Official (Alberta) Oil Discussion Thread

[peter12]

Originally Posted by Scroopy Noopers

Both a quote of support ( “this is not the oil patch” ) and the GMs words were written in the original post that you guys are dissecting without having read it.

I still think what she did was ridiculous. Everyone loves to be a social media crusader.

[Sliver]

Yeah, I think it's fair if that changed Peter's opinion of things, but I was aware of the order of outrage this lady followed and my comments were all with that in mind.

[peter12]

https://www.google.com/amp/s/edmonto...-stop-tmx/amp/

This is actually great news. SCC will not hear an appeal from First Nations to overturn the Feb 4, 2020 decision to approve TMX.

[Fuzzy14]

Originally Posted by Bring_Back_Shantz

Now I obviously understand exactly what that means.
For example, I totally understand what "Rejection of leave to appeal" means.

But there are some dumb dumbs on this site, who don't understand it at all.

Maybe you should explain it to them. I would, but I understand it so well I would probably just explain it too well and no one would understand it.

I'm assuming this was a real request to clarify and not me being mocked

The leave to appeal which was rejected today seems to relate to the decision by the Federal Court of Appeal in September to allow/reject certain appeals for the second approval of the project.

This does NOT appear to be an appeal of the February 4th decision by the Federal Court of Appeal that the consultations were adequate, etc.

Basically, there are two events to be appealed: 1) the decision by the court on who is allowed to appeal and what the subject matter of the trial will be allowed to be (September). 2) the decision rendered by the court following this trial (February).

The leave to appeal has been denied for event 1. Leave to appeal for event two has not yet been requested, which the appellants have 60 days from the decision to do.

This seems to be supported by a Tsleil-Waututh announcement today that they intend to appeal the February decision.

[Scroopy Noopers]

Originally Posted by peter12

I still think what she did was ridiculous. Everyone loves to be a social media crusader.

Fine. But if you can’t see what transpired there and understand why people are bitching about you making everything about yourself, then I don’t know what to tell you.

I appreciate your views on a lot of topics, and overall I think you bring value to the board. But you fling more #### at the wall than GirlySports.

[Bring_Back_Shantz]

Originally Posted by Fuzzy14

I'm assuming this was a real request to clarify and not me being mocked

The leave to appeal which was rejected today seems to relate to the decision by the Federal Court of Appeal in September to allow/reject certain appeals for the second approval of the project.

This does NOT appear to be an appeal of the February 4th decision by the Federal Court of Appeal that the consultations were adequate, etc.

Basically, there are two events to be appealed: 1) the decision by the court on who is allowed to appeal and what the subject matter of the trial will be allowed to be (September). 2) the decision rendered by the court following this trial (February).

The leave to appeal has been denied for event 1. Leave to appeal for event two has not yet been requested, which the appellants have 60 days from the decision to do.

This seems to be supported by a Tsleil-Waututh announcement today that they intend to appeal the February decision.

It was a real request.
I didn't know what "Leave to appeal" really meant.

So basically it means:

September Decision defined who could appeal the decision on the approval for the project.

People were appealing this so that they would be able to appeal the decision on approval, but SCC said "Nope, we aren't hearing that appeal"

So the approval can still be appealed, but only by certain groups.

Is that right?

[Wormius]

Originally Posted by peter12

I still think what she did was ridiculous. Everyone loves to be a social media crusader.

That’s not an explanation of why it was wrong of them to take it to social media. Because you think “everybody is a social media crusader” isn’t meaningful.

[Fuzzy14]

So the approval can still be appealed, but only by certain groups.

Is that right?

Yep. Only the 5 groups which were granted leave to appeal originally will be allowed to ask for leave to appeal to the SCC. To my knowledge they have another 30 days to do so.

[Slava]

Wow. Today has been grim for Canadian oil and gas. $28 handle on WCS, dividend cut from Vermilion and overall just bleak out there.

[burn_this_city]

Today is a disaster, without the OPEC+ deal we will retest the 2016 lows. Forget double meat subs, there will be no bread soon. Any unhedged producers are going to get smashed.

[Roof-Daddy]

This is un####ing believable.

I was just kinda sorta recovering from the last crash and now along comes a pandemic to #### things up royally.

An absolute disaster.

[Rutuu]

Originally Posted by Slava

Wow. Today has been grim for Canadian oil and gas. $28 handle on WCS, dividend cut from Vermilion and overall just bleak out there.

Please tell me you saw the divvy cut coming? I've been smack talking my buddy at VET about its unsustainability for months. They're payout ratio was way above 100%. You just can't run a company that way. They had to trim and the divvy is still too high, you're still looking at capital destruction scenarios.

[burn_this_city]

Might see some shock bankruptcies from unhedged producers.

[username]

Originally Posted by Rutuu

Please tell me you saw the divvy cut coming? I've been smack talking my buddy at VET about its unsustainability for months. They're payout ratio was way above 100%. You just can't run a company that way. They had to trim and the divvy is still too high, you're still looking at capital destruction scenarios.

No, had it not been for this drop in oil price, the "divvy" wouldn't have been cut. Vermilion's payout ratio is not "way above 100%", it was 103% in 2019 and they cut their capital program for 2020 to ensure the dividend would be sustainable.

It was a 20 dollar drop in oil prices, combined with a YOY 65% drop in SP, that brought this cut to the "divvy".

[Slava]

Originally Posted by Rutuu

Please tell me you saw the divvy cut coming? I've been smack talking my buddy at VET about its unsustainability for months. They're payout ratio was way above 100%. You just can't run a company that way. They had to trim and the divvy is still too high, you're still looking at capital destruction scenarios.

A dividend cut there was bandied about months ago in the media. I did notice that they did what any CEO/CFO will do for this quarter though. Some kitchen sink accounting and blame everything negative on the virus.

[Rutuu]

Originally Posted by username

No, had it not been for this drop in oil price, the "divvy" wouldn't have been cut. Vermilion's payout ratio is not "way above 100%", it was 103% in 2019 and they cut their capital program for 2020 to ensure the dividend would be sustainable.

It was a 20 dollar drop in oil prices, combined with a YOY 65% drop in SP, that brought this cut to the "divvy".

This is the same answer he gave me for months. Three things:
1. I mentioned dividend payout ratio, that is dividend over net income. You are quoting a dividend over FCF ratio of some sorts. Different metrics.
2. If you are using a dividend to free cash flow metric you want it over 70%, anything less is a huge red flag and sustainability for that ratio is closer to 40%.
3. Oil is a cyclic commodity, you should expect fluctuations in FCF with more safety margin on a dividend.

You are entitled to disagree with the above, but it's been three points my friend and I have been arguing about for awhile now. The beer he owes me after today's cut will taste pretty sweet.

[Flash Walken]

Originally Posted by burn_this_city

Might see some shock bankruptcies from unhedged producers.

Can you explain this further?

[Weitz]

Originally Posted by Flash Walken

Can you explain this further?

Generally companies hedge their production (sell at fixed rate for fixed time no matter actual value) so if you’re not hedged you could be taking a beating. I’d be surprised to hear if anyone wasn’t significantly hedged in this market though.

[Flash Walken]

Originally Posted by Weitz

Generally companies hedge their production (sell at fixed rate for fixed time no matter actual value) so if you’re not hedged you could be taking a beating. I’d be surprised to hear if anyone wasn’t significantly hedged in this market though.

Yeah, your last part is what I'm looking for explanation of.

I could see getting surprised at the start of a bear market or an unforseen selloff, but I figured at this point most companies would be hedged or at least limited in their exposure to that level of pricing?

I suppose for some producers though it's tough to keep the lights on below $28 WCS even for a short period?

[Mayo]

Anyone know of anything going on at Husky? I know they have had a lot of upsets and disappointments recently - but boy is their stock temping

For a company with low debt & upstream/downstream exposure they are trading at some ridiculously cheap multiples