Aegis Fundamentals & Strategy Overview

Natural Gas (Henry Hub)

Summer 2025 - Neutral

Fundamentals

• The rapid pace of storage injections continues as we have consistently built faster than the five-year average
  • Inventories now stand 174 Bcf over the 5-yr average
  • A combination of milder weather, higher renewable generation and lower gas burns due to high prices are hastening inventory builds
• Plaquemines & Corpus Christi LNG expect to add nearly 4 Bcf/d of additional LNG demand by December 2025
  • Plaquemines has been ahead of schedule on Phase 1, taking over 3.0 Bcf/d of gas

  • Plaquemines has update guidance on their Phase 2 construction timeline: bringing forward completion by about a year. The updated timeline has the facility up to 3.66 Bcf/d of capacity by year end 2025

• Golden Pass LNG has guided first feed gas in October; three months ahead of previous guidance
  • The facility has taken its first gas, signaling the start up process is progressing
• Concern about supply meeting anticipated LNG demand growth by winter
  • However, Haynesville has added 10 rigs since March, up to 40, but analysts estimate more rigs are needed to keep production growth in line with demand

Strategy

• Aggressively hedge on jumps in price
• We continue to recommend swaps over collars before supply/demand fundamentals become tighter this winter

Winter 25/26 Onward - Bullish

Fundamentals

• While we remain bullish, we have seen a decline of 31% in Winter25/26 price since a peak on March 10 due to weak supply/demand fundamentals throuhgout Summer
• LNG demand growth really starts to ramp in the 2H 2025 and continues to grow rapidly into 2027
• Current estimates are for nearly 20 Bcf/d of LNG demand by the start of 2027
• Permian supply will grow with new pipe in late '26 and '27, but more supply is likely needed
  • Even after the recent oil volatility there remains concerns about furture crude production growth
  • Associated gas supply isn't expected to change trajectory unless oil prices materially move lower from $60
• There becomes a "call on Haynesville" to bridge the gap between new LNG demand and supply

Strategy

• Layer in protection on front of curve rallies (while we are bullish, price could be dragged lower before we get to these tenors)
  • By waiting you may be forced to hedge at lower prices before strip rallies
• Even though call skew has weakened take advantage of upside participation with option structures

Crude (WTI)

Bal 25 - Bearish

Fundamentals

• Price has retraced to the low $60.00s as sentiment is overwhelmingly bearish 
• OPEC+ policy has changed to no longer act as the balancing item in the global oil market
  • The group intends to hasten their supply unwind further with all 2.2 MMBbl/d of voluntary cuts to be unwound by the end of September 2025
    • Voluntary cuts were originally scheduled to be unwound by 140 MBbl/d each month from April 2025 through September 2026
    • These barrels come at a time when the market already looks oversupplied for 2025
• Expectations remain for supply to outpace demand in 2025
  
  • In its latest monthly report EIA forecasts global oil balances will be oversupplied by 1.64 MMBbl/d 
  • However, inventories have been holding below the five year average so far this year on surprising strength in the physical market

Strategy

• Hedge into strength via swaps to protect as much cashflow as possible

Cal 26 - Bearish

Fundamentals

• Expectations of global oversupply persist throughout 2026, building upon the 2025
  • The EIA's August STEO forecasts a global oil surplus of  1.45 MMBbl/d
• The formal OPEC+ policy to reduce production will remain in place even after the 2.2 MMBbl/d of voluntary cuts are unwound

Strategy

• Systematically add hedges when economically viable
• Utilize swaps to protect as much cashflow as possible