The fire was in an atmospheric bottoms pump. This is not a serious issue and I doubt it will result in much of a reduction in output. This pump moves the reduced crude to the vacuum unit and since they have two crude units they will work around the problem. They are taking their FCCU down anyway and don't need the Cat Feed. They should be able to get the unit up fairly quickly once they replace the pump. I doubt if much damage was done to the crude still or distillation tower.
Canadian and Bakkan both trading at very attractive spreads. WCS trading over $30 under WTI Candaian Light crudes also looking very attractive. On top of this is Brent/ WTI at almost $6. Refinery margins should stay very profitable although not as good as late last year. On top of that is the falling oil market which will mean further profits as retail prices lag on the downside.
He has a big position in Suncor that he recently increased further He owned Conoco for years as well.
We should see a bottom after they are done which should be before the 20th. After which you will see Funds buying it, then we should see a nice recovery. The $18.30 level or a little lower should be the approximate bottom. Crude spreads are OK, the 3rd quarter should be very profitable.
That said, it is unlikely to see the crack spreads of last year/earlier this year. Their location does give them about the cheapest crude oil you can get while giving them good location premiums for their products. WCS is about $25 under WTI and Bakkan/Canadian SCO are discount to WTI so even with the weakened crack spreads, they should be doing fine. Problem is the relative change in overall spread is much narrower and that has hammered investor confidence and invited short selling. I don't own the stock but I am selling the January 2014 $20 puts and I bought the March 2014 Calls when they were $2.00. If I land up owning this it will be well below $20 and closer to $18. I have made quite a bit so far just selling out of the money calls against these positions and eventually may land up with a cost significantly below $18. My objective is to own this cheap. We will probably see a spike from shortcovering relatively soon but over $22 I would be on the sidelines. I don't expect much upside until next March.
They have 2 Crude units, one sweet and the other heavy sour. The reduced crude off the sour unit goes to the vacuum unit where it is distilled in a vacuum, the bottoms off this vacuum tower are used to make asphalt. Luckily, asphalt season is over in their part of the country. I don't think this will turn out to be a big deal but we have to wait for an update.
Their facilities and location allow them to have tremendous advantages. By virtue of their location they can buy crude at several dollars a barrel under refiners in in the Gulf/East/West Coast and they are selling their products at a couple of dollars a barrel over them as well. Yes they only have one refinery, but it is going to be a cash cow for a long time to come. Right now, this is on sale when it gets down into this price range, you have to buy it. The next couple of quarters will not be good but they are making money and will thrive for years to come. This refinery incident is not a serious outage and they will capture some of the lost revenue since crude has weakened quite a bit recently(in part due to this incident).
We will probably make it to $15 by early next year. Weekly chart looks good, once we get tax loss sellers out of the picture should make some progress higher. There are a few other trusts out there with similar great opportunities, again tax loss selling is making for terrific opportunities right now.
Volume was very high yesterday. This is the end of the quarter so we have funds selling to get a big loser off the books for the Quarterly statement and funds trying to push it down to increase their quarterly performance. Should see a good shortcovering rally very soon. Other funds may want to buy this as a new position before next distribution.
The size of the short position is so big in relation to the float I would be very nervous if I were short. After the reversal yesterday, the volume has collapsed. This could get extremely illiquid as we approach quarters end. After that, you are looking to new quarter where people will be looking to accumulate for the distribution. I predict this could begin the new quarter with quite a sharp rally, perhaps as high as $15.
this selloff is totally stupid but don't look a gift horse in the mouth. It's the end of the quarter and the owner wants it off the books for some reason. By the end of next week, this will be much higher.
I don't think the market will pay up for this like in the old days. With NG prices low, it just isn't going to attract the buying interest. Yield investors probably don't buy as the yield drops into a 5% handle. There are other yields plays in Oil and Gas area. I think the management is great, they do a good job with what they have but despite the increasing production, this just doesn't attract growth investors. Kind of trapped between a yield and growth stock with gas prices where they are. Sold half my position through call writes in the last 60 days. Moves much higher will probably sell the rest. I like the company but there are many other ones out there to buy right now trading cheaper.
Funds are dumping but it is irrational. They did the same thing to Natural Gas stocks at the end of last year. This is a bargain, well worth the risk at these levels. I have been buying every day and will buy more tomorrow. I only buy on down days, until there are signs of bottoming. Another one worth looking at is NDRO, similar situation.
I would rather be in this than in the broad market. This company is a great value at this price and the products they produce will see growing demand. It will be under pressure for a while since it will see tax loss selling and window dressing selling(having performed poorly).
Not even close to a net exporter of Petroleum. We are presently a net exporter of petroleum products only because of weak U.S. demand and because there have been quite a few Caribbean refinery closures as well as in Europe. Shale plays are way over hyped. Their rapid decline rates make incremental gains more difficult from here and the best prospects get drilled first so remaining drill locations are not a productive. We are still importing over 7 million bbls day of crude and over the next decade decline in existing conventional fields will be enormous.
Looks like they will sell the entire company.
If you don't have aq subscription you can get it by Googling this story line:
"Talisman in Talks to Pare Stake in Kurdistan Assets"
The May 2014 12.5 calls are about $1.30. You have a very good chance of getting more than the distributions between now and then in Capital appreciation.
However, if you own this above $15 it could prove difficult to regain that level for a while depending on distributions. I bought heavily at $12.50 because the 3 and 14 day rsi's on this are at levels you rarely ever see EXCEPT FROM SEVERE LIQUIDATION PRESSURE such as we saw in 2008/09 when levered funds were force liquidating their positions. There is really nothing wrong with this trust especially at these prices, but it's going to take some time to rebuild. I will say that the seller that created this meltdown should be horsewhipped and anyone hurt should write the trust and express outrage. I feel for the holders blindsided by this, this is truly outrageous.
some more info:
Opportunity to increase reserves
• Permian Basin has enough unrisked upside to more
than double the reserves in the entire trust
– Waterflood potential: 6 million BOE
– CO2 potential: 26 million BOE
• North Louisiana has a large amount of unrisked
potential: 46 million BOE of upside potential
• These projects are occurring on our assets right now
• Higher investment in the Permian Basin has more than
offset the lower capital in our gas properties
• More opportunity and a higher yield should lead to
superior price performance compared to our peers