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Inergy, L.P. Message Board

jrad52 13 posts  |  Last Activity: Jul 11, 2016 5:18 PM Member since: Jul 25, 1999
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  • Reply to

    Earnings tonight

    by jrad52 Jul 11, 2016 3:11 PM
    jrad52 jrad52 Jul 11, 2016 5:18 PM Flag

    Well, I was right. But I still own VOXX, don't ask me why.

  • I don't understand today's rise in the stock price. VOXX has pretty consistently disappointed on earnings the last few (many?) quarters. The May Q is usually weak, and the added costs of the eyelock operations can't help.

  • CINR is moving up nicely, past $ 30 now. TROX is also moving up (TROX is ugly because it has titanium operations that aren't doing well plus lots of debt, but it owns a soda ash mining operation adjacent to CINR).
    No news that I can see.

    I keep wanting to buy NRP; I have missed the current run up but I also missed the drop from the $ 30s (post-split) so I can't complain too much. All of the recent news is balance sheet related and good - asset sales and debt repayment. What's left is coal, Ciner and VantaCore, plus some little odds and ends like BRP. I tried modeling 2016 and 2017 operating DCF, but Q1 was so bad for coal that I have to assume lots of improvement in pricing and production to get any decent levels of DCF.

    As I see things, the good news is (1) steel recovery - right now, the BF steel mills that were shut down late last year are still shut, and the good news mostly benefits EAF producers, which don't use coal. But if the steel recovery continues, at some point the producers will increase the blast furnace production. (2) natural gas prices have been rising, which should eventually benefit thermal coal. Based on prior statements from ARLP, the break-even point for coal vs natural gas is reached when nat gas prices are around $ 3.50 and they aren't there yet. But they are getting closer to that level and apparently nat gas inventories are dropping with the recent hot weather in the mid west. So I don't think the benefits will show up in NRP's quarterly statements for a while, but we're getting closer to good times.

    Everyone knows the bad news - high debt level and still a lousy coal environment.

    From my viewpoint, the deciding factor is the presidential race. I'm not trying to start any typical Yahoo political exchange, but I can't see Trump winning the needed electoral votes. So if we have 4 more years of the current administratiuon, I can't see investing in anything coal related.

    But NRP is still so cheap that I may give in & buy.

  • From DTN/The Progressive Farmer - OMAHA (DTN), this week -- The tide has turned this spring in corn and soybean prices, leaving farmers with unexpected marketing opportunities, and also possibly nagging worries about selling too early in a market rally.

    Jeff Hainline, chairman of Advance Trading, Inc. in Bloomington, Illinois, said corn hitting $4 per bushel was the big number which sparked aggressive new-crop sales. "Above $4 they don't have a paradigm for what to expect, so it has slowed down," Hainline said.

  • Reply to

    Bakken properties purchase price?

    by fwilebski Jun 14, 2016 8:31 AM
    jrad52 jrad52 Jun 15, 2016 8:44 PM Flag

    The problem was that the oil & gas venture has been a disaster for NRP from day 1, and I don't think they could afford to continue the investment. NRP reported $ 25 MM of DCF from oil & gas in 2015 for example. But that includes $ 4 MM of royalty income, which NRP has kept, and $ 4 MM of nonrecurring asset sales. So continuing DCF was $ 17 MM. Against this, NRP was required to invest $ 22 MM in new drilling costs and also pay some interest expense. So on a fully-loaded basis, NRP lost money. Q1 2016 was similar, with basically a break even fully-loaded DCF. And in the last 10-Q, NRP disclosed that it would probably be in default on the oil & gas loan before it came due in 2017. So they had to do something.

    All of NRP's assets (I'm not sure about CIner) are already securing the company's other debt so they can't get funding from other sources to repay the oil & gas debt. So I think a sale was necessary. Terrible timing, but if the timing were better, NRP wouldn't be in the mess in the first place.

    Other than Ciner, I don't think any of NRP's assets could be sold today at a reasonable price, so they did what they had to.

    And all of this is reflected in the unit price already.

  • Reply to

    Bakken properties purchase price?

    by fwilebski Jun 14, 2016 8:31 AM
    jrad52 jrad52 Jun 14, 2016 3:14 PM Flag

    NRP announced the sale of all of its non-operated working interests in the Bakken. This would include the Sanish Field (acquired in 2014 for $ 340 MM), as well as the 2013 acquisitions from Abraxas and Sundance for $ 67 MM. So the starting point of NRP’s investment is about $ 407 MM. Since then, NRP invested an additional $ 63 MM in capital expenditures on these fields which brings the total investment to $ 470 MM.

    Against this, NRP received $ 64 MM in operating income, bringing its cash cost down to $ 406 MM.

    2 points – first, as hoops pointed out, about $ 100 MM of the cost was funded thru the issuance of 8.5 MM NRP units at $ 12 (before selling commissions). And second, NRP wrote off most of its investment for GAAP purposes last year, so I would think the sale will produce a gain for GAAP purposes.

    NRP treats 100% of the proceeds from asset sales as distributable cash flow. So DCF will be through the roof in Q3 when the sale closes. Take that with a grain of salt.

  • Reply to

    Coal prices

    by jrummell7 Jun 7, 2016 9:27 AM
    jrad52 jrad52 Jun 8, 2016 4:02 PM Flag

    The EIA numbers have 2 significant problems, and I think the quandl numbers come from the EIA so they may have the same problems.

    The smaller problem is that the EIA only tracks the spot prices of coal for each region. I have been following the EIA site for several years on coal prices and the volume on the spot market is minimal. ARLP has said for years that the spot prices aren't indicative of real current prices because most utility coal is sold under longer-term contracts. So I would just take the prices as indications of what new sale contracts might call for.

    The bigger problem (at least with regard to NRP) is that the regional prices are all for steam coal, not met coal. And met coal is very important to NRP. The EIA gives historical met coal prices but I don't think they give current prices.

    Credit Suisse has a report out today on steel makes and it's very bullish. That might be helping met coal producers today. But part of the CS bullishness is based on the shutdown of a lot of blast furnace steel mills, which use met coal. So I think it's a mixed bag - higher prices but lower coal volumes.

  • Reply to

    Operating Loan Extension

    by fwilebski Jun 7, 2016 6:45 PM
    jrad52 jrad52 Jun 8, 2016 3:54 PM Flag

    This is confusing. Any extension is good news, but maybe there’s something else going on that they aren’t telling us.
    This loan extension involves NRP (Operating) LLC, which is NRP’s subsidiary that owns everything except the Williston Basin oil & gas operations. The Williston Basin oil & gas operations are the ones that NRP has said it is trying to sell, but that isn’t affected by this loan extension.

    The loan extension has a provision that says that NRP (Operating) can sell up to $ 300 MM of assets, as long as 75% of the sales proceeds are used to pay down debt. But I don’t remember NRP say it’s trying to sell anything other than the Williston Basis operations. Am I forgetting something? Or maybe NRP has something else it’s trying to sell?

    The loan extension seems to be coming at a high price, but NRP isn’t in a very good bargaining position. At the end of Q1, NRP owed $ 290 MM on this revolver, all of which comes due in October 2017. The extension cuts the limit to $ 260 MM immediately, so I guess NRP had to repay $ 30 MM immediately to get the deal done. NRP has to repay another $ 50 MM by December 2016, another $ 30 MM by June 2017, and another $ 30 MM by December 2017. The balance of the debt is extended until June 2018. So the “extension” actually accelerates $ 110 MM of repayments and extends the balance of the loan for 9 months past its original maturity. I would bet that on a weighted average basis, there has been no extension. But by stretching out repayments over another year, it makes things a little easier for NRP. And for this (plus a relaxing of the covenants), the interest rate is raised about 1%.

    When I first read the 8-K, I thought the lender was allowing NRP to use sales proceeds to repay the 9.125% bonds out of the proceeds of asset sales, but I was wrong. They can only repay NRP (Operating)’s senior loans, and that doesn’t include the publicly-traded debt.

  • Reply to

    TPUB blood has attracted other sharks?

    by boulmichone Jun 6, 2016 1:05 PM
    jrad52 jrad52 Jun 6, 2016 1:36 PM Flag

    don't think so. Media General exited the newspaper business in 2012 when it sold the operation to Berkshire Hathaway, so it's purely a TV station operator now. Plus, it's in the middle of being acquired by Nexstar. No bidding war from MEG. And Warren doesn't do bidding wars.

  • TPUB released the results of the shareholder vote. Just like GCI said, and contrary to TPUB's news release, excluding Ferro's and related shares, the majority of unrelated shares voted to withhold approval of the directors. But Ferro doesn't care - he will take a dying newspaper business, move it into a capital-intensive new neighborhood and drag us along for the ride.

    And when the stock is back down far enough, he'll buy us out.

  • Reply to

    Serious question on Financial story?

    by tjirish34 May 31, 2016 8:45 AM
    jrad52 jrad52 May 31, 2016 9:00 AM Flag

    Several reasons why I don';t think that would work - first, TPUB's board adopted a poison pill earlier this month which effectively limits anyone from buying more than 20% of the company's stock. After the recent private placement, 20% would be around 7 MM shares. Buying 7 MM shares over a short period of time would drive the price up, reducing the benefit of the plan to catch a quick profit. And finally, TPUB is a small cap. If a buyer were able to buy 7 MM sharers, his max profit would be around $ 20 - 25 MM (and probably a lot less, depending on how much they would have to pay) based on GCI's offer and Friday's price. I don't see that as being large enough to interest a big player like Icahn, with the downside risk that Ferro continues to refuse to sell and the stock drops back to $ 8.

    FWIW. I don't see the shareholder vote this week changing the situation. Very frustrating.

  • jrad52 by jrad52 May 27, 2016 5:06 PM Flag

    I own TPUB shares in 2 accounts. GCI has sent me 2 separate mailings about Withholding votes for the TPUB directors for each account. I have already voted to Withhold the votes; that's not my point. MY point is that GCI is still spending a few dollars, at least, in its effort to buy TPUB.

  • Reply to

    Spectrum auction

    by jrad52 Apr 30, 2016 8:03 AM
    jrad52 jrad52 May 26, 2016 8:54 PM Flag

    It is extremely confusing. The first part of the auction, the reverse auction whereby the TV stations offer to sell their spectrum to the FCC, starts May 31 and (I think) is over in a few days. But I'm not sure we'll hear anything at that time. The FCC needs to repackage the spectrum and then conduct a forward auction to sell the spectrum to wireless communications companies. It's that second auction that will raise the money to pay the TV stations, and I don't think a timeline has been set for that auction yet.

    So maybe (or maybe not) we hear something in June or else not until the second auction ends, which I think is much later this year.

    Like I said, it's confusing.