SharperDingaan

OBE, plus most of the CDN oil/gas patch. Combination of tax selling, fed/provincial/tariff threat response, and industry hate. The reality of course is that net of lower differentials, cost reduction via higher throughput, and a lower FX rate ... many of the despised are actually doing very well SD

Every aspiring CPA has to become proficient in their local tax code, and the expectation is 'The CPA Way'; hence the top 1-2 in a tax course is almost always offered an internship in tax at a prominent accounting firm. The other approach is to treat tax as theft, the year-end tax filing as your opportunity to redress the balance, winner takes all, and may the better thief win! Sadly, while this 2nd approach will ALSO get you into the top 1-2 of a tax course, there is no way you're going to offered an internship 'The CPA Way' sells tax as just another cost of doing business; tax avoidance perfectly acceptable, tax evasion ... not so much. However, an enterprising lad quickly recognises ..... that when your tax rate is > 50%; the taxman is now your majority partner!, and the higher the tax rate the better Take the premium to take stupid risk, spend the money enjoying yourself as much as possible, and when the losses occur - pass the vast bulk of them onto your majority partner Long a favourite of 'Smiling Jack', who has sadly now passed. https://www.cbc.ca/news/canada/oil-pioneer-gallagher-dies-1.165394 SD

Lower production costs = higher margins at current prices, and shorter payback periods. At payback periods < 1 year; maintenance capex is self-funding, as current spend has been recovered by year-end; thereafter the well produces at marginal cost, and lowers average production cost across the reservoir (ie: USD 35/bbl). Reduce the depletion rate, find a home for the rising gas/water cut, and that marginal cost production will also continue for quite some time. Drill baby drill, DOES mean more drilling, but NOT more NET production. Tier 2 inventory is not as prolific as Tier 1, typically depletes faster, and has a higher gas/water cut. To simply maintain an existing production level, the hamster wheel has to speed up, which means more drilling. Drilling technology advancements can slow it down for a time, but it has limitations. The self-fund thing ??? If the payback period is 1 yr, 2024 maintenance capex is 400M, and 2025 maintenance capex is 440M ... the actual 2025 new cash requirement is only 40M (425-400), and that cash saving can go into debt reduction, buy-back, M&A, dividends, etc. SD

Quite agree! but if you have the risk tolerance look at ACX.TO (Cathedral Energy Services, pre reverse split) Lovely low share count, much better shareholder base, and more presence in the US fields; reduced our PD and ESI to fund a larger position. If Trump does his thing, and she runs as expected ..... SD

Pig in a synagogue ... but look at Obsidian Energy (OBE) Dec-31-2023: 77.59M shares, 2175M capital, BV/Share of 28.03 (2175/77.6) Oct-31-2024: YTD buyback of 3.65M shares for 35M, or 9.59/share (35/3.65) YTD gain on share buyback and cancellation? 67.3M ...... 3.65*(28.03-9.59) ... and another 650K shares in November; another 13.9M gain on share buyback and cancellation. A small o/g company in an utterly sh1te sector, in the hades of Alberta oil sands, in a declining price environment, reducing its share count by 6% YTD ???, and booking a gain on cancellation approaching 81M ???? WTF!!!! And to add insult to industry ..... growing net production by > 10%/yr as well, year over year. Who the f*** do they think they are !!! Closed at CAD 9.09 Dec-31-2023, down 18% 2024 YTD as at close Dec-06-2024; gotta love the haters . But no .... this is a terrible sector .... lost 18% this year, and getting worse! ... carbon tax, Trump, Trudeau (blah, blah, blah). And no ... it's not a badly run company. Merry Christmas SD

Just keep in mind that investing in energy, commodities, or a BTC; is very different to investing in a BRK. With energy, you are a price taker, and attempting to forecast the rise and fall of economic tides. If you suck at forecasting (timing &/or price), your results will also suck; whether you invested in an ocean liner, or a row boat. Time horizon and risk management are your friends. Short horizons work against you, as does greed and the sizing of a position beyond your comfort zone. As the expectation is a hold over years ... if the potential reward isn't life changing, you need to walk away. Not what most want to hear, or are prepared to tolerate; hence it often ends in tears. Ideally, the company does not hedge prices beyond the protection of a committed drilling program. It is left to investors to adjust the size of their position to changing price environments, via swing trades or otherwise. Again, not what most want to hear, or are prepared to tolerate. However, do it right ..... and it can work out very well; as a great many hospital fund raising campaigns can attest to. Different PoV. SD

Pretty hard to beat any of the SU, CVE, MEG, etc. CAD/USD exchange rate is low and going lower, revenue is in USD, costs are in CAD, and there is a major hate on anything 'dirty oil'. Trump does his thing, politicians change, pendulums swing, and all the girls clean up very well. Over a 3-4 yr investment horizon, most should should be 2-3 baggers before dividends, and after buybacks. If you have the risk tolerance look at the smaller players, as M&A consolidation is inevitable; enjoy the ride, but don't fall in love. The model assumes any one position big enough, so that an eventual takeout proceed (net of tax) and reinvested in a BCE, will throw off a dividend for life > 1/3 of salary. Swing trade as you please, but keep the eye on the prize. To put up with the drama, you need to get paid well! SD

Sure China is a 7.2M boe/d consumer (consumes 11.3 and produces 4.1 M boe/d); and same as the US, is both an exporter and importer of different grades. The reality is that OPEC+ is pushing for higher prices, and has agreed to hold back 3.65M boe/d for 12 months. It doesn't really matter whether one actually believes the number; even 60% of it, is still a big number. At the same time, Exxon is stressing that 'drill baby drill' ain't going to dramatically ramp up US production; as without new inventory, it's primarily just going to reduce the cost base while replacing existing depletion ... at a material increase in gas production. For most wells, during the first 1-2 years of capex recovery, break-even is around US 65/bbl; thereafter the well produces at just the marginal cash cost. OPEC+ floods the market ... price drops, drilling stops, there are layoffs, production blows-down, and capex/margin go into buybacks/M&A/dividends; bring it on! Whereas if OPEC+ maintains price at around US 65-75/bbl, or higher ... everybody lives peaceably. https://www.theglobeandmail.com/business/industry-news/energy-and-resources/article-opec-delays-oil-output-hike-until-april-extends-cuts-into-2026-sources/ https://oilprice.com/Energy/Energy-General/Exxon-Dont-Expect-Drill-Baby-Drill-Under-Trump.html Tariffs will both reduce Chinese exports and net energy consumption; same again if the Chinese power grid can actually support all the EV charging. Hence, most would argue that with the continuing OPEC+ overhang, and diminishing future Chinese demand; it's far smarter to simply put production into blow-down. Cut maintenance capex and put it into buybacks and dividends; the Exxon argument. If you think producers have found religion, o/g is a promising investment; whereas if you think that isn't the case ... well, we have a market for that SD

EV can't charge when the grid goes down... https://www.scmp.com/news/china/science/article/3289629/xinjiang-power-swing-threatened-chinas-nationwide-electricity-supply-august https://www.reuters.com/markets/commodities/chinas-rapid-renewables-rollout-hits-grid-limits-2024-07-04/ Sure ... its fixable. But until then EV is going to remain a hard sell, sold on ever deepening price cuts. There is a reason why EV battery makers are steadily going to the wall. SD

You might want to do some actual research. https://www.ceicdata.com/en/indicator/china/crude-oil-production China is currently the 7th larger producer in the world at 4.1M boe/d ...... AHEAD OF Brazil, Iran, Kuwait, Mexico, Norway. SD

Trimmed our obe and drilling positions with proceeds going into the more junior o/g dividend payers @ > 1O% cash yields. BTC now a core position of X units that we're swing trading around. UBS remains untouched. Now just a dividend collector and swing trader reinvesting proceeds in TBills & capital repatriation. Get the more exotic bucket list stuff in while we can, as the possibilities are closing in. SD

BTC is just a different form of money. At this point most people who know anything about it recognise that. UBS is cash equivalent, little different to a TBill. Store of value and unitization but not a means of payment. The difference vs other blue chips is the degree of CB willingness to intervene with market support on the upside. Same as all the other GSIBs, USB is guaranteed by ALL the Basel CBs, but this one also has the benefit of a recent severe f*** ** in Switzerland that damaged a lot of reputations. The Swiss central bank needs to demonstrate a 'Swiss Finish', and heaven and earth will be moved to make it happen. 18 months out they will have done that, after which it becomes just another GSIB, and the money status drops away. Arguably a blue-chip equity marginable at 70%, or provincial bonds marginable at 85% are also a cash equivalent. We just don't think of them that way as it is not accounting convention (asset sale in a liquid market, versus borrow against asset collateral) Thereafter cash is basically fiat (USD), held as a cheap way of paying for things. Portable, and most everyone accepts it, everywhere in the world. SD

It is Germany, the labour force reduction will be achieved via a buyout. Some cash now, the rest via a full pension deferred until age 66, all of it guaranteed by the Bundesbank so that there is no risk of not getting paid. Those young enough take the buyout, and work for someone else ... 'double-dipping' all along the way. SD

Too early for us at this point, as we would fund from a sale of our UBS position 18 mo's out. Preference is for the chemicals, bullets, artillery shells, drone, and rocket consumables ... the cheaper and lower tech the products, the better. Between now and then, a lot of NATO 'Airbus' type standardisation and industry restructuring, and the set-up of production on multiple continents. Big brothers doing most of the hardware and guidance, multiple little brothers doing most of the consumables. SD

All our UBS was bought at the time of the CS merger; bias as we have a very low cost base, a free put on the Swiss CB, and treat UBS as a CHF denominated cash equivalent. We think the incremental CS benefits still have 1-2 yrs to play out, following which UBS will be pretty much the same as every other major European DSIB. Outside of UBS we would look at the arms merchants, subject to a payback period of < 5 years. Given that NATO is being revamped, and member spending pushed > 2% of GNP/year, even a monkey should do well; the short payback steadily reducing European exposure, should conflict break out early. The hope that nothing happens, but borrow from the pages of German rearmament in the run-up to WWII. Different PoV, SD