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ConocoPhillips Message Board

  • collapse7c collapse7c Mar 1, 2012 9:58 AM Flag

    Marathon oil split vs COP Breakup

     

    Someone help me with this.
    After Marathon oil split into MPC - MRO shares shot down 22 bucks

    Does the same thing happen with a breakup , when PSX comes out will COP drop x number of dollars.

    From my limited understanding, a split causes the parent stock to drop, but a breakup doesn't

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    • "it is my understanding also that as long as you purchase "regular issue" COP by May 1 you will receive the distribution"

      May 1st is too late. That's the ex-date. April 30th is the last day to buy for the distribution.

      "The statement regarding record date of 4/16 is misleading for sure."

      Yes, it is.

      "Regular issue COP shares sold before distribution date will not receive the distribution, regardless of whether you held them on April 16 or not."

      Yes, but shareholders who sell ON the distribution date will not get the distribution either. Like any dividend or distribution, sell before the ex-date (May 1 in this case), do not get the distribution.

    • seafraz@att.net seafraz Apr 26, 2012 6:56 AM Flag

      The combined value of your new "regular issue" PSX and COP stock (as of May 1) should be approximately equal to the parent company COP pre-distribution (current price), give or take a small difference. The dividends have not yet been declared for either but will be before the distribution date (May 1). The new "when issued" shares are already trading under COP-WI and PSX-WI.
      These will not participate in any distributions of course.
      Currently COP-WI is trading at 53.79, while the PSX-WI is at 34.75, which means your "regular issue" COP "value" is: (PSX-WI + 2x COP-WI divided by 2 = approx $71.17/share of the current COP at today's pricing (4/26 3am PST)
      It is pretty confusing re: distribution vs ex date but it is my understanding also that as long as you purchase "regular issue" COP by May 1 you will receive the distribution as outlined (1 PSX for every 2 COP). The statement regarding record date of 4/16 is misleading for sure.
      Regular issue COP shares sold before distribution date will not receive the distribution, regardless of whether you held them on April 16 or not.
      I have researched and discussed this and these are my conclusions, but if you know what I have posted is incorrect, please post a response, but I posted this with best of intentions so keep it civilized.
      I haven't seen anything regarding option contracts you might be holding, so if anyone knows that I would appreciate it. Thx

    • Intent doesn't really matter. The fact they own those facilities implies they have capital tied up in them and there are associated op costs. I am not saying that retail is good or bad. But it needs to be compared against what other options there are for that cash flow and capital.

      As to providing on outlet for their product, is COP/PSX or other refinery w/o co. owned retail having problems moving their product? ((Answer is no) So then the question becomes, is the net back to MPC better with or w/o co. owned retail. For MPC it might be better. And for COP/PSX/etc, maybe not. In the end it boils down to how much they make.

    • MPC operations are strategically located to serve major markets. They include a six-plant refining network, a comprehensive terminal and transportation system, and extensive wholesale and retail marketing operations. This includes both the Marathon Brand and MPC’s wholly owned retail marketing subsidiary, Speedway LLC, the nation’s fourth largest chain of company-owned and operated retail gasoline and convenience stores.

      I don't think they are so much interested in making a ton on the convenience stores, but having those 1350 stations to market their gasoline and other refining products that are sold locally.

    • Note I don't follow MPC so I could be wrong on one of these points.

      1. Just because there are 1350 stations with that brand does not imply MPC owns them. Many could be frachises. That is most common set up for the major oilco's (which MPC really is not)

      2. Retail is not generally highly profitable over time.

    • There is also plenty of info on the internet that illustrates how the MRO spin was calculated. COP will give guidance. Generally, applying a formula to the original purchase price or prices to determine what the cost basis is for each entity.

    • Wrong, PSX won't be free. You will have a cost that isn't real easy to calculate. An example should be on their site.

    • How much value did the MRO/MPC split create?

      As of close of business March 7 2012, the combined market capitalization of MRO + MPC was 5.0% above the pre-split MRO market cap.

      As a reference, over the same period the S&P500 index increased 5.4%.

      While it's only been about 9 months since the split, thus far it hasn't created much value.

      Conoclone

    • Actually its spinning off about half it employeed and a large % of its hard assets, split seems like an OK way to describe it...

    • I understand that stock dividends are taxable in UK.

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