Author Topic: Future strategy to survive discovering 1 out of every 20 bbls of oil we now use.  (Read 85908 times)

Cardboard

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"According to auto-research company Edmunds, in 2015 and 2016, 40% of hybrid or electric-vehicle (EV) trade-ins in the US were for SUVs or trucks and over 10% for luxury cars."

This is pretty telling: many people were switching to hybrid's and EV's because the cost of gasoline had gone up too much.

I was glancing at a parking lot last week and the percentage of hybrids/EV's was at around 1-2%. From my earlier days investing into Autozone, I recalled the average of cars being in the 10 year average. It is not much different today.

So even if everyone decided to switch to EV's tomorrow morning to cut CO2 emission (obviously not the reason for the 40% of trade-ins mentioned above), it would likely take at minimum 10 years to switch over half of the existing fleet.

For many people, buying a new car is simply not a possibility as they don't have the money. On top of it, EV's are more expensive to acquire making it less affordable for those who can switch.

Then you have an enormous production system built around current cars with assembly lines, parts suppliers, castings, etc. that you would have to switch over to build something very different. You would need much higher supply of raw materials such as lithium, cobalt, copper, rare Earth metals. It takes around 10 years from time of discovery to opening of a mine. Then you have questions around grid capacity and where does that additional electric supply of energy comes from?

All considered, I am thinking that 20 years is a more reasonable target to switch over 50% of the current fleet and once again, that would mean that there is a desire and cost advantage for people to do it. Add another 10 to 20 years to go to 100% with those who can't afford to buy a new car and for other reasons.

Of course, this is somewhat static in terms of analysis since autonomous vehicles will likely affect the size of the fleet downward. There is also population growth which means an increasing fleet size. Overall, I think that making the assumption that fossil fuels will be with us for quite a while is not unreasonable. Could be a tappering of demand at around 100 million barrels/day but, that is still a lot of demand.

It would take a big shock to actually accelerate the transition and with lower investments by government pension funds (Norway for example) reducing capital availability to the industry it could well happen. Unfortunately, this could get very ugly for the economy if done in this manner.

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sculpin

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[/quote]

Not to turn this into a PPR thread but I posted this on SA comments and thought it would be worth posting here too.

Has anyone been paying close attention to the NAFTA lawsuit?

I didn't appreciate we might be close to a ruling as closing arguments are due next week in Montreal (Nov 24) following a hearing in front of a Tribunal in early October in Toronto.

Is anyone familiar with how long it takes the Tribunal to come to a ruling?

Given that the claim is for more than the entire enterprise value of the company, while it's not the investment case it's a nice option much like a clearer path to the development of the Utica shale would be as well. Best case scenario is a clear path to commercialization in QC with the capital to exploit it from the arbitration process.

Link to notice of hearing in Montreal next week: http://bit.ly/2jGKooB
Link to all other procedural details: http://bit.ly/2B5pzHM
[/quote]

Amazing isn't it?!? Here we have a Company trading at a fraction of just PDP in a rising oil price environment with the potential for a $250mm settlement plus costs but is completely ignored by a market that wants to pay $100's of millions & billions for companies with negligible revenues or assets that are involved in blockchain, marijuana or lithium.

SafetyinNumbers

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Amazing isn't it?!? Here we have a Company trading at a fraction of just PDP in a rising oil price environment with the potential for a $250mm settlement plus costs but is completely ignored by a market that wants to pay $100's of millions & billions for companies with negligible revenues or assets that are involved in blockchain, marijuana or lithium.
[/quote]

I checked with an event-driven sales guy today and he hadnít even heard of PPR let alone about the potential of this hearing. Just on a probability adjusted basis, this seems like a good risk reward. You could have a positive result on the suit which could be worth multiples of the stock price and/or Quebec policy could move further towards allowing fracking on PPR acreage which could be worth multiples of the stock price.

Plus you have Goldman owning over 50% of the company in credit funds that surely would like to get fair value for their stake which will only happen once both of these situations are resolved one way or the other.
ELF IAM GCM.DB.U/DB.V/DB.X PIF C.N

sculpin

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Amazing isn't it?!? Here we have a Company trading at a fraction of just PDP in a rising oil price environment with the potential for a $250mm settlement plus costs but is completely ignored by a market that wants to pay $100's of millions & billions for companies with negligible revenues or assets that are involved in blockchain, marijuana or lithium.

I checked with an event-driven sales guy today and he hadnít even heard of PPR let alone about the potential of this hearing. Just on a probability adjusted basis, this seems like a good risk reward. You could have a positive result on the suit which could be worth multiples of the stock price and/or Quebec policy could move further towards allowing fracking on PPR acreage which could be worth multiples of the stock price.

Plus you have Goldman owning over 50% of the company in credit funds that surely would like to get fair value for their stake which will only happen once both of these situations are resolved one way or the other.
[/quote]



As well, PPR owns these boomer gas wells in the Liard basin. Who knows when this could become commercial...

http://www.marketwired.com/press-release/lone-pine-resources-announces-shale-gas-land-continuation-pointed-mountain-liard-basin-tsx-lpr-1786774.htm


The results Forest Oil Canada got on PPR's Utica acreage with only vertical wells on an emerging shale gas play were very good given the learning curve potential & move to extended reach horizontals with modern day frac & technological advances.  As well, market access is excellent given that the play is situated in Eastern North America.

Utica Shale

Over the last two years, Forest has accumulated approximately 269,000 net acres, under lease or farmout, in the St. Lawrence Lowlands in Quebec, Canada. Two vertical pilot wells were drilled in 2007, testing the Utica Shale, to a total depth of approximately 4,800 feet. Production rates tested up to 1 MMcfe/d. Although the play is still in the early stages, Forest believes the initial results are encouraging due to the following factors:

Shallow depth of the shale

Rock properties are comparable to other more established shale plays

High-quality natural gas with minimal impurities

Infrastructure in place with nearby access to major pipelines

Premium natural gas pricing to NYMEX makes the economics compelling

Forest plans to drill three horizontal wells in 2008 to refine its drilling and completion techniques. Based on technical data and the vertical pilot well program, the preliminary net resource potential on Forestís acreage is estimated to be approximately 4 Tcfe. First production is expected in 2009 with the potential for a full scale drilling program in 2010 and beyond.
« Last Edit: November 20, 2017, 10:12:25 AM by sculpin »

HJ

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Probably a question with no answer, but is there precedent for this sort of thing working out for PPR? 

SafetyinNumbers

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Probably a question with no answer, but is there precedent for this sort of thing working out for PPR?

This is really interesting (if Iím reading it right).

See page 15. I think itís saying that 46% of cases going through this process are awarded all or partial claims. Thatís a giant percentage when the potential outcome is worth over $1/share and the stock is $0.45.

https://icsid.worldbank.org/en/Documents/resources/ICSID%20Web%20Stats%202017-2%20(English)%20Final.pdf
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sculpin

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This self-taught investor has outperformed Warren Buffett. Here's his top holdings right now

When Christopher Rees left home in 1966 at the age of 16, his parents thought he would be back in time for dinner. But he ended up wandering the world for several decades, working at jobs in difference places, including as a tailor in Afghanistan, a cook in India, a carpenter in Switzerland and a charter-boat captain in the Caribbean.

The thrifty Mr. Rees is also a self-taught investor who has invested his savings well enough to establish a track record better than his hero, Warren Buffett. He has made the right buy or sell call an astonishing 80-per-cent of the time for his "10STX" portfolio, registered since 2000 on Marketocracy.com. The return on his personal portfolio averaged 21 per cent a year over the past 25 years, as recorded on Tenstocks.com. Mr. Rees has appeared in publications such as Forbes, SmartMoney, The Times of London and The Globe and Mail Ė and was featured in Matthew Schifrin's 2010 book, The Warren Buffetts Next Door: The World's Greatest Investors You've Never Heard Of.

The Globe recently caught up with Mr. Rees to get an update on how things have been going since we interviewed him in 2008.

Is your investing approach still the same?

I haven't changed anything. My focus is still on trying to find companies selling at a discount to tangible book value, and/or special situation investments, while running a concentrated portfolio of around 10 stocks. I am often investing in companies that 97 per cent of investors would not touch with a bargepole. Sometimes, my portfolio can look like an undesirable collection of rotting fish-heads and dumpster debris. When I am buying, almost nobody agrees with me. I like it like that.

What are you investing in these days?

Currently my portfolio is focused on energy- and commodity-related investments. I think it's the only part of the market where there is still some value to be found. It's very unusual for me to be so concentrated in a single sector. Usually I diversify across sectors, currencies, and geographies. This concentration introduces a great deal of price volatility in the portfolio. I'm used to a lot of price volatility but this current sector concentration amplifies it even more. In the face of extreme price volatility, I focus more on the value of the underlying investments rather than day-to-day price gyrations. Those who invest alongside me don't always enjoy the ride. A strong stomach is required.

What are your top holdings?

The top five are Obsidian Energy, Vale SA, Chesapeake Energy preferred D shares, Suncor and Capital Product Partners. My biggest position is Obsidian Energy (OBE-TSX, OBE-NYSE), formally known as Penn West Petroleum. I've owned OBE several times over the years, including selling a chunk as high as $34 (U.S.) a share in 2008. Since then I've been to hell and back multiple times. But OBE is now a smaller, more compact company and I'm bullish on the long-term price of oil. Demand is increasing, and I think the supposed production threat from U.S. shale is way overblown. John Brydson, a director and board member, has been accumulating OBE stock for some time, his most recent, a purchase of 250,000 shares, was at $1.60 back in April. Mr. Brydson spent close to 15 years managing a $2-billion portfolio at Credit Suisse. He knows his stuff and he's on the inside. David French, the CEO, has also begun nibbling at OBE shares, with several buys in August and September at around a $1 a share. Obsidian Energy is my best idea.

What's your take on the stock market these days?

I am basically in a holding pattern, waiting for higher oil and commodity prices to sell stocks and raise cash. I really don't like this market. In my opinion, risk is way too high and reward is way too little. I'm currently 7-per-cent cash but would like to see it rise to the 40-per-cent range sooner rather than later. This market is toppy, overvalued and high risk. I want no part of it. I suspect in the next crisis of over-confidence there may be no place to hide. People will likely be forced to sell what they can, not what they want. The best place to be may be sitting on a lot of cash to be a buyer when some fear returns to the market.

You were in the Dominican Republic when we spoke in 2008. Where are you now?

I have relocated to a small beach town in Thailand. My 13-year-old daughter is fluent in Spanish, English and Thai Ė and is currently learning Mandarin and Japanese. One reason I moved to Thailand was because I was intrigued by [billionaire investor] Jim Rogers moving with his family to Singapore. His reasons for doing so made a lot of sense to me [in interviews with journalists, Mr. Rogers has said that he wants his heirs to grow up and live in Asia because he believes that's where the best opportunities will be over the next century].

https://www.theglobeandmail.com/globe-investor/investment-ideas/this-self-taught-investor-is-outperforming-warren-buffett/article37019857/

Cigarbutt

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sculpin,
Appreciate the post and reference to an investor I did not know, Mr. Christopher Rees.
He has a website. Unconventional but quite interesting. Instructive recent developments: his returns, his holdings and his outlook.
As I continue to wonder if I'm on the right side of statistical variance, when I read: "I do, and will, make mistakes. I'm really not a very smart guy. There are still plenty of things I don't know.", I sort of knew that this was worth considering.
I hope this guy hangs around as he does not seem to confuse a good run with superior skill.

SafetyinNumbers

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Back on PPR for a minute.

This development in Quebec has lit a fire under QEC and ATI. PPR has bigger exposure than both plus the added option of the NAFTA Tribunal which ends tomorrow (decision expected within a few months).

http://www.ledevoir.com/environnement/actualites-sur-l-environnement/513407/energies-fossiles-quebec-elargir-l-acces-aux-fonds-publics

Tax loss selling may be providing the opportunity (although that is the excuse I am using for any stocks that I own that are seemingly stuck in the mud).
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Cardboard

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I really hope that they win because when a company is willing to pay 15% interest on 4 year notes to drill mostly for gas at Wheatland to honour a commitment to a royalty company, it is pretty screwed up.

If at least they were running a tight ship, the situation could be explainable but, that is not the case. While G&A has somewhat improved it remains too high vs peers.

There is value in this company but, I am really unclear on the leadership to make it surface.

Cardboard