Rejected before testingRejected · unspecified — never reached a specification · n/a — no backtest
The idea
Small oil and gas producers borrow against their reserves. Twice a year the bank recomputes how much they may borrow, from updated reserve reports and a price deck. When oil falls, the new borrowing base can end up below the debt already drawn, and the producer has to close the gap. The bet was that closing the gap means selling something, on the lender's schedule, at whatever price the market offers.
This entry arrived by a different road from the others. Instead of guessing a mechanism and then looking for the document, the lab mined EDGAR bottom-up for rare "forcing" phrases, and the borrowing-base clause was one of the hits.
How it was tested
No backtest. The entry test asks for a quoted sentence in a primary document that forces the trade, before any data work. The document read was the cure clause of a reserve-based credit agreement, as a producer describes it in its own 10-K. A clause that said "sell" would have sent the mechanism to pre-registration; a clause that offered choices would end it.
Where it died
It ended on 2026-09-30. The clause hands the producer an election: repay the deficiency in a lump sum within 45 days, repay it in monthly installments over six months, pledge more oil and gas properties within 45 days, or any combination. The deficiency must disappear; how it disappears is the borrower's choice, and none of the options is a dated sale of a listed security.
The new search route did not change the outcome. It failed in the same shape as the rejections reached by guessing: a real obligation in aggregate, discretion in the specific action. The credit agreement was negotiated by the party it binds, and it kept its exits.
The record
Thesis
Small oil and gas producers with reserve-based credit lines have their borrowing base redetermined twice a year against reserves and price decks. If debt exceeds the new base, the deficiency must be eliminated — which, the thesis goes, forces sales.
Gates
Entry test — obligationfail
Is someone actually obliged to trade badly here, and unable to stop?
Why it died
The cure clause offers a menu, not a forced sale. From a producer's 10-K: "we would be required to make an election: (1) to repay the deficiency in a lump sum within 45 days or (2) ... to repay the deficiency in equal monthly installments over a six-month period or (3) to submit within 45 days additional oil and gas properties ... or (4) any combination". Obliged in aggregate (eliminate the deficiency), discretionary in the specific action — none of the four elections is a dated sale of a publicly traded security.
What it taught
Found by a different route from every earlier entry — bottom-up mining of EDGAR for rare "forcing" phrases rather than guessing mechanisms — and it failed in exactly the same shape as four earlier rejections. That convergence suggests the pattern is structural: a party that drafts its own agreement negotiates several cure paths so that none becomes a forced trade. It produced the registry's cheaper pre-filter: who wrote the rule?
Verdict history
2026-09-30Rejected at the entry test after reading the credit agreement's cure clause Rejected before testing