oldye

http://www.reuters.com/finance/stocks/keyDevelopments?rpc=66&symbol=SD&timestamp=20100602123300 They're now offering 4.50 in cash instead of 2.50...so proforma they'll have an extra 100 million in debt if the deal goes through...and if it doesn't they now get 39 million instead of 50 so the destruction of value continues.

"There are 60,000 economists in the U.S, many of them employed full-time trying to forecast recessions and interest rates, and if they could do it successfully twice in a row, they'd all be millionaires by now." -Peter Lynch

You are right, I was using the department of energy projections, I hope they have a relatively good handle what near term demand will look like. Awesome Ted Talk by Bill Gates that makes me think that we'll be a lot closer to the high technology outcome and energy consumption per capita will drop by 40% in the U.S by 2030. I hope by the time China has 200 million cars on the road, I'll be driving an electric car because I don't see why they won't be as widespread as hybrids are today as early as 2020.

Its just that roughly 250m of that FCF needs to go toward paying interest and then you have about 22% depletion so more than 100 wells need to be drilled to maintain production each year before cashflow is really free. Whatever money they make from hedging will go toward drilling and they'll probably need to borrow a little extra to see any incremental FCF which of course increases how much they have to drill each year to maintain that production. Like they said at the dinner, at 6$ gas this is a home run but with costs to drill going down I see everyone saying the same exact thing, other companies are on the verge of cutting production but we'll be fine just as long as we double ours every few years. All the while total U.S consumption will probably drop by 1.5 tcf a year between now and 2014.

Unless oil demand already peaked in the U.S back in 07...it hasn't peaked in the Brics but we can absolutely see 30$ oil again like we did last year. They're fully hedged through what 2011...well Natural gas use is going to fall in the U.S between 2010-2014 and inventories are already very high. Also remember that Sd hedged their legacy production not Arena's but that doesn't matter because a) arena shareholders would be nuts to go through with the deal (I'm not saying it won't happen but somehow it seems that the deal doesn't benefit shareholders of either company unless you assume high oil) b) even with the hedges all that money and more is going to be spent paying interest and drilling just like every other company out there.

Unless oil goes to 30 again and then its just retarded.

http://www.glgroup.com/webcast.aspx?title=Webcast:+China's+Dependence+on+Imported+Wood+Fiber+(10+AM+HKT,+GMT%2b8)&data-ipsquote-timestamp=5/11/2010&presenter=GLG+Expert+Contributor&src=051110_W_Chinas+Dependence+on+Imported+Wood+Fiber.flv Fantastic webcast on China's wood fiber needs, currently around 70% of Canada's total capacity.

NBSK is no different than jet fuel, if the U.S government gives out another 200$/ton subsidy that encourages all out production then yes pulp prices will tank. But when consumer stocks are low and port inventories are at all time lows theres just not going to be a sudden build up in supplies that can cause meaningful relief. China and India consume about 22-24% of the worlds paper capacity yet per capita they only consume about 10% of what we use (India consumes about 1% as much per capita)...assuming they like paper as much as us they'll have import an additional 3-4 million tons of nbsk every year by the end of the decade.

They shorted the S&P around 1062 I believe so overall they're still down slightly maybe 10-15m, I don't know what the change is since last Q but they're probably up.

8*3.8/4 = 7.6 not 4 As you've said the cad will have an impact ...should be about a 20m quarter less refinancing chargesassuming break even at the rbk mills. For those concerned about ongoing costs: You also have to remember the energy generation that will start up in a little over 2 and a half years that will cut their costs by another 6m per year add another 3.5m in savings from eliminating the debs and another two or three from the refi and we're making 10m more per year. I don't think they need to sell anything, but if they do they should not sell the nbsk mill for anything under 1,000/ton. Oh and once the conversion takes place they'll have a hefty tax asset to add to the balance sheet. Rational investors would of expected the stock to rally once the refi and conversion were off the table but instead liquidity got tight and usually these small caps tend to get dragged under regardless of the situation. For those concerned about pulp prices...there is no way in hell you will see prices come down when inventories are at record lows...I'm not sure I understand the argument but exactly where is all this pulp going to come from?

http://www.paperage.com/issues/jan_feb2010/01_2010of_interest_charge_paper.pdf 1 page paper on the paper battery. "This is potentially a very nice, low-cost, flexible electrode for any electrical device,” Yang said.

Vote passed as expected. Cheers!

http://www.glgroup.com/News/Despite-Weak-Euro-Pulp-Prices-Still-Increase-48464.html Dave Hillman has been writing some pretty interesting articles lately regarding pulp.

Let me know if someone come across the preface online, I don't read Chinese but google translate should do the trick. http://why.knovel.com/ Li Lu is on the BOD of this company

What else did he talk about? Great article from 1998 http://www.observer.com/node/40526 "With the Dow Jones average rising above 9,000, the latest financial district jokes and clichés liken good investing to good sex. Mr. Li considered the comparison. "This market is not a man's sex drive," he said. 'If you had to compare it, this market is a woman's sex drive. It is really experiencing a multiple climax, but even the woman has downtime. The traditional Chinese sentiment is that the woman has the capacity to climax 15 times. The market is turning into the traditional description of the woman's sex drive. My girlfriend is around that number.'"

Q1 was not disappointing, my average cost for the units was about 60 cents..they made about 10 cents in cash during q1...I almost did a back flip when i saw the numbers. I remember reading about Buffett's partnership days and dreaming about buying companies for 2x earnings...what else can we ask for? The catalyst is valuation and its still damn cheap at 3$ a unit.

Context matters Cheers!

"In 2009, under the Delaware Insurance Code, the Company recorded a nonadmitted charge of approximately $81.8 million, net of tax, due to the Company exceeding Delaware’s statutory limits for investments in equity securities." C&F 2009 Annual Report

They were being charged penalties by regulators for holding too much as a % of assets last year

I'm in the camp thats not sure why they need the extra 40m but at the same time I'm not willing to throw management under a bus after a few down days. How do you know the people willing to take the low bid won't stop taking it next week?

Thanks for the link Viking, He says industry could have 110 accident cr this year. My favorite thing about the insurance industry is that you don't have to wait for the economic cycle, opportunities to buy come on an almost annual basis.

If you assume 1,000$/ton for the nbsk mil+working capital = 400 mil + rbk mills at auction 150 mil + working capital = 200m and that the 60m in cash+ q2 get you pretty close to 1$/share in net debt Leaves about 4.40$ in private business value per share without counting the hidden tax asset or the electrical generation coming online dec. 2012.

I'm not sure why they need an extra 40 m from the warrants but I guess this type of move gets deals done and should have them close to zero net debt by end of Q2 and considerable ongoing savings over Q1 where they had 4.6m in finance charges. Just to make sure I get this, the subscription pricing refers only to Fairfax, each share is entitled to a detachable warrant at about .44cents, so there will be about 180m shares o/s once this is done?

http://www.risiinfo.com/pulp-paper/news/Northern-Pulp-SFK-Pulp-to-hike-NBSK-in-North-America-Europe-30-40tonne.html April 27, 2010 (RISI) - SFK Pulp told North American and European customers that they will increase northern bleached softwood kraft (NBSK) pulp prices, effective May 1

Awesome video, thanks! David asked a question at the meeting this year, anyone remember what it was?