13 January 2015
HY Corporate Credit
Energy
Figure 37: New drilled gas supply breakeyen Figure 3B: Dominion North Point (USDiminBtu)
5 2015 8
2014 —Henry Hub
7
Dominion
6 North Point
gc 3.5 -
3• 5
E ‘Ivvel. N.AseaN aveu ro‘
2.5 - 4
2- 3
1.5 2
1
2 6 8 10 12 1
bed Jan-14 Mar-14 May-14 Jul-14 Sep-14 Nov-14
Sant Awe Mocketar Donn** San* Sloambep Irtrow• 10, Deurche an
On a year-on-year comparison we expect lower demand from normalized
winter weather to be offset by growth in power utility generation demand and
industrial demand. Winter-to-date weather has been quite close to average in
cumulative HDDs, with generally mild weather being offset by a pronounced
cold spike over 12-21 November. This cold spell also triggered freeze-offs but a
return to mild weather resulted in a quick resumption in production to the
highest average of the year at 71.5 bcf/c1 in the week ending 5 December.
[Figure 39: Natural gas supply & demand (yoy change) Figure 40: Storage as % of working gas capacity
2.5 Supply 2.1 Demand 1W% 4135 bcf
2 90%
1.5 80% 1718 bcf
70%
1 0.6
0 60%
0.5
50%
„.; 0 40%
0
ea 0 •-
10Y Range (%)
-0.5 ti I 30% — — — 10Y Avg (%)
-1
.14 1 c2 6 A 20% 2014
-1.5 10% 2014 Forecast
2015 Forecast
-2 0%
Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec
San VS 006414 Arad* eint Sane IS 00(414 Opera* &int
Overall we expect that the market could be balanced and restore normal
storage levels by mid-year if production growth averages 1.3 bcf/d yoy in 2015.
Consequently, our forecast of 2.0 bcf/d yoy growth implies normal storage
achieved by the end of Q1, and building surpluses relative to the 10Y average
(measured by the percentage of working gas capacity) over the balance of the
year. Therefore we lower our 2015 forecast for Henry Hub to USD3.75/mmBtu
with downside risks over the summer in the event of more aggressive
production growth.
Page 44 Deutsche Bank Securities Inc.
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