Have to agree things are looking good for CTP. East Coast...

Have to agree things are looking good for CTP.

East Coast wholesale gas prices doubled over the past month, with spot prices in Victoria soaring to $58/GJ last week, before dropping back to $22/GJ in the afternoon.

The rise in prices are tied to global gas prices hitting multi-year highs in the northern hemisphere, with "...European and US benchmarks surging due to high carbon prices, outages, heat waves and strong demand from China's economic rebound."

S&P Global Platts JKM, the Asian benchmark used by the ACCC's netback price estimates, marked August deliveries at $14.247/MMBtu, the highest price for the northern hemisphere summer since 2013.

JKM at $14.247/MMBtu translates to a Wallumbilla netback of A$15.92/GJ and A$18.36/GJ delivered to Melbourne.

ACCC Chair Rod Sims calling for more supply to be brought onto the market.

“Clearly more supply is what is needed in the market. We need more gas exploration and production. We need more pipeline capacity as well. If we don’t get that, we’ll end up importing it.

“Whether you import it or whether you get it from the LNG players, you are going to have to pay international prices. The only way you can get below that is if you have a lot of gas, and that means more production.”

Meanwhile S&P Global Platts Analytics says JKM continues to find support from the European TTF market and Asian demand.

"Persistent Chinese import strength, strong power-sector driven LNG demand in South Korea and flat Asian LNG supply year on year is expected to grow nearly 100 million cu m/d through the balance of summer".

Forward estimates of the ACCC netback price published at the start of the month expected an average of $15/GJ through to the end of Q1 2022.

Higher prices bode well for explorers like CTP. It's fixed price sales agreements average $8-9/GJ city gate equivalent, and the decrease in fixed price volumes by 55% in 2023 opens the opportunity for GSAs at a higher average. This, in addition to increase production from the Amadeus farm out positions CTP well with a prolonged increase in gas prices.

Sources:
https://www.accc.gov.au/regulated-infrastructure/energy/gas-inquiry-2017-2025/lng-netback-price-series

https://www.spglobal.com/platts/en/market-insights/latest-news/natural-gas/070721-australian-domestic-natural-gas-prices-jump-on-winter-demand-outages

https://amp.theaustralian.com.au/business/mining-energy/scott-morrison-urged-to-cap-gas-exports-to-secure-price/news-story/4c915762faa2730d964fc29e63eeaa52