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  • $60 WTI Crude Yields 60% IRR Per Well For Diamondback Energy [View article]
    I have to say another great article VM, a company that I was aware of but have not paid sufficient attention to particularly with the Northern Midland acquisition. Looking forward to more of your gems.
    Jun 26, 2015. 09:06 PM | 1 Like Like |Link to Comment
  • Brookfield Infrastructure Partners: World Class Infrastructure Assets And Undervalued With Solid Growth Prospects [View article]
    Steve great point and thanks for adding it. Your totally right and I should have included it myself.

    I should also point out that BIP is able to continue as a cash generating business without making further acquisitions so with the exception of maintenance capex, costs attributable to revenues and finance/interest expense it can continue as a going cash generating concern, making it very different from other dividend paying businesses. It is also another reason why it is a superb defensive stock that still possesses solid growth characteristics.
    Jun 26, 2015. 07:29 PM | Likes Like |Link to Comment
  • Brookfield Infrastructure Partners: World Class Infrastructure Assets And Undervalued With Solid Growth Prospects [View article]
    Buzz & Rav distributions are paid out of FFO rather than net income. This is for a number of reasons but primarily because as a capital intensive business with reliable cash flows for the reasons explained in the article it is a far better measure of performance and liquidity.

    Going back to dividend 101, the standard payout ratio which is dividends/distributions paid divided by net income does not provide an accurate representation of the capability of a business to sustain payments in capital intensive industries with smooth cash flows. This is because net income includes a range of non-cash line items that distorting the true liquidity of a business.

    You will note that distributions are at around 68% of FFO and this is within the targeted 60% to 70% of FFO. Now this is quite sustainable because when we deduct maintenance capex from FFO the only operational cash expense in FFO (note interest expenses and G&A are deducted when calculating FFO) there is sufficient FFO remaining to meet distributions. This means they are not required to sell assets, draw down on their debt facilities or raise funds in order to meet their distributions.

    I hope that clarifies how distributions are paid, all information is available in company filings and if you require any further information please let me know.

    Jun 26, 2015. 12:19 PM | 1 Like Like |Link to Comment
  • Brookfield Infrastructure Partners: World Class Infrastructure Assets And Undervalued With Solid Growth Prospects [View article]
    alschroed I couldn't agree more and I am going to be taking a position, because there is so much to like about its business and management. I have been watching them for some time.
    Jun 25, 2015. 11:46 AM | 2 Likes Like |Link to Comment
  • Brookfield Infrastructure Partners: World Class Infrastructure Assets And Undervalued With Solid Growth Prospects [View article]
    ravthank you for the kind words and feedback. That is a great question. Any investment in BAM gives you broader exposure to a range of assets and this helps to mitigate risk but to be honest I am not a big fan of property and REITS. I much prefer the concentrated exposure of BIP to infrastructure and utilities, although I agree with the earlier comment about the poor performance of the power generating assets.

    What makes me a big fan of BIP is its ownership of transport infrastructure in South America and electricity transmission infrastructure as well as ports in North America. I also really like the position it has taken in Western Australia regarding rail, although that may come under pressure as the Australian economy feels the impact of lower iron ore, coal and metals prices.

    I also feel that BIP is a far lower risk investment with superior growth prospects because of the defensive nature of these assets, their wide economic moat and the growing demand for them as the population grows and global economic activity grows in coming years.
    Jun 25, 2015. 10:56 AM | 1 Like Like |Link to Comment
  • Canada's Woes: Why The BOC Is Unreasonably Optimistic [View article]
    Canada's banks have focused quite heavily on using mortgage lending in recent years as a key growth lever. You only need to look at their filings to see how aggressive it has been, and you can see how much both mortgages volumes and net interest income has grown since the GFC and the implementation of a low interest rate environment. How else do you think the big six were able to grow record profits and regularly hike their dividends in recent years?

    I am aware of the risk management and regulatory framework in Canada and while it is relatively conservative especially compared to the pre-GFC U.S. a number of banks have ratcheted up their risk appetites and become more aggressive in their lending practices. This has previously caught the eye of ratings agencies like Fitch and S&P as well as the BOC and CMHC.
    Jun 25, 2015. 09:24 AM | Likes Like |Link to Comment
  • Further Emerging Headwinds Set To Keep Oil Prices Low For Longer [View article]
    VM thank you for commenting. I agree that $70 crude appears to be some way off. I certainly agree with your views on drilling targets being economical at $60 WTI plus the collapse in crude prices has taught the O&G sector to be more disciplined with costs and capital which is a good thing.
    Jun 25, 2015. 08:38 AM | Likes Like |Link to Comment
  • Further Emerging Headwinds Set To Keep Oil Prices Low For Longer [View article]
    There are a number of factors that influence gasoline prices but the key driver is the price of crude and over the last few weeks the price of crude has rallied to now be close to US$60 per barrel for WTI as you can see in the article. But what your missing is that U.S. gasoline prices are now at their lowest level since late 2010.
    Jun 24, 2015. 02:03 PM | Likes Like |Link to Comment
  • Further Emerging Headwinds Set To Keep Oil Prices Low For Longer [View article]
    2Fatcats thank you for the feedback, I am quite pleased with the depth of the comments other readers have made and the different perspective they have provided, it is what makes Seeking Alpha such a powerful investment tool.
    Jun 24, 2015. 11:39 AM | Likes Like |Link to Comment
  • Canada's Woes: Why The BOC Is Unreasonably Optimistic [View article]
    I hope Entiene doesn't mind if I weigh in on this one. There are a wide range of factors driving the housing bubble with the low interest rate environment coupled with steady economic growth (driving higher employment and incomes) being key.

    As to when it will end that is anyone's guess. The sharp collapse in crude prices is certainly having an impact on the RE markets in Alberta and Saskatchewan but no material effect (if any) at this time on Toronto or Vancouver.

    There are those who take the doomsday view that a housing collapse is imminent and that will become a contagion that will significantly damage the financial system given the aggressive mortgage lending of Canada's banks.

    I don't subscribe to this view and believe that while households are hovering near record levels of debt, wealth has also increased significantly and this will help to act as a buffer to any housing meltdown. I also don't believe that there will be a meltdown but rather a soft landing in major markets and a somewhat harder landing in the regional overheated markets.
    Jun 24, 2015. 09:46 AM | 3 Likes Like |Link to Comment
  • Further Emerging Headwinds Set To Keep Oil Prices Low For Longer [View article]
    Marion great points and I have to agree part of the Saudi's strategy is to target Iran, Iraq and other non-aligned OPEC members. Perhaps there is a political motivation to pull those countries into line with SA's view of regional politics and hegemony?
    Jun 24, 2015. 09:21 AM | 1 Like Like |Link to Comment
  • Further Emerging Headwinds Set To Keep Oil Prices Low For Longer [View article]
    I doubt that the data is available to do that. As for the Forex reserves I think that you will be surprised as to how deep the Saudi's pockets are plus don't forget the burn rate will drop with WTI at $60 and Brent at $63. But from a long-term perspective I am in agreement with you.
    Jun 23, 2015. 08:18 PM | 1 Like Like |Link to Comment
  • Further Emerging Headwinds Set To Keep Oil Prices Low For Longer [View article]
    Snake thank you for bringing another perspective to the discussion. There are two sides to every market and while agree with your views pertaining to their older fields I don't think that really presents the full picture but rather cherry picked data to present an optimistic picture of oil prices.

    The Saudi's have a robust economy, deep pockets and considerable FX reserves and can easily sustain further losses for the foreseeable future.

    While the region my be unstable and engulfed by conflict SA is not caught in a warzone itself and I don't believe those risks really apply. If this was Iraq, Yemen, Afghanistan or Libya I would certainly agree with those sentiments.

    Furthermore, the Saudi's are not really producing at capacity. They still have reserves of around 1 million bbls daily and in the current environment there is little incentive to keep those reserves. Some analysts actually believe they will release those reserves onto the market but lets wait and see.

    Finally, as I also point out in the article they are investing considerable amounts in developing their existing fields in order to boost capacity and it is not too far fetched to see their capacity being aorund 11 million bbls daily by the end of 2015.

    But certainly looking forward to more comments and your perspective because it is those types of comments that prompt me to further develop my argument and investment thesis and add considerable value for other readers.
    Jun 23, 2015. 06:55 PM | 1 Like Like |Link to Comment
  • Further Emerging Headwinds Set To Keep Oil Prices Low For Longer [View article]
    TimmiesRegular thank you for the kind words and raising some great points. I agree that the number of unfinished wells to be brought online is a short-term issue but it will apply pressure to the oil price until those wells are completed. I think at this time the market has priced in an equilibrium of around $55 to $65 per barrel for WTI with those and other issues in play.

    When the hedges roll-off in 2016 for the majority of companies there is going to be a lot of pain felt across the industry but many companies will also remain profitable with the savage costs cutting that has gone on across the industry.

    I don't think that projects being shelved will have any material impact on supply until there is a change in demand.

    The key driver to push prices higher is an uptick in demand and for this to occur the market needs markedly greater demand from China (I doubt that will occur for sometime) and the EU which may just be in the books if the ECB's stimulus plan gains decent traction over coming months.
    Jun 23, 2015. 05:40 PM | 2 Likes Like |Link to Comment
  • Further Emerging Headwinds Set To Keep Oil Prices Low For Longer [View article]
    Yarak appreciate the comments and different perspective. As you state "They could simply have produced increasing amounts and optimized their revenue curve. " and this is exactly what they have done to push down the price in order to force higher cost producers out of the market i.e shale oil. T

    his aligns exactly with the thrust of your comment and as those producers shutdown and the oil supply falls then SA and OPEC are capable of filling the gap supply as and when it arises.

    It also works well for the Saudi's and other OPEC members because they have direct state control over the production of oil whereas in the U.S. it is privately controlled.

    At no stage have they announced nor does the article state "Instead they publicly announce they'll flood the market??" But the focus on boosting productive capacity certainly creates an interesting psychological phenomenon with the market (i.e. buyers and sellers) looking to see what they will do with that excess capacity. They could easily use it to flood the market creating a condition of oversupply that would push the price of crude down for longer foreign higher cost producers to shutter production as prices fall, furthering their objective explained above.
    Jun 23, 2015. 05:32 PM | Likes Like |Link to Comment
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