Layoffs in the Oil Patch 3

[Macman]

I wished they would start reporting unemployment stats using real people numbers vs percentages or at least include them when saying the unemployment rate is 5% for example.

I thought unemployment was high already prior to the pandemic across the country and here in Alberta specifically and when you went to look at the stats across the country compared to Alberta they were a percentage or so lower. That's still a very high unemployment rate.
I think it gives the government an easy way out and leaves them unaccountable for high unemployment rates as they're directly related to their policies.

[CaptainCrunch]

When I looked last week Alberta is at 10.7 I think and Canada at 9.4. The numbers are a little bit off, there are people that have dropped off of the benefits, or never got them that seem to not show up in the Stats.


I think in the last week, I've read about large layoffs, Air Canada, Bombardier for example. and I think that's 4600 people in the last week.

[RichieRich]

I'm stunned to hear about Brookfield, IPL, and North River... I know people at the latter two. I know at least one person at TORC too.

[Lubicon]

Originally Posted by CaptainCrunch

Don't know where it belongs because its not relatable, but it is comparible. Bombardier lays off 1600 people this morning.

Just a lot of mass layoffs happening across the country.

Still sucks for those who will be affected, but 'only' half those layoffs will be in Canada. The other half will be at the Learjet production facility in Whichita.

[Leondros]

Originally Posted by Ducay

Non-cash impairments are literally to reflect future economics, but I do agree generally they dont result in layoffs, just more an indication future jobs wont be created.

Yes and no, all they are saying is that the current NBV of their PPE is not supported by their reserve evaluations which are a point in time test. These tests are super sensitive to discount rates and the forward strip in which they are using. I also find reserve evaluators strips are typically less accurate than the actual forward strip and the bank's strips.

I won't bore everyone but your NBV of your PPE includes random items such as asset retirement obligations, capitalized G&A, overhead allocations, etc. To effectively 'accelerate' their depletion through impairment does not necessarily mean their economics are in turmoil.

[red sky]

Originally Posted by Leondros

Yes and no, all they are saying is that the current NBV of their PPE is not supported by their reserve evaluations which are a point in time test. These tests are super sensitive to discount rates and the forward strip in which they are using. I also find reserve evaluators strips are typically less accurate than the actual forward strip and the bank's strips.

I won't bore everyone but your NBV of your PPE includes random items such as asset retirement obligations, capitalized G&A, overhead allocations, etc. To effectively 'accelerate' their depletion through impairment does not necessarily mean their economics are in turmoil.

Thanks. If you are using a forward curve at a time when there is so much fundamental uncertainty like in 2020 then it is not indicative of future value. Using a $30/bbl oil price to evaluate non-cash ceiling test impairments is a lot different than $60. Under US GAAP you are unable to write up the assets in the latter scenario if they have already be written down. Net earnings and ROCI are only useful in a stable environment.

[Ducay]

Ya ya, we're all accountants here anyways, keep arguing the minutia of ceiling tests and forecast vs escalated prices all you want, the fact still holds impairments are reflecting future economics (again by definition). No one said they are absolute judgements of future outcomes, but it is a point in time estimate and acting as if they don't relate to future economics is being intentionally disingenuous.

There is a reason analysts don't care about them at all.

[red sky]

I think we can agree then. Point in time evaluation of future economics that is not relevant after the ink has dried.

[BigNumbers]

nm

[BigNumbers]

nm

[CaptainCrunch]

https://www.worldoil.com/news/2021/2...eid=b4ade1b61a


I mean why not, Russia and Saudi Arabia literally have no environmental standards for Oil, and don't really give a crap about Carbon emissions, so this move will just increase that.



Plus pumping a ton of money into hostile states.

[CaptainCrunch]

14 states looking at legal action over the cancellation of Keystone.


https://financialpost.com/commoditie...-against-biden

[burn_this_city]

Originally Posted by CaptainCrunch

https://www.worldoil.com/news/2021/2...eid=b4ade1b61a


I mean why not, Russia and Saudi Arabia literally have no environmental standards for Oil, and don't really give a crap about Carbon emissions, so this move will just increase that.



Plus pumping a ton of money into hostile states.

I'm skeptical either country can meaningfully add to their production long term for technical reasons. The Saudis has been planning 12.5Mbdp for over a decade and never got there. American oil hasn't exactly been held to rigorous environmental standards, when the TRRC allows 750mm cu/ft of natural gas to be flared everyday.

SA has the second lowest upstream GHG emissions per bbl in the world, Russia is mid pack. That is a function of their reservoirs and the type of crude they produce.

[CaptainCrunch]

The Saudi's also recently got busted for massively understating their emissions


https://www.bloomberg.com/news/artic...rbon-footprint


Beyond the low environmental standards of Russia and SA and the use of tankers to bring Oil over the ocean, these are two regimes that really shouldn't be getting huge revenue bumps because Canada and the US are following some idealistic foolish crusade.

[burn_this_city]

Originally Posted by CaptainCrunch

The Saudi's also recently got busted for massively understating their emissions


https://www.bloomberg.com/news/artic...rbon-footprint


Beyond the low environmental standards of Russia and SA and the use of tankers to bring Oil over the ocean, these are two regimes that really shouldn't be getting huge revenue bumps because Canada and the US are following some idealistic foolish crusade.

They omitted their downstream emissions, but I largely buy into the idea that their upstream oil production is near the bottom globally.

I think people are overestimating how much or how quickly global demand will go down. Last year really illustrated how much demand is sticky even when the OECD have their citizens largely sit at home and drive rarely. Global aviation down huge, lockdowns ect, demand down less than 5%.

Biden impairing shale is probably going to be a myth more than reality. It's mostly going to be investors forcing companies to generate a return rather than grow at any cost that will cap US growth.

[flamesfever]

The way I see it, unless there is a price spike in oil, a war breaks out, or we get someone in Ottawa who gives a damn, there is not much pressure on Biden to do anything on Keystone. I think the US is still able to maintain production at present prices, and court action usually takes years to resolve.

[Lubicon]

Yesterday Shell announced their framework plan for getting to net zero emissions. Predictably, environmental groups say this is not good enough.

https://www.shell.com/energy-and-inn...V9hbWJpdGlvbi8

[Locke]

Originally Posted by Lubicon

Yesterday Shell announced their framework plan for getting to net zero emissions. Predictably, environmental groups say this is not good enough.

https://www.shell.com/energy-and-inn...V9hbWJpdGlvbi8

What are Environmental Groups doing to get to Net Zero emissions?

Shall we inspect the Furnaces in their offices?

[calgarygeologist]

Originally Posted by Locke

What are Environmental Groups doing to get to Net Zero emissions?

Shall we inspect the Furnaces in their offices?

They have the social license to preclude criticism.

[Locke]

Originally Posted by calgarygeologist

They have the social license to preclude criticism.

I revoke it.