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Western Refining, Inc. Message Board

  • edmanfan edmanfan Nov 11, 2013 4:34 PM Flag

    Golden cross

    The 50 day MA has crossed above the 200 day MA with both rising, creates positive technical pattern. The market seems to be saying either the estimates are going higher or the spreads are going to stay higher or both

    Sentiment: Buy

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    • Now we know why the Golden cross occurred, so the next step is figure out how accretive the extra 89,500 bbls per day plus the new pipeline earnings plus the new retail and logistics facilities will add.
      First however is that about 1/3 of the float was short, so what happened to those 19.3MM shorts? Not enough volume to cover a small fraction of that so a lot more short covering has to occur.
      Second, WNR has made $4 per barrel margins refining oil so cut that in half on the new capacity is an extra $180,000 per day X 330 days = $59,400,000 X 38.7% ownership = $23MM per year. Assume the other stuff makes more than enough money to pay the taxes and increased interest expense, so on 87MM shares outstanding = 26cents/share plus whatever extra is left over from the other new earnings contributions. Then you add some financial engineering and roll the new downstream facilities into the existing WNRL in exchange for new shares of WNRL, gives them a currency to do a secondary and maintain their original ownership for a big stock buyback or dividend increase. The cash flow from the distributions of WNRL roll right into WNR bank accounts so plenty of fuel to return to shareholders.
      There are many positive moving parts here, this stock is headed higher.

      Sentiment: Buy

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