Glossary — The terms the desk uses

A

AECO #

also: aeco hub, alberta gas

The Alberta natural gas hub price. The benchmark Canadian gas producers actually receive. Frequently disconnected from Henry Hub by basin-takeaway constraints; the AECO discount is the structural reality, not a market accident.

AISC #

also: all-in sustaining cost, all in sustaining cost, all-in sustaining costs

All-in sustaining cost. The number a miner needs to receive per ounce or pound to keep producing without eroding the asset base. Below it for too long, the mine starves. Above it, the operator is making money. Watch the gap, not the headline price.

all-in margin #

also: fully loaded margin

The margin after sustaining capex, corporate G&A, interest, and tax — not just operating margin. The number that ends up in retained earnings. The rest is accounting.

B

breakeven price #

also: corporate breakeven

The commodity price at which an operator's full-cycle revenue covers its full-cycle cost of capital. Below it, the business is running on momentum. Above it, the business is compounding. The honest version includes sustaining capex and the dividend.

buyback #

also: share buyback, share repurchase, repurchase

Open-market repurchase of the company's own shares. Value-accretive when bought below intrinsic value; value-destructive when bought at the top. The 2015–2020 record separates the operators who bought when the stock was hated from the ones who issued when it was loved.

C

capital allocation #

also: capital allocators

The choice between reinvesting in the business, paying dividends, buying back stock, doing M&A, or paying down debt. The most important sentence an operator writes is the one about what they did with the last dollar. Most public-company underperformance is a capital-allocation story dressed up as something else.

capital intensity #

also: capex intensity

Capital spending divided by revenue or by production. A measure of how much investment a business needs to stand still. High-decline shale plays carry capital intensity north of 50%; long-life oil sands assets sit closer to 15%.

capital stack #

also: debt-to-equity, capital structure

The priority of claims on a company's cash flows and assets, spanning senior secured debt, mezzanine debt, preferred equity, and common equity. Real estate developers and corporate allocators optimize the stack to maximize equity returns while keeping the cost of capital and default risk within limits. The strength of the stack is tested at the trough, not the peak.

COMEX #

also: comex silver, comex gold

The U.S. commodity exchange for gold, silver, and copper futures. Spot prices most investors quote are COMEX prints. A futures market, not a physical delivery channel, and a poor proxy for what a miner actually realizes after royalties and treatment charges.

contract price #

also: long-term contract price

The realized price under a long-term sales agreement, generally tied to a formula referencing spot with floors, ceilings, and escalators. The number the operator actually gets paid. Usually disconnected from the day's headline.

cost of service #

also: cost-of-service rate, cos

A regulated rate structure that lets the operator earn an allowed return on rate base regardless of throughput. The other half of the pipeline turnpike model. The earnings are predictable because the regulator, not the commodity price, sets them.

cyclical #

also: cyclical business

A business whose earnings rise and fall with a broader macro or commodity cycle. Most operators on the Halvren desk are cyclical. The only investable cyclical is one that survives the trough without dilution.

D

decline rate #

also: corporate decline, production decline

The rate at which production falls year over year without new capex. Low-decline businesses (oil sands mining, conventional gas) need less capital to stay flat. High-decline plays (tight oil, shale gas) trade growth for capital intensity. A 35% decline rate is a treadmill; a 10% decline rate is a business.

diluent #

also: condensate diluent

A light petroleum liquid, typically natural gas condensate, blended with heavy crude (bitumen) to lower its viscosity so it can flow through pipelines. In Canada, oil sands producers must blend roughly 30% diluent into their bitumen to transport it, making condensate the highest-value and most supply-constrained liquid in the Canadian energy basin.

dilution #

also: equity dilution

An increase in shares outstanding without a matching increase in value, eroding each existing share. Comes from secondary offerings, options grants, and acquisitions paid in stock. The opposite of a buyback, and usually announced with much better language.

distribution #

also: unit distribution

A cash payment from a partnership or trust to unitholders. The structural equivalent of a dividend, but taxed differently and accounted for separately. The distribution coverage ratio plays the role of payout ratio.

dividend coverage #

also: dividend coverage ratio

Free cash flow divided by dividends paid. The inverse of the payout ratio, read from the safer direction. 1.5× or better through a full cycle is what survives; 0.8× at peak pricing is what gets cut.

E

EBITDA #

also: earnings before interest taxes depreciation and amortization

Earnings before interest, taxes, depreciation, and amortization. A cash-flow proxy for businesses where depreciation is non-cash and tax is structural. Useful as a denominator for leverage ratios; never the line that pays a dividend.

F

FCF #

also: free cash flow, free cashflow

Free cash flow. Operating cash flow minus capital expenditure. The actual cash a business generates after keeping itself running. For commodity producers, ten years of FCF tells the truth that twelve months of earnings hides.

free cash flow yield #

also: fcf yield, free cash flow yield

Free cash flow per share divided by share price. The desk's preferred valuation lens for commodity businesses because it survives the accounting noise. A 12% FCF yield through the cycle is a business; 12% at the peak is a warning.

full-cycle #

also: full cycle economics, full-cycle returns

Economics that include the entire capital base — exploration, development, sustaining, and decommissioning — against lifetime revenue. The only honest way to evaluate a long-lived asset. Half-cycle math is what gets sold; full-cycle math is what gets owned.

G

growth capex #

also: growth capital, expansion capex

Capital spent to add productive capacity, above what is required to stay flat. The number to test against ROIC on incremental capital. Growth capex that doesn't earn its cost of capital is destroying value at full pace.

H

half-cycle #

also: half cycle economics

Economics that ignore the up-front capital already spent and look only at the next dollar of operating cost versus revenue. Useful for short-term operational decisions. Misleading when used to argue a project is profitable.

hedge book #

also: hedging program, hedge program

The portfolio of derivative contracts an operator uses to lock in future prices. A hedge book that survives a downturn smooths cash flow; one that traps the operator at the bottom of the cycle is the wrong kind of insurance. Read the strike and the duration before the headline percentage.

I

insider buy #

also: insider purchase, open-market purchase

An open-market purchase of the company's stock by an officer or director, reported under SEDI in Canada or Form 4 in the U.S. Costs the insider real money and signals real conviction. Options exercises and gifts do not count.

IRR #

also: internal rate of return

The discount rate at which a project's net present value is zero. The rate of return the project earns on its capital. A pre-tax 30% IRR at $80 oil is a very different project than a post-tax 12% IRR at $60 oil; ask which one the slide actually shows.

M

maturity ladder #

also: debt maturity schedule

The schedule of when each tranche of debt comes due. Read it before the leverage ratio. A 1.0× balance sheet with a $2B wall in eighteen months is a tighter spot than 1.5× with no maturities for five years.

midstream #

also: midstream energy, pipeline midstream

The pipelines, storage, processing, and terminal businesses between the wellhead and the refinery or end customer. Commodity-adjacent rather than commodity-exposed when the contracts are long and take-or-pay. The cleanest part of the energy complex when read honestly.

moat #

also: economic moat, competitive moat

A durable advantage that protects returns on capital from competition. In commodities, the moat is almost always cost position on the curve. In regulated infrastructure, it is the rate base and the corridor.

N

NAV #

also: net asset value

Net asset value. The sum of an operator's projects at engineered economics, minus debt, divided by shares. A standard valuation lens for mining and oil & gas. Sensitive to the price deck and the discount rate — quote the assumptions, not just the number.

ND/EBITDA #

also: net debt to ebitda, net debt / ebitda, leverage ratio

Net debt divided by EBITDA. The standard corporate leverage ratio. For commodity producers, the honest version is computed on mid-cycle or trough EBITDA, not the last twelve months at peak pricing. A 1.0× ratio at the top of the cycle is a 3.0× ratio at the bottom.

net debt #

also: net borrowings

Total debt minus cash and equivalents. The number the company will be carrying when the next downturn arrives. For commodity producers, the only honest stress test is whether the maturity ladder survives trough EBITDA.

netback #

also: operating netback, netback per barrel

The realized price of a barrel of oil or equivalent minus royalties, operating costs, and transportation expenses. The net cash margin an operator actually pockets per unit of production. Netback is the cleanest measure of asset quality and operating efficiency, stripping away corporate overhead and financial structure.

NPV #

also: net present value, npv10

Net present value. The discounted sum of a project's future cash flows. In Canadian reserves reports under NI 51-101, the conventional discount rate is 10% — hence NPV10. Industry convention is not the right cost of capital for every business.

O

options grant #

also: stock option grant, option grant

Compensation paid in the form of share options. Loyalty to a quarter, not to a decade. Treat granted shares and bought shares as two very different signals when reading insider alignment.

P

P1 reserves #

also: proved reserves, proven reserves, 1p reserves

Proved reserves — the 90% confidence bucket under reserves engineering convention. P1 is the number a banker will lend against. The other categories are what management hopes to be standing on.

P2 reserves #

also: proved plus probable, 2p reserves

Proved plus probable reserves — the 50% confidence bucket. The number used most often in valuation work because it captures the inventory the company expects to develop. The gap between P1 and P2 is the part of the story that still has to be earned.

payout ratio #

also: dividend payout ratio

Dividends divided by earnings, FCF, or AFFO — depending on the business. A sustainability check. A payout ratio that exceeds 100% over a cycle is a dividend waiting to be cut.

R

rate base #

also: regulated rate base

The depreciated asset value on which a regulated utility is allowed to earn its return. Grow the rate base, grow the earnings — subject to the regulator's allowed return. Fortis has compounded rate base for five decades; the dividend record is downstream of that.

regulated utility #

also: regulated utilities

A business whose returns are set by a public utility commission against an allowed return on rate base. Earnings move with rate base, not with commodity prices. The trade-off is regulator risk: the allowed return can be lowered as easily as it was set.

reserves #

also: oil reserves, gas reserves, mineral reserves

Hydrocarbons or minerals economically recoverable at today's prices under today's technology. Audited annually under NI 51-101 in Canada and SEC rules in the U.S. The reserves report tells you how long the business has to live; it does not tell you the price it gets.

ROE #

also: return on equity

Return on equity. Net income divided by shareholders' equity. Useful for steady-state businesses; misleading for commodity producers where reported earnings swing with price and equity is held flat with buybacks. ROIC reads cleaner through a cycle.

ROIC #

also: return on invested capital, return on incremental capital

Return on invested capital. After-tax operating profit divided by the debt and equity that funded it. The desk cares about ROIC on the incremental dollar, not the average across the whole book — that is the dollar management still controls.

royalty #

also: royalty interest, mineral royalty

A share of production or revenue paid to a government or landowner before the producer earns anything. Royalty rates can materially change project economics. Mexico's silver royalty regime is the case study most outsiders underestimate.

S

secular #

also: secular trend, secular growth

A trend that operates above and across cycles — demographics, electrification, decarbonization, AI compute demand. Secular tailwinds can mask poor execution for years. They never excuse it forever.

SAGD #

also: steam-assisted gravity drainage

Steam-Assisted Gravity Drainage. An in-situ oil sands extraction technology where steam is injected into a top horizontal well to heat the heavy bitumen, allowing it to flow by gravity into a bottom horizontal well for production. SAGD carries higher upfront capital intensity but has very low decline rates and a decades-long production plateau compared to tight shale wells.

spot price #

also: spot market

The price for immediate delivery on a public market. Loud, volatile, and a poor proxy for what the operator earns. For most producers, less than a third of revenue clears at spot.

sustaining capex #

also: maintenance capex, sustaining capital

The capital required to keep production flat. The gap between reported capex and sustaining capex is growth investment in disguise. If sustaining capex is greater than free cash flow at trough, the dividend is not really covered.

T

take-or-pay #

also: minimum volume commitment, mvc

A long-term contract that pays the operator whether or not the customer ships volume. The closest a commodity-adjacent business gets to a utility. Roughly 98% of Enbridge's group EBITDA is take-or-pay or cost-of-service; that is why it reads like a turnpike, not an oil bet.

term book #

also: long-term contract book, contract book

The portfolio of long-dated sales agreements an operator has on the shelf. In uranium, the term book at Cameco rolls slowly and prices in over years, not days. A high-quality term book muffles the spot market for years at a time.

U

U3O8 #

also: uranium oxide, yellowcake

Uranium concentrate, the form in which uranium is bought and sold before enrichment. Priced per pound. The spot market is thin and noisy; the term market is where the real volume clears.

W

WCS #

also: western canadian select, wcs heavy

Western Canadian Select. The benchmark for heavy oil produced in the WCSB, priced at a discount to WTI that reflects quality and takeaway capacity. The differential is the part Canadian producers cannot control and the part most outsiders underestimate.

working interest #

also: wi

The fractional ownership share of a well or property held by an operator before royalties. A 60% working interest means 60% of the costs and 60% of the production after royalty. The operator of record may hold less than 50% and still call the shots.

WTI #

also: west texas intermediate

West Texas Intermediate. The U.S. light sweet crude benchmark priced at Cushing, Oklahoma. Most North American oil revenues reference WTI plus or minus a quality and location differential, not WTI itself.

The terms the desk uses, defined.

A