Tourmaline Oil Corp (Alberta) T.TOU

Net debt really a 250 million surplus with Tpz shares

[MyHoneyPot]

TOU has negative net debt and has a billion dollars worth of TPZ shares on the balance sheet that pay 50 million a year in dividends. So if you look at the presentation Dec 31 debt was .8 Billion, but if you take TPZ shares into account they have 250 million in share equity on the balance sheet. 

So the dividends from TPZ are above 5%, so as long as their debt is less than a billion, and their bank rate is less than 5% they haven't any net debt service charges. 

On a net net basis they have no interest charges with TPZ dividends taken into consideration. 

IMHO

[idleweiss]

The interest expense is approx 10 million a quarter or about 40 million a year. The rate that they pay dropped in the third quarter of last year because the Bank of Canada rate declined. But rates are expected to start rising again in March. It would be prudent to pay down this debt now that we are in a rising rate environment.

[GunnerG]

Still do get why it would be prudent to pay off low interest loan in a rising rate environment. From the notes of the FS. On October 8, 2021, Tourmaline increased the credit capacity of its revolving credit facility from $1.8 billion to $2.55 billion and concurrently cancelled the $950.0 million term loan, which had a higher interest rate. The aggregate borrowing capacity of the Company was

[GunnerG]

Should have read...Still DON'T get why it would be prudent to pay off....

[realcdn]

Agreed. Cheap fixed rate debt. No good reason to pay it off and rising rates only matter when it matures. 

[idleweiss]

it's not a fixed rate debt. It's on a line of credit with variable rate. And I am not talking about the senior unsecured notes.

[GunnerG]

Alright, then read this.  From the FS Sept 2022; At September 30, 2021, the revolving credit facility was not drawn. Bank debt The Company has a covenant-based, unsecured, five-year extendible revolving credit facility in place with a syndicate of banks, in the amount of $1.8 billion. In March 2021, the Company extended the maturity date of the revolving credit facility to June 2026

[idleweiss]

Read their financial statements before you post. The interest rate dropped from 1.9 percent to 1.57 percent in the third quarter. So they did well. But the rates could start moving up. Right now they've bank debt and they haven't used the line. But the bank debt carries a variable rate.

[GunnerG]

They have bank debt?  They have not drawn on the line of credit and paid off the $950M.  What is left? You are confused on this as you were on ex-dividend calculation. Can't fix stupid.  Later bud

[idleweiss]

I guess you must be feeling  BIG just about now. However, if I were you I would go back and do some more research: What do you call this if not a bank debt? "The Company has a $950.0 million term loan with a syndicate of banks. In March 2021, the Company extended the maturity date of the term loan to June 2026. With the exception of the change in maturity date, the term loan was renewed

[GunnerG]

Posted this two days ago. " On October 8, 2021, Tourmaline increased the credit capacity of its revolving credit facility from $1.8 billion to $2.55 billion and concurrently cancelled the $950.0 million term loan, which had a higher interest rate. "

[singsingasong]

Yeah OK. So he missed that little note to the financial statement. Why are you blabbering on you moron. Besides, there is no guarantee that the rate on the line of credit will not increase in the future. Which is what he was tryin to say. So, SCREW OFF!

[GunnerG]

Thanks for your valued input.  Just trying to present the facts of which he was wrong. Dont want people like you to get confused.

[singsingasong]

The facts are that the rates will go up - whether its on the LOC or tthe bank loan. So, cork your mouth for a change

[GunnerG]

singsing, let me point out where you have gotten things wrong.  Idel sta, ted he was not talking about the LOC nor the senior debt in previous posts.  Don't know why you bring it up other than you are confused as well. He was talking about the $950M bank debt that was retired; read his last post where he states that fact.  He wanted me to read the notes to the FS as more

[idleweiss]

he said that the note was "little" - not the debt. And are you suggesting that putting it on the LOC is the same as retiring the debt? Yes I missed the little note, but you sh$$thead have missed the bigger picture and that is that it is a good thing to retire debt when you are in rising rate environment irrespective of what your financial position is right now.