Liquids-Rich Companies Will Weather the Dry Spell: Luc Mageau

The Energy Report: With Brent Crude trading at about US$110 per barrel (bbl) and natural gas futures trading at 10-year lows, are you leaning more heavily toward oily names than you did in 2011? Luc Mageau: Absolutely. In fact, although gas prices have been reduced to around the $2.50 level, it still seems like the picture could get worse before it gets better. Current natural gas storage is at ~3.5 trillion cubic feet (Tcf); that's a full 0.4 Tcf fuller than an average winter. The reason we have such a glut of gas is the winter has not been co-operating. Basically, we rely on winter to post the bulk of the withdrawals throughout any given year—in the last few years, we have truly been relying on a cold winter to bail us out of the storage glut and we've been lucky. On average we normally see ~150-200 billion cubic feet (Bcf) of gas withdrawn per week. With the warm weather we've been getting, our average withdrawals from storage have been closer to 80-100 Bcf during the 2011/2012 wi...