thoughts, page-4

I think one of the biggest headaches for doing a deal such as Montney is if the price assumptions between the buyer and seller vary wildly. I bet this was a big issue for Calima as the futures for most of the last 6 months had a spread of $2+ between 2022 to 2025 (the 1 year forward prices were much higher than mid 2023+)

This is no longer the case as further out delivery contracts have moved up and front end contracts come down as of last month. It's settled at about $4-5 depending on time of the year. This is substantially higher than the assumptions used in the Peters & Co sales pitch of $3.50. So it's very bullish on the value, but also I think for the timing as one more headache is out of the way. Refer red line half way down the page in here: https://www.gasalberta.com/gas-market/market-prices

Another issue I flagged in the past that I think has been the capacity of Montney and firming up expectations on the timing of completion of new capacity projects. Just for background from my research, its interesting that despite Canada now hitting record levels of gas production, the production levels outside of Montney area are almost all falling. Most new projects are focusing on Montney, and even in the northern part of Montney (they're got Calima almost surrounded!!). The depth is shallow enough for low cost production, but deep enough for high pressure if I remember correctly. 2-4x the typical flow rates of Duvernay I believe, and also much thicker reservoirs.

So no surprise that capacity is likely to get a little tight, hence LNG Canada and Coastal Gaslink projects are forging ahead. If you go back through news reports from late last year to early this year there's been a lot of headaches with covid disruptions, claims disputes, and protestors. However the messages from what I can see in the last couple of months is that despite headwinds, substantial progress has been made and importantly the final completion dates are now firming up to late 2022 and early 2023. So this should also be another headwind out of the way.

The team need to stay firm on this one, I think our acreage is worth a fortune. The market cap is already very cheap if you just take into account the oil producing business.