The maximum settlement to TROX is zero. In the bankruptcy proceeding, TROX assigned 100% of its claims against APC to a trust for the benefit of various government agencies and private plaintiffs. TROX gets no cash from APC whatsoever, as it has disclosed in its SEC filings. It may be entitled to tax deductions for APC's payments, or at least a portion of those payments, but there's no guarantee that TROX will get to use those deductions in the reasonable future, because it has to use up its own loss carryovers first.
Hope this helps.
CS reduces its rating on both SXC and SXCP to Neutral from Outperform. SXC is trading above CS 12-month target price of $ 19, and SXCP is trading right around CS 12-month target price. They like both companies, it's just that they have reached or exceeded the target prices.
Interesting comments about SXC's breakup agreement with Sunoco, which expires on January 18, 2014. That agreement prevented SXC from taking several steps, such as selling its coal mining operation or buying back any stock. They are looking forward to company guidance on what they may do next.
ARLP lists the South Gibson mine as Illinois Basin - page 42 of the last 10-K. I'm not much on geography, so it might be close to Northern App, but I went with the company's description. I'm not sure it matters much; NAPP coal is almost as good as IB and much better than CAPP.
The 10-K also shows South Gibson as being higher sulfur than the existing North Gibson mine, but it certainly lower sulfur than all the other ARLP mines in IB and NAPP, except for 1 very small in West Va.
I don't know where the EIA gets the information for its reports. I assume at some point in the process, they rely on information from the miners about their plans. That is why the expected drop in CAPP production is so concerning for NRP. Production at NRP-owned reserves accounts for about 15% of all CAPP production. If the miners are indicating a 40% drop in production over the next 3 years, that's got to be a major issue for NRP. NRP's management aren't dummies; they have been buying reserves in the IB that are mined by a related company, but production isn't growing anywhere near as fast as I thought it would. So the first thing I would like to know is what kind of production NRP expects from these newer mines over the next few years. They have really good pricing on these reserves, and increased production could go a long way toward offsetting CAPP problems.
I don't think OCIW will help much. This year, NRP had a preferred rate of return from OCIW, which increased NRP's DCF a lot. They gave up that preferred return in the restructuring, so they are left with normal operations which are good but not great. That leaves either the BRP joint venture, or some new acquisition that we don't know about. So I'm on the sidelines, still, until they announce Q4 results and give preliminary guidance for 2014. Their guidance is generally spot on.
Part 2 - With all the new production coming on line in IB, I'd have expected pricing problems, but the EIA doesn't see that coming.
The projected prices may include met coal; I can't tell from the tables. That would explain why APP coal still costs more than IB coal by a wide margin. So take the projected prices with a grain of salt. In fact, take all the projections with a grain of salt. But they illustrate that coal people think IB is the place to be.
Thanks for reminding me. I had forgotten it was being released today. The report tracks actual US energy production and usage, and projects both usage and prices for quite a long time. I only follow the near future projections - over the next few years. Even that is a gamble, but it's better than anything else I've seen. Also, I fgure investors in general are using the same projections, either directly or through analysts.
Not surprisingly, the report raises its projected natural gas prices over the next few years, by 10% to 20% above last year's projections. Should be good for coal, and it is. Just not in CAPP, which is where most of NRP's reserves are.
The trend is complicated, but in general, the EIA thinks thermal coal production will remain stable over the next 5 years. But how it gets there is interesting. It is projecting a huge drop in CAPP production, from 133 million tons in 2013 down to 94 million tons in 2016. That is a drop of 40% from last year's projection of CAPP's 2016 production, which is incredible to me. At the same time, Illinois Basin production is expected to increase from 2013's 134 million tons to 166 million tons in 2016, which is why the total remains stable.
The EIA report did not project prices by CAPP. Instead, it grouped CAPP and NAPP together, and projected a 10% price decline per ton over the next few years. They had some positive projections about NAPP production over this time frame, so I suspect CAPP prices are expected to drop more than 10% per ton.
So lower production and lower prices for CAPP. NRP had better hope that Foresight, its major IB lessee, gets its production up big time. Or that its non-coal investments pay off.
I was surprised about the favorable projections for IB coal. Maybe I shouldn't be. ARLP has 2 new IB mines coming on line in the next year or so, and Foresight predicted significant increases in IB production in its S-1 (later abandoned) last year. More later.
It's probably a lot less than that. In TROX's bankruptcy restructuring a few years back, it reported a tax deduction of $ 1.13 billion for the value of what was given to the creditors. The company has not even started to use up that deduction yet, and has set up a full valuation allowance against the deduction. So TROX needs to use up its current loss carryovers (no guarantee) before getting any benefit for the Anadarko payments, whatever they are. So I think you need to push your years back a bit.
Also, TROX has said in the tax footnote that it thinks the bankruptcy did not result in a change of ownership of the company. No guarantee of that, looking from the outside. If a change occurred, a whole other set of rules applies.
And I'm not sure where the Anadarko deductions will show up, assuming TROX gets them. To the extent that the claim related to US properties, which I assume is most of the claim, the deduction is a US deduction. But to the extent the claims related to non-US environmental problems, I think the deduction would be limited to whatever jurisdiction the claim relates to.
It's all conjecture right now, as you said. First, there's the appeal. Then, TROX, which presumably has all the necessary info, will have to sort things out and tell us what benefit it might get. So for now, it's fun to guess, but I can't see it being worth much to TROX today. Other than getting this done.
Like production MLPs? Not a whole lot just now. But OCIP is not much different from PDH, which I wouldn't touch just now. And if you think about it, it's similar in nature to the refinery and nitrogen fertilizer MLPs, some of which I do own. My problem with OCIP is that I have no way of knowing how the market for methanol is doing. I own a little OCIP buit won't buy more until it has a few qaurters as a public company under its belt.
There's no assurance that TROX will be entitled to the deductions because of its bankruptcy restructuring. In its SEC filings, the best TROX could say was "However, pursuant to the terms of the litigation trust, Tronox Incorporated could continue to be treated as the owner of the Anadarko Claim solely for purposes of federal and state income taxes. Depending on the outcome of the Anadarko Claim, it is possible that Tronox Incorporated will receive the benefit of certain tax deductions that would result if the Anadarko Claim is resolved successfully and the proceeds of such Claim are used as contemplated under the terms of the litigation trust." I haven't kept current with any subsequent disclosures (the doc I quoted from was filed in April 2012) so maybe TROX has gotten more comfortable with its position, but absent that, there's a lot of "ifs" in its tax position, even aside from its ownership change history. And of course, its need to make enough money to use up any substantial part of the deductions.
How many KMR shares do you own? KMR only pays dividends in shares, including fractions. So you should have received the dividended shares, including fractions.
I own KMR thru Schwab, and it picks up all shares, including fractions. I don't know how Fidelity handles fractions; maybe it sells them and credits you with the cash?
You would need at least 60 to 70 KMR shares to receive a whole share as a dividend, depending on the quarter. So my first question is whether you own at least this number of shares? If you own fewer shares, check your cash balance. I suspect you're getting factions and Fidelity is selling them. If you own more than 60 - 70 shares, you should see at least 1 additional share each Q. Ask Fidelity what's happening to them.
And sales of the fractions are capital gains - you allocate a portion of your original cost to the dividended shares, and compare that to the sales proceeds. The holding period goes back to your original purchase date.
Yes, OCIP is an MLP. The IRA tax issue is complicated by the fact that the IRS has never ruled on certain important issues related to sales of interests in MLPs. But there is always a risk that an IRA might be subject to Federal income tax (called the unrelated business income tax) on income or gains resulting from an investment in OCIP. It depends, in part, on how many units the IRA owns, as well as how much taxable income it generates. In all likelihood, there would be no tax exposure for the first few years that an IRA owned OCIP - the company estimates that taxable income thru 2016 will equal less than 30% of the cash distributions. But when you sell, the tax deferrals may well come back to haunt the IRA as UBTI. So I tend not to invest in MLPs in my IRA or Keogh accounts.
Not yet. I almost pulled the trigger a week or 2 ago, but ARLP/AHGP tanked so I bought them instead. Another coal MLP, but this one extremely profitable with a great coverage ratio. If coal weren't so ugly, I'd buy a whole lot more of it; they have 2 mines coming on stream in the next year and a half, 1 of which is pretty much guaranteed to produce great cash flow. But they don't say much about their contract positions so I can't go crazy over them.
And I have way too much invested right now in all sorts of MLPs. I'm way over my target allocation to MLPs. So I need to sell something before I can let myself buy another MLP, including NRP.
But thanks for asking.
I don't think I'm the moderator, but maybe I can explain a few things. OCIP does not sell fertilizer. It does, however, make ammonia (1 of its 2 products), and ammonia is used to make fertilizer. So OCIP sells its ammonia production to 2 companies, 1 of which is RNF, a publicly-traded MLP that makes fertilizer.
OCIP owns 100% of an existing methanol/ammonia plant, not a minority interest in a plant that is being built. Here's the confusion - OCI is the parent company of OCIP; it owns about 80%. OCI is a major European chemical company that makes nitrogen-based fertilizer, and also owns a construction company that builds chemical plants. Because the names are so similar, it gets confusing. OCI (the parent) is building the new methanol plant that you see in Yahoo's headlines; OCIP does not appear to be involved in that construction, at least not yet.
Methanol/ammonia production uses natural gas as a feedstock. When nat gas prices spiked in the 2000s, companies shut down their methanol plants. When nat gas priced dropped due to shale, people started to re-open those closed plants and build new ones. In OCIP's prospectus, they said something like this - total US methanol production is around 1 million tons; it is expected to grow to 6 million tons over the next few years because of low nat gas prices. So OCIP purchased a methanol plant that had been closed since 2004, and re-opened and expanded it. Lots of other companies made similar announcements; Celanese might have been 1. But OCIP's plant is currently in operation.
Hope this helps.
Oops, you violated the first rule about predictions. If you predict an event, don't give a specific time frame. Unless the market craters before year end, I can't see any reason for a big down movement for NRP this month. Unless the EIA 2014 energy report, which I think si due out on December 16, is really bad for coal, which I don't expect.
You got it. OCIP will distribute 100% of available cash each Q, whatever that amounts to.
And natural gas makes up 75% of OCIP's variable cash expenses for production. And it only has 2 products, methanol (75%) and ammonia (25%). These are generic chemicals, not proprietary or specialty. So customers can buy the exact same chemicals from other suppliers. Sales depend on lowest price and availability. Which means lowest price wins.
Sounds just like PDH, on the downside. It also sounds just like TNH, which until recently has been a great investment.
There is confusing disclosure in the prospectus about all of this. First, the prices of methanol and ammonia do not exactly track the price of natural gas, because natural gas has many other uses. So, natural gas prices could rise, as they have recently, without methanol and ammonia prices rising similarly. I'm sure you could track the price of methanol, but I have no idea where. And ammonia prices have been falling in recent quarters because of weakness in the agricultural area. I think OCIP sells substantially all of its ammonia production to RNF, a fertilizer MLP whose price recently has been fertilizer. Anyway, OCIP says a $ 1 change in the price of natural gas would change its profit by $ 32 MM, or 40 cents/unit. That sounds really low. My thought is that a $ 1 rise in natural gas prices is about a 25% - 33% rise. If natural gas makes up 75% of variable cash costs, I would have thought the impact would be much greater. But that's what they said.
So yeah, variable distribution MLP whose profit depends on the relationship of natural gas prices to methanol/ammonia prices.
My answer is too late, but to be fair - cash flow from ops for the 9 month period was $ 254 million, but DCF was only $ 73 million. You're right about Q3, but to be fair, the YTD numbers are important too. GLP is consistent in the way it reports DCF, no matter the relation to op cash flow. DCF ignores working capital changes.
The reason for the difference is that operating cash flow has been inflated YTD by the drop in oil prices, which decreased inventories by $ 232 million YTD. This benefits op cash flow, but is ignored in DCF.
And unless I'm missing something, debt is only up $ 37 million YTD. Not bad, when you consider that GLP made $ 185 million of acquisitions so far this year. Again, the drop in oil prices is helping. If prices had been stable, your concerns would have been right.
No one bought any shares. The officers were given restricted shares back in Dec 2010 at no cost, and this week the shares vested, so they got the shares free and clear. That's why they had to file the forms 4. Plus they received in cash the cumulative dividends the restricted shares would have received over the last 3 years.
So no actual cash outlay except for the withholding tax that should be due. Unless they made Section 83(b) elections back in 2010. So you should expect to see the officers/directors sell a few shares to pay taxes.
If companies would give me shares at no cost, I'd take them too. It wouldn't be a bullish sign, though. It's also not bearish, just a nothing.
FWIW. CS maintained its Outperform rating on KMP and KMI, but it dropped its target prices. The 12 month target for KMP is now $ 90, down from $ 97, and KMI’s target price is $ 40, down from $ 45. CS drops its longer term growth rate for KMP from 7% to 2.5% based on the updated distribution guidance. I understand the drop in growth and price projections – KMP is always on the edge of covering its distribution, so any slowdown in growth hits the distribution and the price quickly. I don’t understand their keeping the Outperform rating, though. Since CS is probably no different from the other analysts, I would expect trading today to be ugly.
First thing I checked. UAN's facility in Coffeyville, KS is 650 miles from RNF's East Dubuque facility. TNH's is about the same. Because shipping costs are so high, I didn't think RNF's problem would help either UNA or TNH. So I didn't add to my UAN. Unfortunately, I didn't sell any of the UAN I already own.
This message has been delayed due to my not being able to access Yahoo's boards for about an hour. But I still think it works.
GES reports tomorrow, so option volatility is reasonably high. This morning I was able to buy GES in the very high $ 33s and sell December $ 33 option for $ 2 before commissions. The stock goes ex before the option expires, so I should get another 20 cents on the trade. So unless the earnings really stink, I should be able to make a little less than 4% on my money in about 2 1/2 weeks.
I could have accepted a slightly lower return with more security if I had sold the $ 32 call, but the bid/ask spread on that option was pretty wide.
My risk is that earnings really stink, but no one is expecting much, and last Q was pretty good, compared to expectations. Also, there is a very remote possibility of a special dividend. GES paid 1 last year (because of the anticipated tax rate change in 2013) and also in December 2010. I figure that's about a less than 1% chance, And I'm protected down to a price of $ 32 or so.
Nothing special, but in today's rate environment, I think I can pick up a few bucks with some idle money with an acceptable risk level.
Actually, the release said the underwriters had exercised their overallotment option, and the total shares sold was 5,175,000. I assume the overallotment sale happened a day or 2 after the first sale; maybe today is a distribution day? Or maybe today is just another bad day for yield securities.