RE:Deficit versus equityquicksilver545 wrote: I had a look at the financial statements dating back to 2006. We currently have a deficit of 182M, which has steadily ballooned in the past 3 years. The main difference compared to past years seems to be the asset valuation declining rather than big increases in liabilities, related to fair value adjustments.
I wonder, given the improvements in occupancy in Fort Mac, and rising real estate prices, what the change in fair value adjustments we receive at next report. I can't see how we decline further.
What reasonable value would be placed on the asset portfolio, and are the secured lenders willing to take some reductions?
The main reason why things asset valuation declined in the last while can be fully explained by a series of what some may call a "a series of unfortunate events".
1.) 2016 wildfire that caused over 88,000 people to leave their homes;
2.) 2020 flood causing $522 million in damage;
3.) price of oil turned negative in April 2020 (buyers were being paid to take oil off producer's/seller's hands)
4.) price of oil was at an uneconic level, between around 2016/17-2020/21 that there was no incentive for producers to build infrastructure or facilities to produce. It was more cost effective to leave reserves in the ground or shut-in production until things get better.
5.) increasing ESG pressures oil majors to stop oil production in favour of a green future.
It is a tough slog for anyone that has properties in Ft. McMurray for the last little while. It is no wonder that the share prices for LRT.UN and the LRT.DB.G have headed toward the toilet during that time.
I would imagine that we will see an increase in valuations in this next report, just because things have got better. It is a resiliant community and things are improving.