bizaro86

Nm

I'm pretty sure CLB provides reservoir characterization services as opposed to liscencing simulation software. The 900 lb gorilla in the industry is Eclipse, which is owned by Schlumberger. I like that you're competing against a small non-core division of a mega-cap. Also, I've used both and the CMG suite is WAY easier to learn than eclipse.

I've nibbled at cmg lately. Big operating leverage there to upside (new drilling = more reservoir engineers = more licenses at very high contribution margin). Less downside than producing companies. Great management. The folks there are pretty much all geniuses. One thing that really struck me when I visited was that a huge number of staff were eating their lunch together in the lunch room. That is super uncommon in Calgary's oil industry (this was 3-4 years ago). That people brought lunch and then ate it together isn't something I'd seen culture wise. Thought it was interesting.

Yeah, I can't see any reasons why the Goodmans would choose to pay in cash and in full. I think the most likely scenario is they offer some sort of haircut (either cash or new paper) and a conversion to common for those who don't take it. That will hurt the common short term, making the conversion even more attractive.

I think inatagram and social media in general is a huge tailwind for the leisure travel industry.

In/Out capacity is important here as well. The faster you can pull the power out of storage the better price you'll get for it, as you can sell it all at the peak price.

Can you elvatorate on why you think their bond prices would tumble after a dividend cut? In my limited experience investing in this type of debt, it seems like the uncertainty beforehand pushes the bonds down and keeps them in the toilet, but the the dividend cut usually pulls the bonds higher, because more cash flow is retained to service debt instead of supporting dividend payments to common equity holders. Sorry, that was poorly worded. The sentence before the ones you quoted talks about a WIN filing. I think a WIN filing would definitely push Uniti bonds down. It would also probably cause Uniti to stop paying dividends. I agree that independently a dividend cut would support the credit because the cash would be on their balance sheet for the bondholders. But if a dividend cut came after a WIN filing I think the uncertainty around the lease would outweigh the savings from the dividend payments. But the savings from dividend suspension and the likelihood that the lease would be renewed with only a slight drop in payments would justify the bonds at par.

That's the part I find the most impressive. I've had a couple of doubles where I sold the vast majority of my position after a double, and then watched it double again (or twice, in one case) on small positions. I'm trying very hard to not do that anymore on quality stocks...

An appeal is an interesting one here. My understanding (and I haven't acquired a law degree since my first post in the thread) is that WIN would have to post security for the judgement for them to appeal. They maybe could do so with the proceeds from the asset sales, but it would definitely add balance sheet stress and uncertainty. Unfortunately (and this is where Aurelius is probably not acting with totally clean hands) I doubt Aurelius will be inclined to settle. Based on my recollection of the Pennzoil debacle, if WIN files for Chp 11 they can appeal without putting up collateral. That is obviously attractive for them, and they could probably do a debt to equity swap for more flexibility, get a bit of a discount on the Uniti lease and give management huge equity incentives. That outcome doesn't seem better from a bondholders perspective, but if Aurelius has a big huge CDS position that changes the incentives on their side of the table as well. Aurelius released a letter today basically daring them to appeal. It isn't the sort of thing you would do if you were planning on having constructive settlement discussions. I think the Uniti debt is potentially attractive. I took a tracker position to keep following it. The incentives for the parties involved seem to point to a WIN Chp 11 filing at the same time they appeal. At that point I would expect Uniti to suspend their dividend and for their bond prices to tumble dramatically. If that happens I think they'll be a buy, as WIN needs the lease and the debt would still be money good even if the lease payments get negotiated down somewhat.

If I held WIN notes in 2015, I would have been annoyed and sold at a loss. But I'm just a small fish. If I had a few hundred million in WIN notes I definitely would have looked at suing to enforce the indenture. That's the biggest reason I personally like this decision. I think WIN was playing fast and loose with investor protections. Nobody called them on it, because most credit investors aren't activist. But I think it's good for the markets if public companies have to respect their contracts and obligations. My two cents obviously, and different points of view are likely just as valid. I have no position here and am unlikely to start one. (Unless maybe Uniti has some beaten down debt issues or something, I might try and look into that if I get some time)

A striking feature in this case is that a majority of bond investors followed through with Windstream. Majority votes and related "strategies" are not ideal but may be the best of bad options to align incentives, on a net basis, for all participants. I think its relevant (and so did the judge, who mentioned it) that of the original owners of the bonds in question, less than a majority voted to waive the default. Windstream got a large majority of the bonds that the exchanged into that indenture, but without that (pretty dodgy, imo) exchange, they wouldn't have had the majority and wouldn't have a waiver of the default. The transaction being a sale-leaseback seems pretty straightforward to me, so I doubt that's very likely to change on appeal. Maybe they can get the waiver of the default to stand somehow, that seemed less obvious to me.

The judge specifically addressed the argument of a delay barring the claim: Second, Services contends that the Trustee’s and Aurelius’s arguments are barred by the doctrine of laches. See Services PFFCL ¶ 265. In a similar vein, Services suggests that Aurelius’s request for relief should be rejected because Aurelius failed to seek emergency relief to prevent the Third Supplemental Indenture from taking effect. Id. ¶¶ 263-64. That is, Services argues that Aurelius undermined its means to cure any alleged default relating to the 2015 Transaction by waiting an excessive length of time before seeking to declare a default and that its failure to seek injunctive relief in the first instance defeats Aurelius and Trustee’s claims. See Tr. 742-43; see also Services Am. Countercls. ¶ 105. Translated into more colorful terms, Services contends that “the proverbial egg has not only been scrambled, but eaten and digested by marketplace investors long ago,” and, on that basis alone, the Court should deny the Trustee and Aurelius equitable relief. Docket No. 178 (“Services Opp’n”), at 43. There is some irony to these arguments insofar as Services, in the same breath, faults Aurelius for violating the Indenture’s no action clause by acting too hastily. Services PFFCL ¶¶ 258-62. But, regardless, Services’ argument is without merit for several reasons. First, “[t]he equitable doctrine of laches . . . does not apply to the delayed exercise of a contractual right.” DiStefano v. Maclay, 102 F. App’x 188, 190 (2d Cir. 2004). Second, Aurelius did promptly seek relief, raising the propriety of the 2017 Transactions in real time and filing its counterclaims only fifteen days after the Third Supplemental Indenture was signed. See Docket No. 72. Services cites — and the Court has found — no authority for the proposition that, in such circumstances, the failure to seek emergency injunctive relief is a bar on obtaining relief altogether. Third, and in any event, Services’ own counterclaims would defeat its argument, as Services puts at issue the very questions it asks the Court to ignore on the basis of Aurelius’s and Trustee’s supposed delay. And finally, in this respect, what is good for the goose is good for the gander: Services was well aware of Aurelius’s view that the 2017 Transaction was invalid when it directed the Trustee to sign the Third Supplemental Indenture. See, e.g., DX-155; DX-156; DX-157. To the extent that Services desired peace of mind — for either its own sake or the sake of investors in the New Notes — it presumably could have sought immediate judicial relief itself. Having failed to do so, it cannot now be heard to complain that it was prejudiced by the other parties’ delay. These compelling reasons aside, “[t]he determination of whether laches bars a [party] from equitable relief is entirely within the discretion of the trial court,” Tri-Star Pictures, Inc. v. Leisure Time Productions, B.V., 17 F.3d 38, 44 (2d Cir. 1994), and the Court concludes that there is no good reason to impose such a bar here. To be sure, granting relief to the Trustee and Aurelius at this juncture would undoubtedly have a significant (albeit hard to assess) impact on Services, investors, and the market generally. But that goes with the territory — and,presumably, investors took the risk of such relief into account, as the parties’ dispute was well known. The fact is that this case was litigated in real time and, given the stakes, proceeded from initial complaint to trial quickly. To accept Services’ argument would, in effect, immunize large public companies from scrutiny for corporate transactions unless emergency relief is sought and obtained. The law does not impose that burden on investors or the courts.

I read the decision. There were two main issues. Was the sale of the network a sale-leaseback? If so, they violated their covenants and had an event of default, which required them to buy back these bonds. I'm not a lawyer, but it seems pretty obviously yes. The second question was did they successfully weasel out of the default by converting other types of bonds into this class and getting them to waive the default. Still not a lawyer, and the judge ruled their machinations didn't count because the new debt wasn't allowed to vote under the indenture.

What's the thesis on PEA? Just that Goldsboro will get built? I had a big short position there during the Ikkuma deal as there was a huge spread. Seems binary to me, but maybe still a good risk-reward.

Your list of crashes depends how far backward you are looking. Calgary is down big earlier than the rest of Canada because of oil prices, but things seem to have startes to stabilize here, and valuations on basically every metric are way more reasonable. Vancouver/TO are much earlier in the bubble deflating process.

Those are registered parties, not all of which are realistic threats (the pro-life party isn't going to split many votes) and not all of which are conservative (the Alberta Party is a liberal rebrand)

I think the AECO issue is more a TCPL competence issue than a government regulation issue... I could be wrong of course, and Peyto might know better than me. I also think it's possible that publicly blaming the AER might get them to speed up which would of course help, whereas publicly blaming TCPL probably just gets you lower quality service. So not a big incentive to do so.

The biggest risk to the United conservative party in AB is the potential that Brian Jean (former leader of the Wild Rose Party) forms a splinter conservative group and splits the right wing vote again. He's talking/exploring the idea with donors/insiders right now. The vote split between wild rose/conservative parties is the biggest reason the NDP won last time. But politicians have big egos, and he very likely expected to win the leadership race after the parties merged. From a Peyto perspective, I don't think it will make much difference. Their biggest problem is the price of natural gas.

I'm not sure how I would offset cold/warm days. I tend to bucket days into two categories - the type where I can go outside and do stuff with my kids (skating, sledding, zoo, etc) and the type where it's too cold. Because we have the wide wariation in temperature, there are lots of days in winter where the highs are 0-10 degrees C, which is great for winter activities. I suspect we have a bigger variation than many places with similar average temperature in winter, which is lots of places. I googled average temperature new Hampshire and got Concord: https://www.usclimatedata.com/climate/new-hampshire/united-states/3199# January High/Low -1/-12 C Feb Hi/Low 2/-10 Calgary January High/Low 0/-13 C Feb Hi/Low 1/-12 I'm not sure how that compares to the rest of NH, but the difference isnt really that significant. I can run my business from anywhere with halfway decent Internet, but I like it here. Different strokes, obviously! I would guess we average ~3-5 days where it gets to -30C per year.

Weather apparently doesn’t count. Now, I'm in a weak position for my argument that it's nice living here (Calgary) because I had to get my furnace serviced today to keep up with the -30 C weather. But, the weather here isn't as bad as people think. We have a significant portion of relatively warm days in the winter because of a weather pattern known as chinooks. Plus, it is one of the sunniest major cities, which I think is relatively more important to people's well-being (and livability) than temperature. But on the other hand its pretty freakin' cold right now. I will still never move. Yep, that's what everyone in Alberta says... Well we have sunny days... or .... But it's a dry cold (yea, right). All you need to know is -30 C. That's COLD! I got a buddy in Edmonton who always fantasizes about moving to Toronto where it's warm lol. He'd do that in a second too if over here we didn't loose our minds with the houses. Those of us in Calgary can always cling to the fact that at least we don't live in Edmonton...

Weather apparently doesn’t count. Now, I'm in a weak position for my argument that it's nice living here (Calgary) because I had to get my furnace serviced today to keep up with the -30 C weather. But, the weather here isn't as bad as people think. We have a significant portion of relatively warm days in the winter because of a weather pattern known as chinooks. Plus, it is one of the sunniest major cities, which I think is relatively more important to people's well-being (and livability) than temperature. But on the other hand its pretty freakin' cold right now. I will still never move.

1. Those links cover it well. Abandonment requires all zones to be isolated from each other, generally with a bridge plug covered with a layer of cement. The lowest area with groundwater is also isolated. To cut and cap, the well is cut off below the surface, and covered with a vented cap, then with dirt. You didn't ask, but after all wells/facilities on a lease are abandoned, the lease is reclaimed. That requires the operator to put the land back to condition comparable to its original condition. For this reason, oilsands projects collect seeds and plant matter when they are building. That way they can plant the exact same species as were there originally. The cost of remediation often exceeds the cost of abandonment (sometimes greatly). 2. Yes. It's long and technical, but basically you have to demonstrate (via pressure data) that each zone is isolated from the others. 3. Yes. There is required data to be submitted to the regulator to get an abandonment complete. Also, the operator remains liable for future issues from the abandonment in perpetuity.

I think the AER will leave the requirement that companies can't make acquisitions unless they have an LMR greater than 2. That would stop the traditional big company plans of dealing with liabilities by selling a package of assets with NPV slightly greater than zero (because environmental liabilities approx equal value) to a junior who milks it along cheaply. That worked fine in a rising price environment, but poorly in an extended downturn. It will also stop the garbage barge issue (ie Lexin) which is a huge part of the current problem.

#eliG I agree this removes the environmental costs from industry. Previously the order was: Individual company equity holders -->industry Now it will be Individual company equity --> individual company debt owners --> industry The big companies (the ones who control CAPP) love this. They pay most of the orphan well levies, which have been rising dramatically. So this will save them money. They also have much better access to both debt and equity capital than juniors. The small companies are less excited. They don't pay much for orphan well levies anyway, so making them smaller doesn't move the needle. But they don't have access to the bond market or earnings-based lending. And now reserve based lenders will tighten their purse strings dramatically as they are effectively subordinated behind environmental liabilities. Given an individual well can range dramatically in liability, that puts them behind an uncertain value. (I once had to hire a scuba certified guy who also had alberta wellhead insurance to suspend a well that was underwater (ducks unlimited created a new wetland...). We could only find one guy who met the criteria to do the work, and from his pricing he realized that he had a 'moat' in the business of underwater well remediation....) I'm in favor of this as an Alberta resident/taxpayer, I think it's the right thing to do. But it will cause a lot of pain in the junior sector, and that's a group that has had a lot of external pain inflicted on them the last few years... The management class of these companies tend to be well off (==overpaid?) and are often politically active/donors. So they have clout here in AB. (Supreme court doesn't care about that, obviously...)

This is interesting indeed. I think in the short run it will all but freeze the lending market for junior oil and gas companies in Canada. Hard to lend with undefined priority claims ahead of you. In the long term I think one of the banks will build in house capacity to evaluate environmental liabilities and use it to take profitable market share. This should have the consequence of pushing the industry toward higher rate individual wells, as the cleanup liability is less per $ of value extracted, and that is so obvious even the banks should realize it soon enough, and preferentially lend on those assets, lowering the cost of capital for those plays.