From National Bank research this morning: More on Euro gas Energy market analysis from Energy Flux’s (EF) Winter Stress Tester suggests a manageable outcome for the European gas market requires nearly every variable—weather, LNG inflows, industrial demand, Russian LNG availability, renewables and French nuclear generation—to cooperate.
Under current conditions, end-March inventories could fall below historical lows. According to EF (and others have suggested similar), the resulting risk is heavily skewed toward tighter supply, demand destruction and higher TTF prices, with even modest adverse developments potentially pushing European storage depletion into unprecedented territory.
• European natural gas prices have now reached €70/MWh for the first time since January 2023 as markets belatedly recognize that the Hormuz crisis could further constrain global LNG supplies throughout winter. EF points out that QatarEnergy’s extension of force majeure to November triggered a broader repricing, lifting the entire October–March TTF strip roughly 15% over the past month to €50–67/MWh;
• As previously noted in the morning commentary, Europe’s vulnerability is compounded by weak storage: Germany was only 53% full on August 30 and would require a record nine-week injection effort to approach its revised 70% target, while historical refill rates suggest just 59–63% by October 1 EF suggests. EU storage, at 65.1%, is projected to begin winter between 67.6% and 74.3%, making even 80% unattainable (Cheniere Energy has taken a similar view);
• As stated last week, TNZ remains ideally positioned to benefit from higher European gas prices as the company continues to see margins expand significantly as European volumes increased sequentially in Q2, which should further improve as production ramps-up through 2H26. We have modestly revised our estimates to align with the growth outlook, slightly ahead of our previous forecast, supported by management commentary indicating preliminary July corporate production averaged 23 mboe/d (90% European natural gas). We estimate Tenaz ‘27/’26 volumes and cash flow to increase by ~45% and ~70%, respectively, while leverage falls to in/around nil next year on our estimates on the back of strong FCF (from 0.7x D/CF ’26)….the stock trades for ~2.5x EV/DACF ’27 which we continue to think is compelling.