November 1st

Let’s take a walk around the world and see what is happening…Borish Johnson managed to persuade the UK parliament to vote themselves out of a job and an election is underway in Britain. Voting on December 12th. While Borish begins with a huge lead in the polls and Jeremy Corbyn is being pummeled by his enemies within his own Labour Party, it will be a roller coaster ride. The ride will be made more interesting by Nigel Farage, leader of the Brexit party, who wants a deal with Borish on condition that he tears up the deal done between the UK and the EU which parliament kind of voted in favour of. 200 years from now, when the Brexit negotiation celebrations continue, we will be asking “what was Borish thinking?”. Silly question – does he ever?

Donald Trump (a.k.a as the Kremlin Employee of the Month), fresh off his performance as Commander of Kill Team al-Baghdadi, now faces a public impeachment process in the House and on CNN. It will be great television and Twitter will make a fortune. Meanwhile, Ivanka and Jarred are quietly plotting a takeover of government while “The Yellow One” is distracted. Their plan includes installing Barron as Secretary of State, selling the Pentagon to the Israeli’s and offering Betsy de Vos up as a sacrifice to assuage the impeachment gods. Ivanka herself will be offering a new line of impeachment shoes. It’s no wonder that the Donald has moved his official residence from New York to Florida.

In Canada, the Wexit party is seeking to separate some Western Provinces from the rest of the country. (For my British readers, this is equivalent of seeking to separate Lancashire from the rest of the UK – not necessarily a bad thing, but then I am a Yorkshireman!). They are angry that they cant control the economy, the weather, plant growth and the NHL – I think that’s right. I must say, it is all very confusing. They want the world to buy Alberta oil and gas at a very high price so that we can all go back in time for tea.

Justin-time Trudeau has asked former Liberal Deputy Prime Minister Hon. Anne McClelland to help him think about how to connect to Western Canada. She has suggested moving parliament from Ottawa to Lethbridge, gifting the Trans-Mountain Pipeline to Treaty 6 First Nations and selling the National Energy Board to CNLR might be a good start. She also thinks declaring Quebec a terrorist state would appease Jason Kenney, the Premier of Alberta-Wexit. Scrapping the Carbon Tax and replacing it with free money for anyone who can demonstrate Welsh ancestry is, apparently, now off the table.

A large energy company currently based in Alberta has decided to move to the USA. Encana, soon to be called Ovinitiv (just rolls off the tongue doesn’t it), cites access to capital and the fact that the CEO is American who lives in Denver and can’t spell Alberta as the basis for the move. They say there will be no job losses, but then Brexit was due to be done yesterday, climate change is “just a theory” and Big Foot is alive and well.

Halloween passed without much fuss. An elderly gentleman followed his grandchildren around with a shot glass in the hope that, while the kids got candy, he could get a top up of scotch. I must stop doing this. People will soon catch on that the kids aren’t even my own grandkids!

November 3rd

I am engaged on a year long set of explorations. One is to rediscover poetry – a fascinating exploration which I am really enjoying. Another is to continue to explore music which others tend to ignore. For example, last night’s Edmonton Symphony concert included two pieces not often performed – the Rachmaninoff 4th Piano Concerto and Shostakovich’s 11th Symphony (1905). Stunning. Simply stunning. A third exploration is to explore my self – understanding what makes me tick.

I am using a program of questions to do this – The Mind Journal. I chose this (and also a set of cards from Best Self) so that I didn’t have to ask myself the questions I need to explore, they are asked of me. All I had to do was to explore – this is just the same as a mountain climber – the mountain is “given”, you just have to work out how to climb it.

The question today was “what is your biggest fear – why and how does thinking about this fear make you feel?”. Good question.

My response is blindness is my biggest fear – losing my sight.

It seems unlikely that this will happen. I have regular check-ups and will, at some point around 3-5 years from now, need cataract surgery (pretty straightforward these days), but I dont have a genetic disposition to blindness (at least, according to 23&Me) and at 69 my sight is fine.

But it comes from the day that I was told my sight was bad and I needed glasses – I was 10 or 11. It was an awful moment. I have worn glasses ever since (and have no interest in contact lenses).

Why is this a big thing? I am a writer and the key to writing is reading – I read a lot. I am also a very visual person – movies, art, dance, opera, television, cooking (a very visual activity) – are all key to my life. Right now, as I write I am listening to music (Dohnányi Piano Quintets), writing and keeping an eye on second screen. Not being able to see would be a huge change for me, and one that I would find extremely challenging.

My other fear, I realized, was that I would have to become a full time carer. I had a long chat with friend and colleague whose father has dementia (I have several friends who have or have had parents with this condition) – it is so distressing. I am not good as a patient, but I am even less good as a nurse. I couldn’t stand day in and day out being on call, cleaning up after someone, not being recognized and being (basically) abused every day.

What I don’t particularly fear is death. “I am not afraid of death – I just don’t want to be there when it happens” – Woody Allen, who also said “I don’t believe in the afterlife, but I am bringing a change of underwear!”. (Woody is a naturally funny man. Saw him do stand-up in New York once – he came up with the line “I was in analysis. I was suicidal. As a matter of fact, I would have killed myself, but I was in analysis with a strict Freudian and if you kill yourself they make you pay for the sessions you miss!” and also “I was thrown out of college for cheating on the metaphysics exam; I looked into the soul of the boy sitting next to me”).

Such explorations, when you get to my age, are interesting. It is a good time to consider writing fiction!

November 4th

How easy it is for someone to be captured by a narrative and not be able to escape it. Another energy company has shuttered its doors and laid off its staff and a colleague blames Justin Trudeau. He may just as well blamed the bloke with a flat cap who took his whippet for a walk around Tyersall Park in Pudsey (nr. Leeds) yesterday afternoon.

Company decisions are based on a range of factors and market uncertainty is one, but so too are poor management decisions and really bad risk taking This company offered completion services for gas and conventional oil – .as drilling is declining, due to price and demand, demand for their services has fallen. They are a US owned company, though headquartered in Calgary. Around 90 people will lose their jobs.

The Trudeau argument has these elements to it:

He has said several times that oil and gas has a limited future – this upsets people, despite the fact that world-wide demand is falling and other forms of energy (hydro, thermal, wind, solar and hydrogen) are growing quickly and, given the advances in storage and battery technology, will accelerate. Trudeau is telling it as it is.

He has also introduced legislation – one putting into law a voluntary ban on tanker traffic which has been in place for 30 years and another cleaning up environmental review legislation which was a mess. It was this latter mess that led to court ordered delays in the construction of a pipeline which Trudeau then (a) bought; and (b) consulted on again; and (c) approved for a second time.

Trudeau also is said to have ignored the plight of Calgary, despite having poured twice as much money into the economy in 4 years as Stephen Harper did in 10.

The reality is somewhat different from the narrative. Alberta’s conventional oil production has been in decline since 2014 (-4.5 percent CAGR). Overall
production for oil (not including penates plus and condensate) fell from 590 Mbpd in 2014 to 490 Mbpd in 2018. However, the declining trend ceased in 2017 – 2.5 years into Trudeau’s term. Pentanes plus and condensate output has been on the rise (17.9 percent CAGR over the same period) reaching 351 Mbpd in 2018, adding 170 Mbpd since 2014 (CAPP 2018).

What this whole argument is about is finding someone to blame for the world changing in front of your eyes (see my post on The In-Between Time). The narrative could not possibly blame oil and gas companies, the way capital markets work, shifts in the economy, company management or the attractiveness of other markets. After all, doing so is what we do when retailers like Mothercare (UK) or Sears Canada collapse, but “oil and gas is different”. We get to blame someone in particular.

I get it. Calgary is hit badly by the change in the energy economies worldwide. But so are other energy economies. EP Energy in Houston declared bankruptcy last month with debts of $4.97 billion. Of the 21 Houston companies that have gotten delisting warnings from their various stock exchanges since the start of 2019, 12 of them were either oil and gas producers or direct service providers to such companies. The biggest filings for bankruptcy in Houston so far include the oilfield services giant Weatherford International and a slew of oil and gas producers such as Houston’s Sanchez Energy, Halcón Resources, Vanguard Natural Resources and Midland-based Legacy Reserves.

Stop looking for a scapegoat and try understand the economy and how business works in complex capital intense markets. Expect more pain, not less. We’re witnessing a massive shift in the nature of investing, in capital flows, in intangible asset growth and the way corporations manage debt.