The AECO story this year is straightforward, and the market has largely converged on it: LNG Canada is pulling gas out of the WCSB for the first time, the chronic basis discount to Henry Hub has narrowed from roughly -$3.00/MMBtu toward -$1.00 to -$1.50, and Phase 2 — another ~2.0 Bcf/d of feedgas demand, fast-tracked through Canada's new Major Projects Office — is the next catalyst analysts are underwriting as the move that gets AECO to something close to parity. Montney gas names are being framed as a re-rating story, trading at 3-5x EV/CF against 6-10x for U.S. LNG-leveraged peers, with the gap held up as 40-80% of unpriced upside.

My view: that framing skips over the one number that actually determines how much of this price recovery producers get to keep — the roughly 200 drilled-but-uncompleted wells sitting in the Montney, double the historical norm. The market is pricing a supply-demand rebalancing as if supply is fixed. It isn't. It's parked.

A DUC well isn't a well that can't produce. It's a well that a producer has chosen not to complete because the netback wasn't there yet. That's a capital-allocation decision, not a geological constraint, and it's reversible in weeks, not years. AECO spot has already moved from negative territory in late 2025 to the C$1.70-C$1.75/GJ range by early June, and forward curves are pricing further improvement as LNG Canada ramps and Phase 2 sanctioning approaches. Every incremental dollar of AECO recovery makes the economics on those 200 DUCs better. At some point — and I'd argue it's closer than the current re-rating narrative assumes — completing them becomes the highest-return capital decision on the table for names sitting on that inventory, and they get turned to production fast.

That's the mechanism the bull case is underweighting. The Montney re-rating thesis treats the current supply overhang as evidence of capital discipline, a sign producers have gotten smarter about not chasing dry gas. It's also, more simply, an options position. Every producer holding DUCs is holding a call option on AECO with a strike price close to today's forward curve, and options get exercised when they move in the money. If AECO firms the way LNG Canada Phase 1 ramp-up and Phase 2 sanctioning both suggest it will over the next 12-18 months, the DUC inventory doesn't sit on the sidelines cheering the price recovery — it becomes the supply response that caps it. Deloitte and the Alberta Energy Regulator are both projecting 2026 AECO averages as high as C$3.20-C$3.80. Those numbers assume production discipline holds through the recovery. Two hundred parked wells is exactly the mechanism by which it doesn't.

None of this breaks the long-run bull case. LNG Canada Phase 2, Cedar LNG, Woodfibre LNG, and Ksi Lisims collectively represent close to 4 Bcf/d of new demand by the end of the decade, and that demand is real and largely locked in. What it does is complicate the timing. The names getting bid up today on a basis-closure re-rating are being priced as if the DUC overhang is a rounding error. I don't think it is. I think it's the single best explanation for why AECO has repeatedly disappointed the more aggressive recovery forecasts over the past eighteen months, and I'd expect the same dynamic to reassert itself the next time the forward curve gets ahead of itself.

If I'm right, the trade isn't "avoid Montney gas." It's "be more skeptical of the names and the timelines priced for a clean, uninterrupted basis-closure story, and more interested in whoever is disclosing DUC counts and completion schedules with enough transparency to actually underwrite the pace of that supply response." That's a screen the current re-rating narrative isn't running.