SharperDingaan

If proven reserve is 100, the banker is lending up to .5 D/E, & they are 35 in debt - they look good. Cut the proven reserve to 60 (i.e. uneconomic gas prices) & the bank is suddenly forcing you to sell 5 of your depressed reserve. If you borrow to drill the banker will force you to sell > 5 of proven reserve. KKR is there because it will become cheaper to buy versus drill in the shale fields once banks start selling collateral, & they hope to be selling entire coy's for > the reserve value. If you must own gas wait untill the banks start selling.

lessthaniv: we think our glasses just see further out. There is only one reason for lowering the threshold, & Steelheads dissassociation. ABH must have a hurdle (related to the lock-up agreement?) tied to a 2nd stage offer - they aren't trying for majority at this point; just a formal vote that their offer has been accepted - & the lock-up group will give them that. At only $1.00, no one unrelated is going to vote for this. A 2nd stage offer will be a new ballgame, & the firmer PPA & Mercers competing offer will be up front parts of the equation. Maybe this time they'll bring the real "A" team, & leave the ego behind. Folks are happy to sell but they will get paid for it. Most would also expect a 'peace' premium for putting up with the abusive BS over the last 5 months.

Bulawayo, Zimbabwe -> London, UK -> Calgary, AB -> Toronto, ON. The Zulu name for Bulawayo is GuBulawayo or "the Place of Killing". The local tribe is Matabele, essentially one of Dingaans old regiments, with a kraal just south of the Matopos. Same place that CJ Rhodes was buried. http://en.wikipedia.org/wiki/Dingane_kaSenzangakhonaregiments. Sport in this part of Africa has a different take. It's all who are we going to kill, who are we going to eat, etc. with much smashing down of heavy clubs maybe two centimeters from your head. Then when the game is done - you pass the beer around :D

We highly doubt that ABH will cut bait. ABH has little choice now but to put up a better bid that includes something for the PPA - or add a significant economic loss from their chip plant (i.e. Mercer refuses that plants production untill they renegotiate the price) to their existing costs. The lock up group also has a fiduciary duty to their shareholders to push ABH, & maximize the value of their FBK holdings. If they have any strategic sense at all, they will not try to cheap out this time. SD

- Steelhead cannot refute that they've been buying > the ABH bid price, or that their average cost is > the ABH bid price. Seperating themselves from ABH strengthens ABH's legal arguments. - They may also have a deal for the US plants - but no access unless they step away from ABH. Per the Q4 financials those plants are now coming back on line. They may well also be fed up with the Marx brothers, & at the end of their agreement. 5 months to do a simple takeover ?, it is STILL not over, costs are mounting, & ABH may be hitting them up for cash. Good for them.

NA gas is cheap because of shale production (high supply) & nowhere for the gas to go (low demand). Fundamentals that will materially continue untill new west coast LNG facilities are built (i.e. 5 yrs plus). Shale production will continue so long as wet gas can be produced & the distillates sold off as bi-product (i.e. only a moderate reduction in new gas supply over time). To government, the real costs of solar & nuclear are roughly the same. Nuclear in the private sector only looks cheap because government absorbs the nuclear liability risk (i.e a Fukushima). Median to long term solar is materially cheaper - primarily because of industrial policy generating new industry/jobs, & reducing unit cost through higher production & next generation technology (i.e. common IT experience). Nuclear is here to stay, but the mining through production and waste disposal technology needs updating - no different to the technology difference in todays IC engine versus its 1930's counterpart (i.e. years away) All kinds of literature available, but spun.

We might add; - Sharp elbows, thick skin, and a sense of humour. - Common touch, speak your mind, & fair dealing. - Compete hard - all is fair in love & war! - Find a mentor to polish you up. No one is going to give you a break - but maybe 1 in 15 will tell somebody else "you have to see this guy to believe it". Maybe 1:5 of those will then give you a try - just to see if you screw up. You're in! http://en.wikipedia.org/wiki/Pygmalion_effect Good luck

This is really telling you that PHX is a 2nd Tier player. Suppliers to the 1st Tier drillers. PHX is still one of the names, but at the 2nd Tier level all players experience magnified volatility. You might want to look at where the near term gain probabilities are, & an option strategy to match.

Your biggest asset starting out is your chutzpah, youth, & willingness/ability to take on risk. Your ask should not be "Please Sir, give me a job in your company". It should be "I've come to work for the best, I'm hands on, I'm here to learn, & we're all getting old - what can we do to make it happen? Your chair is safe for now - but dont get too comfortable". Doesn't play well in bank culture. To the senior operational people that matter, this is gold. They will grille you 10 ways to Sunday, & own you if you pass, you will be given opportunities during your stay far better than you could possibly imagine - so much so that the banks just are not competitive. You'll work a 50hr+ week on a regular basis, & not even notice it. If you want the invesment world, do a year or two in an I-Bank as an analyst for that sector - before doing the MBA. Your operational experience in that sector, senior level contacts, & progress on the CFA exams should put you in the top 1/3 of all candidates. Keep in touch with those in the company that brung ya, & when it's over - go back to work for them. You'll probably find yourself running a division, LOB, or something else equally challenging. We've nothing against working for banks, just not in the early stages of an entrepreneurial career. Good luck with your pitch!

Toronto, Ontario .... but originally from Zimbabwe!

The flag that should go up is whether they lose people faster than their day rate increases. The patch is busy, & principals are going to be making offers to all the good people that this company can find. For the next 3-6 months are they more a headhunter, or a driller ? Break-up may benefit them for March-April but it doesn't last forever. SD

"I almost have to believe that Resolute has gone off the reservation with the direction of the takeover following the lockup. It's possible that FFH is regretting that lockup and doesn't like how this is being done." We would suggest that a large part of the ill-will is because it is highly likely that there will be senior level terminations at ABH once its over. No board (& related significant shareholders) appreciates being ridiculed as inept, especially when they had such overwhelming advantage going into this thing. The story line must also be galling; FBK management was inept, about to make a stupid acquisition, & the ABH bid was to 'save' everybody. The results to date suggest that ABH actually has the inept management. They might even be better off with FBK's senior management ;)

GK THE best thing you can do for yourself - is set up a game plan - AND a hedge if it doesn't work out. For most people, that means 5 years apprenticing as a senior financial analyst working for one of the major industrials in your sector of interest. DO NOT WORK FOR A BANK. In your apprenticeship; - Work only for #1, 2, or 3 in the sector that you've chosen. You know squat, they are the experts at what they do, & you are there to learn. Youth, humility, & emotional maturity are your biggest assets. - Use the time to do your CFA exams, & expect to fail at least twice. Your aim is to pass the exams before life happens (spouse, kids, etc), &/or you return to school - NOT get the designation itself. - Invest your savings in the sector, & stay away from the industry analysts. Talk to the company lifers (they have a track record of having successfully exploited the changes in the industry since you were in daipers), develop your own opinions. Experiment, & don't be shy. Your hedge is your growing circle of competency, & the small $ that you are playing with. Return to school; - Business plan. How you're going to do value investing. - MBA. The narrow view is a school in the geographic area that you would like to work - working summers for the investment firms in that area (building contacts & pursuing the experience required for your actual CFA designation). The broad view is a school in a different country where you would like to work - language, culture, contacts, experience all being built during your summers. Lessons learnt. When starting out try to work for a working Bronfman, Irving, Desmarais, etc (long list). There is nothing like having to explain DIRECTLY to the guy whose $ you've just wasted - & in time you want to BE that guy. If not an owner then the GE's of the world - but always the best. The real money is in building things, not trading. Acquire, develop, build companies then IPO/sell when you've taken them as far as you can go. You want to be a Gates, Zuckerberg, etc - not the valet financial advisor that you slip a tip to. Most securities analysts have a short life - that roughly follows a 20% declining balance amortization. Make a lot in a short term, then get fired - & essentially become unemployable. If you originally came from industry, you go back to it - & with enough cash to buy a real stake in the business. We wish you the best of luck in your endeavors, but don't let the bright lights blind you. SD

The legal BS effectively extends the Mercer bid indefinitely. The bid remains at $1.30 until there is a Supreme Court decision, or 3 days after ABH lets its bid lapse - i.e: it could be months. The lock-up has a time-limit, & to extend – all parties have to agree to it. Uncompetitive at $1.00, multiple vote failures, & an instant 30% gain if the parties walk on expiry - dance space on the pin-head is rapidly running out, & getting expensive. Fiduciary duty is a bitch - & all the lock-up parties are liable to prosecution if they don’t get paid the 30c (18M) bid difference on their shares - upfront. (18M= 130M shares x .30 x 46%) ABH can divert attention to the legal, but it is still the Marx brothers - laughing stock. The problem though, is that the lock-up group has been drinking the cool-aid. The PPA was applied for 9 weeks ago. By now there will firm indications as to whether the application was successful. Release the details a few days before the lock up expires, & this thing will resolve itself pretty quickly.

VAL9000: Be cautious when a coy doesn't tell you its day-rate. You may want to look a little closer at where they are drilling (field is mostly dry gas?), how many rigs, what needs to happen for them to go further, etc. A dividend paying O&G with limited connections & institutional ownership is a flag. Assuming it is sutainable, were PHX not paying their increased dividend they would not be a todays price. Then if a junior is doing this, what would happen if a major - in the same sector & with better prospects - partially reinstated a previously rescinded dividend? Out of sync market. Rogermunihound: Fluidized coal feeds produce more fly-ash. The rest of the emissions are a function of temperature - the hotter the burn the less emission. Coal can easily reach the temps required but operations are optimized if the higher temp is used to burn garbage instead.

We would put it to you that by end-of-week the minimum price will be $1.30, 50.01%, & you choose whichever you like best. To break it, a party is going to have to bid on the outstanding PPA, based on whatever updated details FBK releases in the next week or so. About as fair as it can possibly be. There is nothing wrong with spoon feeding, the same as there is nothing wrong with a lock-up agreement.

New power stations are designed to switch between fuels. The more modern are designed to run on primarily fluidized & pulverized coal fed by specialized conveyor - with 5-15% garbage. When gas is cheap they switch to gas. Changing to gas alters the business model from steady base load to intermittent peak load at spot rates. To shut down the conveyors, the gas has to very cheap, large quantities have to locked in for a long time, & you have to be reasonably certain of seeing peak loads for extended periods. Much higher margins while you're selling, but the down time introduces a lot of additional operational risk for a utility - as the break-even now also has to include the depreciation & carry cost on idled equipment & coal inventory. Pulverizing & fluidizing allows the Utility to use poorer quality & cheaper coal, or run at higher temps when using anthracite or coking coal. Higher temps allows the inceneration of more medical waste & the use of more plastic as fuel - the hospital/minicipality pays the Utility for disposal, & the revenue offsets the cost of the better quality coal. No one is going to be in a hurry to convert, & where it occurrs it will be on a case by case basis.

To truly appreciate just how out of sync the market currently is with the O&G servicing market, you need to do your own DD. We would suggest you start with PD's Q4 2011 MD&A + outlook, google rig activity, O&G Week, etc. You would swear that you're looking at another planet. PBN et al can't get service because they trying for PD rigs & they're all going on LT contract into oil &/or wet gas. Where they can get a rig its spot rate & cash up front - and that well only gets drilled because its a forced lease hold farm-in by a bigger operator, & PD is doing them a favour. It's an old boys club, & ya dance with the one that brung ya. If you cant drill you buy, & a shut-in well is worth squat. The further you are from a collection point, the dryer your gas, & the more constrained the pipeline capacity - the less you get. Very bad news for a junior unless you have a big friend. Obviously there are other drillers, & pluses, but we are not going to disclose them.

Look at the Q4-2011 for PD. - Running flat out. Signing all kinds of new multi-year contracts for oil &/or wet gas drilling - Clean BS. 200M write-off taken in Q4, & STILL showing rapid & ACCELERATING growth - THE Cdn land based directional driller.Tech, staff, networks to match - Day rates & rig volumes increasing - spot & long term - New super rigs going to ME Pretty tight with the old Cdn Fracmaster, & were fracking ME fields long before 'shale' gas technology became 'mainstream'. Formula-1 rigs going back to wells that were drilled with the equivalent of a VW - and going where flag neutrality is a consideration. Re disclosure. We hold a long position at a very low cost base.

With a 5yr+ holding period, NA gas is a great complement to NA real-estate. But to make it really work, you need many more Asian purchases in NA O&G fields - plus extensive pipeline & west coast LNG facilities. 5yrs just to get the ports upgraded. With a shorter holding period look to the oilfield service companies. They are running flat out, & that additional activity has begun to spread to the ME O&G fields as well.

Been there 12 years. Slime by association. Scalping muppets is what you do - so why not scalp THE muppet - GS. Make a name, side with the angels, get the industry 'trust busted', & come back as a CFO/Senior Partner in a 'new' I-Bank, under 'new' rules. Short GS down to peanuts, & let your bank balance do the talking. GS partners loathe you because you took away the golden goose, but so what - f** 'em - they're just more muppets. Begging you for a 'partnerhip' in your new firm if you're successfull. GS only exists because the partners have no way of reliably making more $ elsewhere. Their ability to grow the business further, & their profit maximization, has gone about as far as it can go. The big $ are now from imploding it & shorting all the way down ..... & with maybe a little assistance from global regulators, & the I-Bank lobby cutting off a limb to save the body. SD

FBKQ4 and 2011 Financial Results: On October 26, 2011, the Québec Government adopted a regulation which allows Hydro-Québec to purchase electric power produced by cogeneration facilities from residual forest biomass from a renewable energy source producer. The program was approved by the Régie de l'énergie on December 15, 2011 and formally launched by Hydro-Québec on December 20, 2011. Fibrek believes that its Saint-Félicien Mill qualifies as a renewable energy source producer under this program. On January 27, 2012, the Company submitted its proposal to be awarded the equivalent of the existing installed green energy capacity of 33MW under the 150 MW available for allocation in this cogeneration program. No one wants to hear it, but at some point this potential PPA is going to become a reality; & the further out the bids get extended the more likely it is to occur. As at March 09, it has been 6 weeks since submission date. Agreed that MERC is the better of the two current offers, but if the PPA shows up, at least one of the bid prices goes up. SD

You might want to recognize: Looser & cheaper mortgages. HELOC financing permits interest only monthly payment. The extended period of historic low rates allows a given $ of monthly payment to support a lot more mortgage. CMHC removed the default risk on the big mortgages with minimal DP, making questionable credit extension safe for the lender. Availability of longer than 'normal' financing terms. Net impact is more $ to spend on the same supply of housing. Therefore price must increase - Economics 101 Help with DP. Every $ of help mom/dad extend son/daughter is another $ to spend on the same supply of housing. Also a multiplyer as without the DP help, son/daughter may not have been able to enter the housing market period. Again, more $ at the lower end of the market. Price can only increase. Global investment. Vast majority of Canada lives in the major cities, & many of them are attractive investment homes to foreign investors. Family going to school (Vancouver, Toronto), NA alternative (Montreal, Quebec City, Victoria), just like the place. Again, more $ at the higher end of the market. Price can only increase. Exclude all Canada's major urban centers from the stats, & prices have moved by roughly the inflation + regional growth rate. About what you would expect.

margin equivilancy: The share price at which the $4.00 investment in the warrant could alternatively be used to buy the stock itself with the maximum possible 70% margin financing. max margin financing: The maximum amount a broker will permit an investor to borrow, using the stock itself as the loan collateral. warrant 1/2 life: Proxy for your intended holding period. Market convention is to average; hence divide remaining time to expiry by 2. You might also want to review the value of a warrant at expiry, & the practical margin elibibilty of a warrant.

Assume 5 yr warrant, strike of $11.00 Share price today is $10.50. Max margin of 70% Warrant price today of $4.00 P(margin equivalency achieved < warrant ½ life): 60% Margin equivalency: Today’s $4.00 warrant price could be pledged as long & margin equity. ie: if the share price was $13.33 & you used 70% margin to buy it, you would need to make a $4.00 equity investment 13.33x(1-.7)=4.00 At margin equivalency, the warrant will be $2.33 in the money. 13.33-11.00=2.33 Assuming no other change, the warrant price will be $6.33 (4.00+2.33) Assume a warrant 1/2 life of 2.5 yrs (5yr life/2) PV=4.00, FV=6.33, N=2.5, PMT=0, IRR=20.15% Risk adjusted IRR = 12.09% (20.15x0.6) Reject if you want a return > 12.09% Quick & simple, & one of many methods. Because of the risk most would not consider it unless there was current low share volatility, & the risk adjusted return was > 25-30%