Quote:
Originally Posted by bizaro86
The point of the liability management ratio is to make that choice unprofitable. Basically the value of your Alberta assets have to exceed the value of your reclamation liabilities or you can't get new well licenses (either by drilling or transfer iirc).
Maybe there needs to be a bigger safety factor, especially for firms that own lots of marginal wells where a small change in pricing would have a big change in value, since commodity prices are pretty volatile.
But that's all tinkering around the edges. And when prices are high would be a good-ish time to make that change, because operators could absorb it more easily.
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The LLR calculation for wells uses a 3 year rolling average netback on the asset side of the equation to smooth out that volatility.
The government has only $283,000,000 in securities from companies with a sub 1.0 LMR. Put pressure on licensees that have many wells that are on the inactive list. Jack up the security requirements to put pressure on these companies that are not directive 13 compliant. Giving these companies a royalty break does nothing to incentive them. They have shut in most of their production. It's a handout to the companies that maintain a good LMR.