Canadian analyst boosts natural gas price forecast Sep 18, 2000 04:18 PM ET

Reuters

CALGARY, Sept 18 (Reuters) - A prominent Canadian energy analyst sharply increased his domestic natural gas price forecast on Monday, a move that led to loftier target share prices for many of the country gas producers.

Peter Linder, analyst with Research Capital Corp. in Calgary, said wellhead gas prices could average C$4.75 per thousand cubic feet this year and as much as C$5.50 in 2001 because of continuing fears of a supply squeeze this winter.

Those numbers compare with his previous assumptions of C$4.50 per thousand cubic feet in 2000 and C$5 next year.

Spot gas in Alberta was quoted at a record C$6.90 per thousand cubic feet on Monday, compared with C$3.24 last year.

"(The new forecast) is based on the supply concerns, falling production, very low inventories, strong demand, and once Alliance (Pipeline) comes on, the market will clearly recognise just how tight western Canadian supply is," Linder said.

The C$4.5-billion ($3-billion) Alliance line to the thirsty Chicago market from northeastern British Columbia is slated to begin pumping 1.3 billion cubic feet of gas a day within the next few weeks.

But analysts have said they expected a supply shortfall initially, which could result in large volumes being shifted to the new line from other systems, such as the TransCanada PipeLines Ltd. mainline.

"There will effectively be no increase in export volumes," said Linder, who was once known in the Canadian oil patch as perennially bearish on gas prices.

He recently said he believed Canadian gas could at times spike up to C$8 per thousand cubic feet.

The analyst said he increased his 12-month stock-price target on Alberta Energy Co. Ltd. , one of Canada's biggest gas producers, to C$100 from the previous C$90. Other strong buys included Anderson Exploration Ltd. , which Linder now expects will hit C$60 a share, up from his previous C$55 target, and Bonavista Petroleum Ltd. , which now has a target of C$45, up from C$40.

Alberta Energy was trading off 25 Canadian cents at C$66 on Monday, Anderson was up 35 Canadian cents to C$33.50 and Bonavista was off 30 Canadian cents at C$30.35.

"You start putting in a C$5.50 gas price, and you get basically C$10 cash flow per share for Anderson for next year. Their fiscal year starts on October 1, so that's 12 days away," he said.

Previously, Linder had forecast Anderson's cash flow per share, a key indicator of an oil-company's ability to fund its exploration and development, would ring in at C$8.78 in 2001.

-- Martin Thompson (mthom1927@aol.com), September 19, 2000