Official (Alberta) Oil Discussion Thread

[Ducay]

Originally Posted by Bill Bumface

Disagree. While yes, buybacks can be totally benign in some scenarios, we now see buybacks at levels never seen before across industries.

This indicates that capital is so plentiful, that businesses can't keep up with allocating capital to their core value creation streams. It's a cheaper/easier lever to pop numbers for quarterly reports to make the execs look good. The whole point of capitalism is that capital gets allocated to value creation, and value creation has a side effect of job creation. The entire system is so slanted toward corporations right now that they have to find a way to basically dispose of their excess capital.

I know this reply is almost a month old, but I missed it. I don't really know where to start with an answer for your statement since it is so detached from reality. You clearly don't have a good understanding of business or the oil patch; your post reads like a typical leftist uneducated "hit piece", the call out of "corporations" as being evil is a dead giveaway.

Normally I'd point out that buybacks have very little impact on ability to "pop number for quarterly reports" given they are effectively a long term investment in your own company. Would you accuse Exxon of trying to make their numbers "pop" by investing in BP shares? It is effectively the same thing.

But in all seriousness you're actually right, most companies in the North American oil patch have so much excess capital right now they are just doing these evil corporationy corporation buybacks to line their own pockets with corporation money - that it is sick! Golden parachute executive bonuses too $15 minimum wage wealth distribution 1% equality for all. Just another trick by the bourgeoisie to keep the proletariat down.

[AltaGuy]

"TypIcal leFtist unedUcated hit-piece!!!!!!!"

... Proceeds to answer well-reasoned post with nothing but some strawmanning and weak sarcasm.

[DiracSpike]

Buy backs are just another way of returning money to shareholders, same as dividends are. Dividends for some reason don't seem to encounter the same wrath. Excess cash at the corporate level could theoretically be used for growth, but what if you don't have any enticing growth opportunties? What if you're a large bank or multinational like GE? Are you supposed to just shovel money out on something you hope grows your business? I personally don't think that makes a lot of sense. The better strategy is to return capital to shareholders to help keep your stock competitive with the "growth" companies in tech and other industries that actually have good growth avenues. The most acute illustration of this is our large oil companies here before the pandemic. It's moronic to invest in growth here because you literally can't send your production anywhere so the only other thing you can do with your excess cash is to return it to shareholders. You can argue about whether dividends or buybacks are better/more efficient, but it's not clear to me at all that buy backs are some giant scam to enrich executives while dividends are not. If you feel your stock is undervalued it makes sense to buy your own shares. And the executives and board members of these companies own massive chunks of shares so any dividend increase is a direct raise to them personally so they profit either way. Buy backs have become this weird boogeyman and I don't really understand it.

[Yoho]

https://twitter.com/user/status/1324050181764034562

[Looch City]

My grandkid's grandkid's grandkids will be talking about KXL.

The Earth will be a barren desert and we'll still be talking about KXL.

We'll have colonized Mars and Jupiter (don't ask me how) and we'll still be talking about KXL.

[Ashasx]

Originally Posted by Yoho

https://twitter.com/user/status/1324050181764034562

summary for people who aren't subscribed?

[Bill Bumface]

Originally Posted by Ducay

You clearly don't have a good understanding of business or the oil patch; your post reads like a typical leftist uneducated "hit piece", the call out of "corporations" as being evil is a dead giveaway.

Eh, I worked in the industry for over a decade. I'm have a close relative who's an executive in the industry. I'd rate myself as fairly familiar.

Originally Posted by DiracSpike

Buy backs are just another way of returning money to shareholders, same as dividends are.

That was my whole point. Why does a company engage in buy-backs or dividends? Because they are unable to allocate capital in their core business and receive the desired return.

What does a business gain from dividends or buy-backs?

Looking at it from a fairly simplistic view, Dividends retain investors seeking stability in environments of low growth. Buy-backs attract new investors looking for share price growth in areas of low growth.

I don't even remember the point of my original post, but I think it was along the lines that public subsidies for companies that are engaging in buy-backs are not likely to produce greater economic activity and employment, as the companies are sending a strong signal they don't have growth opportunities in their core business. Effectively the government is now dumping money arbitrarily at shareholders in a single industry.

This is very different to incentives and subsidies in growth industries, where jobs and economic activity are created. This is a much better return on public money.

[woob]

Originally Posted by Ashasx

summary for people who aren't subscribed?

I haven't read it either, but I'll take a stab;
- Nothing new or ground breaking
- Written because US Election and easy clicks.
The end.

[Weitz]

Tourmaline picked up Jupitar and Modern Resources. Will likely result in job losses.

The great merging of 2020 continues!

[Bill Bumface]

When CNRL and Suncor inevitably merge I hope they settle on Acme Oil Co. for the name.

[Locke]

Originally Posted by Looch City

My grandkid's grandkid's grandkids will be talking about KXL.

The Earth will be a barren desert and we'll still be talking about KXL.

We'll have colonized Mars and Jupiter (don't ask me how) and we'll still be talking about KXL.

We'll have an oil pipeline from Mars to Earth and we'll still be talking about KXL.

[FlameOn]

Lets be realistic here with KXL. It was already dead in the water when it hit Montana's court injunction before the election and neither Trump or Biden would have made a difference.

The UCP basically paid $9B of Alberta taxpayer money to help companies write that off.

[Tron_fdc]

Originally Posted by FlameOn

Lets be realistic here with KXL. It was already dead in the water when it hit Montana's court injunction before the election and neither Trump or Biden would have made a difference.

The UCP basically paid $9B of Alberta taxpayer money to help companies write that off.

Wasn't it $1.5B in undisclosed cash (stock?) for 2020 construction and the rest loan guarantees when it is being constructed?

Just so we get the rhetoric correct here.

"US$1.1 billion (C$1.5 billion) in the Keystone XL pipeline, TC Energy Corp. said Tuesday, while confirming plans to proceed with the project.

The Calgary-based company said the province’s investment will cover planned construction costs through the end of the year. The remaining investment of US$6.9 billion is expected to be made over the next two years and funded through a US$4.2 billion project level credit facility that’s being guaranteed by the Alberta government, and a US$2.7-billion investment by TC Energy."

My accounting might be a little rusty, but I don' think the Ab gov paid $9 billion so TC could write the project off

[burn_this_city]

The government is only in for $1.5B as far as we know.

[Leeman4Gilmour]

I know Biden said he'd cancel it and he might. But, TC helped their cause

https://www.keystonexl.com/project-u...d-keystone-xl/

That's a lot of money on the table for American workers going through an already difficult time. That kind of money was always on the table, but now it's committed dollars. It'll make shutting it down a bit trickier.

[FlameOn]

Originally Posted by burn_this_city

The government is only in for $1.5B as far as we know.

Originally Posted by Tron_fdc

Wasn't it $1.5B in undisclosed cash (stock?) for 2020 construction and the rest loan guarantees when it is being constructed?

Just so we get the rhetoric correct here.

"US$1.1 billion (C$1.5 billion) in the Keystone XL pipeline, TC Energy Corp. said Tuesday, while confirming plans to proceed with the project.

The Calgary-based company said the province’s investment will cover planned construction costs through the end of the year. The remaining investment of US$6.9 billion is expected to be made over the next two years and funded through a US$4.2 billion project level credit facility that’s being guaranteed by the Alberta government, and a US$2.7-billion investment by TC Energy."

My accounting might be a little rusty, but I don' think the Ab gov paid $9 billion so TC could write the project off

Yes, misstated total project cost vs. what the taxpayer is on the hook for.

[Weitz]

Originally Posted by Leeman4Gilmour

I know Biden said he'd cancel it and he might. But, TC helped their cause

https://www.keystonexl.com/project-u...d-keystone-xl/

That's a lot of money on the table for American workers going through an already difficult time. That kind of money was always on the table, but now it's committed dollars. It'll make shutting it down a bit trickier.

The news has some American Public Policy professors on to talk about it last week. Basically came down to if Biden won handedly and had both houses he may cancel it. But there is a lot of union jobs and money involved. Now that its going to end up being a close election, it will likely go ahead.

[Ozy_Flame]

I don't think it will be cancelled under Biden. He's going to need to keep that if he wants to win over Republican voters, and govern not blue states, not red states, but the United States of America.

[DeluxeMoustache]

Originally Posted by Leeman4Gilmour

I know Biden said he'd cancel it and he might. But, TC helped their cause

https://www.keystonexl.com/project-u...d-keystone-xl/

That's a lot of money on the table for American workers going through an already difficult time. That kind of money was always on the table, but now it's committed dollars. It'll make shutting it down a bit trickier.

They covered a lot of bases including green investment and equity for indigenous stakeholders, and got the press release out a week ahead of the election. Pretty decently played and the timing was not a coincidence

Keystone XL highlights

Advances North American energy security
Committed to a greener future by creating $10 million clean energy training fund
Established Indigenous communities as long-term partners
Creating approximately 13,000 high-paying union jobs in the U.S. and Canada
Supporting over 60,000 jobs across North America

[Tron_fdc]

My guess is he green lights Keystone and also maintains fracking. Too many jobs at stake at the moment.