Saudi Arabia - Signals of Continuing Change in its Relationship with the US

The US is gradually divesting itself of Saudi Arabia, or at least, of its dependence on oil.  There are several indicators of a sea change in America's attitude towards Saudi Arabia: the game changer of fracking, a growing disgust on the part of the general public with Saudi Arabia's medieval social policies and its export of fundamentalism.  The most recent signal is captured here.  It is one of an escalating series of signals that will inflame American opinion and no manner of Saudi-funded public relations campaigns will be able to diffuse this trend.  Will China , Russia or India step in the fill the political vacuum?

In December 2002, a joint Senate-House intelligence committee published its findings on the horrendous 9/11 terrorist attacks, which included evidence of possible links between the government of Saudi Arabia and some of the 15 Saudis involved in the bombings of the Pentagon and Twin Towers that cost nearly 3,000 American lives. For national security reasons, the 28 pages detailing that information were never published. But they may be shortly and revive yet another intense examination of alleged Saudi support for anti-American terrorism. 
https://www.wilsoncenter.org/publication/saudi-arabia-faces-the-missing-28-pages#sthash.Bta4U6RG.dpuf

The advent of capacity to move oil to tidewater terminals will revitalize Canadian oil producers.  They have made great strides in reducing extraction costs.  The present round of rationalization will eliminate the weak and position the sector to compete more effectively in international markets.  I doubt the extent to which the Saudis will be able to beggar the rest of the world oil producers through their efforts to expand their market share.  It is not sustainable from a financial viewpoint and certainly not from a international political perspective.  We are in for “interesting times”.

Look for the re-emergence of support for a southern pipeline from Canada as the US seeks to strengthen its energy security.

Update on Input Capital

In a post dated April 12, 2016 I recounted a conversation that I had with a seasoned investor.  We had differing views about the value of Input Capital.

Here is the gist of my account:

I discussed the company with an experienced professional investor. He made two remarks:

• noted that the company had lost a major streaming contract that went south
• that why would he invest in such as company as he had great expertise in commodity trading - why engage the services of Input Capital?

I was too polite to take him to task at the table but here is my take:

• It is expected that young companies will encounter glitches along the early road, particularly those with pioneering business models.  
• I informed him gently that Input quickly moved to tighten its due diligence and to reduce the size of streaming contracts - also that it had negotiated many more contracts thereafter.  I was impressed by the ability of the company to learn and adjust its practices.

As to the "why" of investing in a company, the man was blinded by his outlook.  He looked at the company from a strictly personal point of view and ignored the possibility that others might have a different outlook.  To my mind, the company provides a retail investor with diversification to agricultural commodities (in this case, rape seed) and also the potential for gain due to the profitability of the company.  He is entitled to his opinion as I am to mine ... and thank heaven for that. As my father-in-law used to opine:  "That's why they make Fords and Chevs."  

Today, Input Capital issued a news release about its efforts to address the loss of three streaming agreements:

REGINA, May 11, 2016 /CNW/ - Input Capital Corp. ("Input") (TSX Venture: INP) (US: INPCF) is pleased to announce that it has now substantially resolved the largest of the three streaming contracts which were terminated in November 2015.

As a result of management's determined collection efforts related to this streaming contract, the following results have been achieved:

In late March, Input took titled possession of approximately 2,000 acres of farmland;

On May 1, a farm equipment auction was held in which approximately 60% of the equipment held as security was auctioned. The auction was very successful, with over 800 bidders registered to bid and gross sales exceeding the expectations of the auctioneer; and late yesterday, the titles to approximately 3,000 acres of additional farmland were transferred to Input.

Input has taken possession of the balance of the equipment and is planning a second auction for June 2016.

The 5,000 acres of farmland now owned by Input have been rented to local farmers for the 2016 growing season. Input plans to market the land for sale after harvest and has already had several inquiries from potential purchasers.

Management expects that the proceeds of the auctions and the planned land sales will result in a complete recovery of Input's capital associated with this streaming contract.

http://s1.q4cdn.com/784243260/files/doc_news/Input-Capital-Corp-Announces-Account-Resolution.pdf

Enough said.  The market reacted very positively.