Q1 Dividend ~1.5 = barrels per day ~59500 crack spread ~31.8 per barrel.
Q2 Dividend = ? = ~72000 crack 22.4 per barrel
Scale accordingly gives you a div of ~1.25 a share.
Right now the crack is at around 15 which is why the dip in stock price but that still yields 85 cents and at 20.00 a share that’s around 17% dividend a year which I think is fair. That being said that sudden drop of crack/price hurts but the last time we had a crack his low we were in a recession. Egypt scared the oil markets and this is what happens but I seriously doubt the spread will stay where it is for very long
Facefire, I like your post! This is one of the rare posts that deals with facts and numbers.
I would like to ask you a few questions: 1. How do you get the crack spread per barrel? 2. How do you get the dividend/distribution? 3. How does Egypt affect the crack spread? I was under the impression that if the middle east has a problem, it should make the world crude price up which should widen the spread ? but now it seems to work in the opposite direction. Am I missing something?
Thanks in advance. Anybody who can share some perspective is welcome and will be appreciated.
The 3.3.1 crack spread is as follow:
You take the EIA price of GOM gasoline $2.73 per USG, multiply by 42 to get the price of gasoline per barrel. You take the price of diesel $2.87 per USG multiply by 42 for the price per barrel.
You take the price of the WTI or LLS, EIA uses LLS or $106.85, don’t know why they use LLS, multiply by 3 to have the price of 3 barrels or $315.42. You add the barrel price of gasoline and diesel or $349.86, you subtract the price of 3 barrels of crude. You get $34.44 for 3 barrels; divide by 3 to get the crack spread per barrel or $11.48.
If the ALDW refinery process 70,000 bp/d the gross profit is $883,960 per day. To this you have to subtract all expenses associated with the production: taxes, amortization, payroll etc.
LLS will give you the lower crack spread. If you use the discounted price of crude such as WTS, the crack spread will be higher. This is assuming the Gasoline and diesel price do not change. The crack spread is the difference between the price of gasoline and diesel versus the processed crude used to process these distillates products.
1)There are published numbers for the crack spread for given regions.
I think I used the numbers from Cushing for that calculation. Not exact but should be a very close approximation. Sorry I do not know of a free source where you can get those numbers.
2) The dividend for this mlp is just going to be ~100% of its profits, its profits are just going to be its profit per barrel multiplied by the total number of barrels. I use the barrels per day as a very close surrogate to total barrels.
3) Oil prices spiked a little over the concern about Egypt. That’s a fact, the following is more of an opinion. That combined with the fact that we already have more reserves of processed than average for this time of year. As such ALDWs oil supply price went up, but the gasoline market etc refused to budge (and is even going down slightly due to slightly over supply)
The department of (I think) energy publishes supply numbers periodically. Luckily for us the excess reserve barrels of gasoline had an unexpected drop in excess reserves. This was announced yesterday at market close. This would be a good indication that the spread will be increasing again.