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Fracking industry projected to have $300B in losses

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This is a real problem when we think of future for Pegulas and their ability to continue to be viable owners.  We're already seeing the affect of this related to the Sabres.  They're seeing a trifecta of problems in front of them that may mushroom faster than we think.  

 

1. Rocked in core industry, where they can't just "dig a hole if they need $"

2. No NHL ticket revenue given they won't make playoffs and will have difficulty putting fans in stands next season

3. While NFL teams get substantial revenue from TV contract, the Bills have big money re-signings ahead of them including coach and GM

 

https://www.cnbc.com/2020/06/22/shale-industry-will-be-rocked-by-300-billion-in-losses-and-a-wave-of-bankruptcies-deloitte-says.html?__source=twitter|main

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Good thing they are one of the richest owners in both leagues.  Put me in the category of absolutely zero concern.

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Posted (edited)

During times of pricing volatility within the oil & gas sector, it is much easier for companies with no debt to survive, meaning the Pegulas can layoff their workers, cut capital expenditures, cut SG&A, etc., to conserve cash and retain liquidity.  If their oil & gas companies have no debt as been reported, then they will survive a downturn. Think of it like losing your job, but your house is paid for, you have no other debt, and a million dollars in your bank account. You have enough money to buy groceries and pay your utilities until you find another job.

Edited by Southtown Tommy
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35 minutes ago, Mark80 said:

Good thing they are one of the richest owners in both leagues.  Put me in the category of absolutely zero concern.

That will change quickly 

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Posted (edited)

The problems with the Sabres is they make bad trades, don't draft well past the obvious picks, sign expensive and unproductive free agents, and hire the wrong people.  The team has no identity and no vision on what kind of style or image they want to communicate.  When you think of Sabres what image comes to mind?  For me its draft lottery.   

 

The problems facing the fracking industry were well articulated by many several years ago but ignored.  More or less living on borrowed money and not generating enough income to service the loans, energy in greater than energy out, and very high depletion rates which required more and more drilling to just keep pace while seeing lower flow and production rates from new wells as fields got played out. 

Edited by All_Pro_Bills
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45 minutes ago, cage said:

This is a real problem when we think of future for Pegulas and their ability to continue to be viable owners.  We're already seeing the affect of this related to the Sabres.  They're seeing a trifecta of problems in front of them that may mushroom faster than we think.  

 

1. Rocked in core industry, where they can't just "dig a hole if they need $"

2. No NHL ticket revenue given they won't make playoffs and will have difficulty putting fans in stands next season

3. While NFL teams get substantial revenue from TV contract, the Bills have big money re-signings ahead of them including coach and GM

 

https://www.cnbc.com/2020/06/22/shale-industry-will-be-rocked-by-300-billion-in-losses-and-a-wave-of-bankruptcies-deloitte-says.html?__source=twitter|main

 

I could be wrong, but I thought the Pegulas sold virtually all of their oil and gas assets year ago to Shell.  That’s why they are so wealthy.  They may a few little assets here and there, but that’s just chump change—more for a hobby. 

 

Am I wrong? Are they still in the oil and gas business? 

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Posted (edited)
15 minutes ago, JR in Pittsburgh said:

 

I could be wrong, but I thought the Pegulas sold virtually all of their oil and gas assets year ago to Shell.  That’s why they are so wealthy.  They may a few little assets here and there, but that’s just chump change—more for a hobby. 

 

Am I wrong? Are they still in the oil and gas business? 

I thought the same thing. They got rich selling the leases they had paid almost nothing for years before. They were never that big or profitable from drilling and production. They got lucky and got rich selling leases on properties they could not develop using conventional drilling techniques they had bought them for, and made an unexpected fortune when big multinationals later developed fracking technology, and suddenly previous marginal or worthless leases became valuable.

Edited by simpleman
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41 minutes ago, Southtown Tommy said:

During times of pricing volatility within the oil & gas sector, it is much easier for companies with no debt to survive, meaning the Pegulas can layoff their workers, cut capital expenditures, cut SG&A, etc., to conserve cash and retain liquidity.  If their oil & gas companies have no debt as been reported, then they will survive a downturn. Think of it like losing your job, but your house is paid for, you have no other debt, and a million dollars in your bank account. You have enough money to buy groceries and pay your utilities until you find another job.

 

Wouldn't paying for the loans taken out to buy the teams count as debt? Assuming they didn't pay for it outright.

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12 minutes ago, JR in Pittsburgh said:

 

I could be wrong, but I thought the Pegulas sold virtually all of their oil and gas assets year ago to Shell.  That’s why they are so wealthy.  They may a few little assets here and there, but that’s just chump change—more for a hobby. 

 

Am I wrong? Are they still in the oil and gas business? 

If you check the investment section on the Wikipedia link it indicates that they have sold some of their oil and gas assets and have also kept them. From a business standpoint their strategy for their multiple business enterprises is to hang in and survive until the health and business environments improve. They are following the same basic business strategies of most businesses to tighten up and adapt to the new world challenging reality. 

 

https://en.wikipedia.org/wiki/Terry_Pegula

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18 minutes ago, JR in Pittsburgh said:

 

I could be wrong, but I thought the Pegulas sold virtually all of their oil and gas assets year ago to Shell.  That’s why they are so wealthy.  They may a few little assets here and there, but that’s just chump change—more for a hobby. 

 

Am I wrong? Are they still in the oil and gas business? 

 

You're not wrong.

 

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Posted (edited)
5 minutes ago, HardyBoy said:

 

Wouldn't paying for the loans taken out to buy the teams count as debt? Assuming they didn't pay for it outright.

 

They paid outright - no loans.

 

Shortly after Mr. Wilson passed, The Pegulas liquidated a bunch of assets, which everyone took as an indicator that they planned to buy the Bills with cash, and they did. 

Edited by WhoTom
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They're going to sell the Sabres.  Just watch.

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The Pegulas aren't the only owners in trouble. Many owners borrow against the value of their teams because up till now it was guaranteed to increase in value 5-10% annually. The Houston Rockets owner just borrowed $300MM using the team as collateral. But banks are getting tight sphincters for lending these days. So expect many more stories of teams "getting lean."

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I don’t have too much of a problem with the premise of this post. A lot of companies are experiencing loss this year. But how in the world do you even come across this? It’s like you searched for problems to criticize the owners, and post them here to cause panic or worry.

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10 minutes ago, eball said:

They're going to sell the Sabres.  Just watch.

 

They seem to be having a hard time with the Sabres, not much the Pegulas do with that team seems to be working.  It's possible they sell the Sabres.

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Posted (edited)
13 minutes ago, eball said:

They're going to sell the Sabres.  Just watch.

 

They aren't in debt, unless they were borrowing against their teams. Besides who in their right minds would buy a sports team in the middle of a pandemic...in Buffalo? (Unless the plan is to move.)

Edited by PromoTheRobot
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The Pegulas stated a short while ago they carry no debt on their business, nothing for us to worry about.  That loss is on potential new business, not current assets. Get yourself a beer and relax, the rich are doing well as usual during this economic situation. Its us paycheck slaves that need to be worried...

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Posted (edited)

Didn't Terry already sell most of his fracking land so that money is already liquid or been re-invested in something else? Not really sure how much of his current wealth is depending on ongoing revenues from fracking...

 

"Pegula got into the fracking business in 1983 with a $7,500 loan from friends and family. His sale of the company in 2010 to Royal Dutch Shell netted him about $3 billion as majority owner. He subsequently sold company assets in Ohio and West Virginia in 2014 for $1.75 billion to American Energy Partners"

https://www.investigativepost.org/2018/05/08/pegula-back-fracking-and-violating-regulations/#:~:text=Pegula got into the fracking,billion to American Energy Partners.

Edited by Mrbojanglezs
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