Canadian Wildfires Introduce Downside Risks for Canadian Midstream in Q2

Canadian wildfires in the Western Canadian Sedimentary Basin have shut in likely in excess of 300,000 barrels per day of production, per Rystad Energy, primarily across the Montney and Duvernay plays. The number of wildfires are about 17% above 10-year averages year to date with 944 fires, but the area burned is nearly 10 times 10-year averages year to date with nearly 500,000 hectares, according to the Canadian Interagency Forest Fire Center. The impact on our Canadian midstream firms (Enbridge, Keyera, Pembina, and TC Energy) is likely to be notable for second-quarter earnings but not material enough to result in fair value estimate or moat changes at this time.