GREY:CNKEF - Post by User
Comment by
bigreturn11on Jun 25, 2016 10:36am
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Post# 24998189
RE:RE:Very low LMR
RE:RE:Very low LMRThe transaction of Alberta O&G assets makes sense. I think I've read between the lines. The Alberta assets were legacy assets with higher operational and environmental liabilities. The spinout of these assets to tournament were completed before the AERs LMR rating requirements were raised from 1 to 2. With Chinooks rating at 1.02 (barely meeting the former LMR cutoff ratio of 1), they were able to spin out the higher liability assets. This should boost Chinooks rating which will protect them against the higher security deposits which will be required for producers with ratios lower than 1. For a producer to aquire assets from other companies, I believe they will need a LMR ratio of 2 or more. Ultimately, the shareholder asset values will remain the same but will be held under two seprate umbrellas rather than one.
Seenms like a very timely and strategic move for the company. Great to see them staying ahead of the curve. Please comment if you have any thoughts or if you have other views.