Canadian Pipelines finally getting built

[BLA + 1,666]

9 hours ago, Chris Kanaan said:

Warren Buffet bought into Suncor again last year.

Buffet also made a huge mistake and got caught by the shale quicksand with OXY.

I believe the "sweetener" deal which resulted in Buffet getting warrants are now worthless.

Also, the common shareholder now gets more then his preferreds at the time of the deal!

CNRL and Suncor are raking in massive amounts of FCF.  Even MEG is a FCF machine.

Look out OPEC after Keystone XL and Line 3 come online, let alone TMX.

Warren bought into Suncor for FCF.  Also. Suncor is a syncrude operation.  BIG DIFFERENCE BETWEEN SYNCRUDE AND DILBIT .

A new syncrude operation would be cost prohibitive.   Suncor and CNRL built syncrude production and refining many years ago. 

Don't confuse SYNCRUDE with DILBIT.

Also OXY  also gave Buffet a $10 Billion note at 8%.  Nice.

Edited February 11, 2020 by BLA

[Chris Kanaan + 22]

12 hours ago, BLA said:

Warren bought into Suncor for FCF.  Also. Suncor is a syncrude operation.  BIG DIFFERENCE BETWEEN SYNCRUDE AND DILBIT .

A new syncrude operation would be cost prohibitive.   Suncor and CNRL built syncrude production and refining many years ago. 

Don't confuse SYNCRUDE with DILBIT.

Also OXY  also gave Buffet a $10 Billion note at 8%.  Nice.

It seemed nice when Buffet did it but the poor old timer bought into the shale scam.

OXY yield on commons now are 7.81% and Buffet's warrants are worthless.

And you wonder why 2019 was one of Berkshire's worst ever?

Edited February 12, 2020 by Chris Kanaan

[BLA + 1,666]

7 hours ago, Chris Kanaan said:

It seemed nice when Buffet did it but the poor old timer bought into the shale scam.

OXY yield on commons now are 7.81% and Buffet's warrants are worthless.

And you wonder why 2019 was one of Berkshire's worst ever?

Warren bought over 7 million shares of OXY.  He said, "It's a bet on oil prices"

Stupid.  He should know better.  The stock market is not for "betting".  It's for investing. 

He then approved the OXY buyout of Anadarko.  

Stupid.  Way way way over paid.  PLUS had to pay Chevron $1Billion for Merger Termination Fee.

Stupid. 

Anyone investing in oil E&P companies before the shakeout and consolidation is STUPID. 

Plenty of shale oil reserves at low cost.

Shale industry has a Balance Sheet problem.

 

Edited February 12, 2020 by BLA

[ronwagn + 6,290]

On 2/10/2020 at 1:32 AM, Tom Kirkman said:

I would prefer to see the U.S  import heavy tar sands crude oil from Canada - a friendly ally - than import crude oil from Venezuela or the Middle East, which essentially hate the U.S. and would prefer to see "The Great Satan" dead.

If the U.S. could / would shift its heavy crude import supply over to Canada and away from Venezuela / Middle East, then it would be beneficial for Canada and the U.S.

(Yes, the U.S  still imports quite a bit of crude oil, despite what much of the media says otherwise.(

Anyway, then the Socialist Paradise of Venezuela and the Religious Dictatorships of the Middle East could be left to their own devices and mostly ignored by the U.S. and Canada.

Just a thought.

And let China ,with its allies, build an empire starting in Venezuela?

[Geoff Guenther + 317]

With the oil sands, the Alberta government should have been pleading with the federal government to run new nuclear, particularly modular nuclear, in the north of the province.  The oil could have been extracted using the heat from the nuclear, rather than by burning more oil and gas, and Alberta oil would be seen as "only" as dirty as everyone else's.

If there's an accident up there, not a worry - there aren't any cities that need to be vacated.  Animals around Chernobyl are also doing ok.

Other benefits? Albertans get a new industry to sell around the world. Oh, and Alberta has great drilling technology and a very stable Canadian Shield. They are better placed to come up with storage solutions for nuclear waste than anyone.

To me that sounds like a win all around.

[Gerry Maddoux + 3,627]

18 hours ago, Chris Kanaan said:

It seemed nice when Buffet did it but the poor old timer bought into the shale scam.

OXY yield on commons now are 7.81% and Buffet's warrants are worthless.

Chris, I'm not sure that Mr. Buffett is worried about the warrants. As I'm sure you know, he received 100,000 shares of cumulative perpetual preferred stock with a liquidation value of $100,000 per share and an 8% annual dividend. 

He can redeem his shares in at least ten years for 105% of the liquidation price--in addition to dividends. 

The warrants to purchase 80 million shares @ $62.50 will simply go unfilled, if this price collapse continues. 

As you point out, the yield on common shares is 7.81%, but this doesn't affect the guaranteed 8% that Berkshire-Hathaway receives. Basically, he just put $10 billion to work at 8%. If Occidental were to go tits-up, he'd be right behind the bondholders with his preferred shares. 

[Chris Kanaan + 22]

3 hours ago, Gerry Maddoux said:

Chris, I'm not sure that Mr. Buffett is worried about the warrants. As I'm sure you know, he received 100,000 shares of cumulative perpetual preferred stock with a liquidation value of $100,000 per share and an 8% annual dividend. 

He can redeem his shares in at least ten years for 105% of the liquidation price--in addition to dividends. 

The warrants to purchase 80 million shares @ $62.50 will simply go unfilled, if this price collapse continues. 

As you point out, the yield on common shares is 7.81%, but this doesn't affect the guaranteed 8% that Berkshire-Hathaway receives. Basically, he just put $10 billion to work at 8%. If Occidental were to go tits-up, he'd be right behind the bondholders with his preferred shares. 

Well I understand that is supposed to be "clockwork" but with shale, there is no guarantee of much left in the pot in ten years, let alone, after the bondholders.  Occidental has something like $40B in debt and is currently paying more in divy then EPS by 3-1 (if what I saw on Twitter was true.)  Once they cut the divy, it will see shareholders run for the hills.

This whole deal was very bad for shareholders and I suspect in a decade from now, we will be remembering this Buffet's worst investment of all-time.

 

[Gerry Maddoux + 3,627]

1 hour ago, Chris Kanaan said:

Well I understand that is supposed to be "clockwork" but with shale, there is no guarantee of much left in the pot in ten years, let alone, after the bondholders.  Occidental has something like $40B in debt and is currently paying more in divy then EPS by 3-1 (if what I saw on Twitter was true.)  Once they cut the divy, it will see shareholders run for the hills.

This whole deal was very bad for shareholders and I suspect in a decade from now, we will be remembering this Buffet's worst investment of all-time.

It wasn't good for shareholders, at this moment. But Occidental owns 2.5 million net mineral acres in the Greater Permian, 650,000 in the Delaware sub-basin. They are bringing in one monster well after another. If they had NO debt, their lifting cost would be $20/barrel. Like I say, if they play this wrong and Mr. Trump sells off the SPR and craters the oil price, or if a pandemic occurs, or any one of a number of Black Swan events, Berkshire-Hathaway will wind up with this, most likely. If the best happens, Mr. Buffett gets to make 8% a year in dividends, which is 800 million dollars a year, and then gets to cash in at 105%. If the worst happens, he gets 800 million a year up to the point of collapse, and then very well ends up with over 3 million net mineral acres at a time of peak oil and no debt and advancing oil prices. Now I ask you, how in the world is that a bad deal?