages some of its marketing risk through hedging, as per the slide below.   Crew Hedging and Marketing (Crew Energy) Wildfire shut in risk is also increasingly present in Canada. Your takeaway Crew currently trades at attractive multiples. EV/TTM EBITDA-4.2X and flowing bbl of $22K. Those numbers put Crew in the Buy category for investors looking for exposure to an eventual move higher in gas prices. I think the prerequisites are in place for that to happen over the next year and deliver the mid-point of analyst estimates.   Small cap Canadian E&P's (Seeking Alpha) A comparison with other small Canadian operators shows Crew to be a little more highly valued than a couple of other operators we follow, but not dramatically so. Crew reports on July 31st, and if they hit targets, could start a move higher.  Editor's Note: This article discusses one or more securities that do not trade on a major U.S. exchange. Please be aware of the risks associated with these stocks.","kind":null,"is_publish_news":true,"is_publish_highlight":false,"is_publish_live":false,"is_publish_wemedia":null,"editions":null,"column":"","sentiment":"0","news_tag":"","news_rank":0,"symbols":[],"gpt_button":1},"commentList":[],"isCommentEnd":true,"newsSizeData":{"likeSize":0,"commentSize":0,"repostSize":0,"favoriteSize":0,"likeStatus":false,"favoriteStatus":false},"APP":{"userAgent":"Mozilla/5.0 AppleWebKit/537.36 (KHTML, like Gecko; compatible; ClaudeBot/1.0; +claudebot@anthropic.com)","isDev":false,"isTTM":true,"deviceId":"web-server-community-laohu8-v3","version":"4.29.2","shortVersion":"4.29.2","platform":"web","vendor":"web","appName":"ttm","isIOS":false,"isAndroid":false,"isTiger":false,"isTHS":false,"isWeiXin":false,"isWeiXinMini":false,"isWeiBo":false,"isQQ":false,"isBaiduSwan":false,"isBaiduBox":false,"isDingTalk":false,"isToutiao":false,"isOnePlus":false,"isHuaWei":false,"isXiaomi":false,"isXiaomiWebView":false,"isOppo":false,"isVivo":false,"isSamsung":false,"isMobile":false},"href":"/m/news/2450581487"}