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Northern Tier Energy LP Message Board

  • rdravin rdravin Jul 3, 2013 9:05 AM Flag

    Rising Oil Prices and Crack Spread

    It would seem rising Brent oil prices lifts all oil prices. Since gasoline and heating prices lag, crack spread must be contracting.

    Hence falling pps for refining stocks.


    Sentiment: Buy

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    • We need to take a minute and look at where the money comes from.
      SPPR, which is located in St. Paul Park, Minnesota, has total crude oil throughput capacity of 81,500 barrels per calendar day. Refining operations include crude fractionation, catalytic cracking, hydrotreating, reforming, alkylation, sulfur recovery and a hydrogen plant. The refinery processes predominately North Dakota and Canadian crude oils into products such as gasoline, diesel, jet fuel, kerosene, asphalt, propane, propylene and sulfur. The refined products are sold to markets primarily located in the Upper Great Plains of the United States.

      As of March 31, 2013, NTR operates 166 convenience stores under the SuperAmerica brand and SAF supports 73 franchised stores which also utilize the SuperAmerica brand. These 239 SuperAmerica stores are primarily located in Minnesota and Wisconsin and sell gasoline, merchandise, and in some locations, diesel fuel. There is a wide range of merchandise sold at the stores including prepared foods, beverages and non-food items. The merchandise sold includes a significant number of proprietary items.

      NTB prepares and distributes food products under the SuperMom’s Bakery brand primarily to SuperAmerica branded retail outlets.

      I am trying to find more details on what % group adds to the bottom line. The retail side has 331 million in revenue and the refining has 1,018 million. Those items that will impact the refining are the drivers of the company. The derivatives could be the area that is causing concern.

      • 2 Replies to rbgardin
      • Excellent post. NTR is that the Canadian holding that, I heard is behind NTI?
        The stock used by NTI is Bakken and Canadian by enlarge. My latest research shows that the Bakken production shoes signs of leveling off. The Bakken crude was using R&R for transport to the East Coast and even GOM. Some was going, by R&R to the North West.
        Lately pipeline is regaining the number one choice to get Bakken crude to market. It is believe that the Bakken production will increase over time, but the lack of pipelines is cutting in the profits. NTI was benefiting from discounted crude, because of the limited outlet to market other than local.
        It is possible that the lower crack spread is the result of the production leveling off, therefore less Bakken crude is discounted.
        My research shows that a significant amount of Eagle Fort light crude is routed to Alberta via Corpus Christy, New Orleans Loop, Chicago and Alberta to be used as diluent. I question the economics of this routing. I would have assumed that the Bakken crude would be cheaper to use as diluent. Without the Keystone the Bitumen crude has to use R&R to the GOM with 20% or 30% diluent.
        The lower crack spread should mean less available Bakken crude. Than the question is where is the Bakken crude going? I have a hard time to believe there is not enough Bakken crude so Eagle Fort crude is competing with the Bakken.

      • Is that BPD is pre or post april? I think it is now 91K BPD post April upgrade.

    • Appears to me it is nothing more than hedge funds & day traders. Stocks don't move that fast w/o computers being involved. Hopefully on Monday some of the big boys will be back & move it up in a hurry, Good Luck.

    • I think that is true as US crude is now replacing imported crude. However, it still maybe cheaper for coastal refiners to buy US crude than imports so their cost basis shouldn't be effected. But the refiners in the central part of the country would lose the advantage they had over the higher cost Brent pricing,

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