I bought and sold EVA at a loss but I missed the subsequent down draft. I might buy back in, simply because it has become so cheap, and the subordinated units make it likely that the distribution will be maintained.
But having said that, the director's timing could have been better, to put it mildly. Since Jun 15, he has purchased 145,928 units at a total price of $ 2,416,932, or $ 16.56 per unit. As of a little while ago, he was down $ 650,000, or 27%. That's not a track record I would put much faith in.
Yahoo won't let me post the news article, but the Whiting refinery has restarted its distillation unit. The refinery isn't at full capacity yet and did not disclose when it expects to be at full capacity. Apparently, gas prices in the area served by the refinery are already dropping.
What comments? Anything I owned tanked. Today I was up huge (but not as much as I lost yesterday) and I suspect I finished down a lot. I think I'll have a drink before I look.
In retrospect, everyone has an explanation. Too bad they didn't give their explanations before the market blew up last week, since all the bad news was so obvious.
People probably saw the news that Mr. Cline has continued to sell his coal assets, including a new deal to sell 2 idled Gatling mines for $ 20 MM, subject to a few contingencies including getting NRP to agree to the deal (NRP owns the reserves). If anyone can produce coal at the Gatling mines, it will be found money for NRP since it wrote off the carrying value of its investments years ago.
But the news release is suspicious, at least to this long-term follower of NRP. The release says "At peak production in 2009, the Gatling Mining Complex produced approximately 250,000 tons of clean coal monthly and employed approximately 200 miners." 250,000 tons per month equals 3 MM tons per year. Per NRP's 10-K, Gatling WV produced a total of 400,000 in the year 2009 and not much thereafter. Gatling OH was a little better - it produced 277,000 tons in calendar 2009 and 715,000 tons in calendar 2010 before it, too, was closed due to geologic conditions.
Maybe the geologic conditions have improved? Maybe nearby fracking caused the water to subside?
Anyway, I'm just posting to avoid looking at my stocks give back all their earlier gains today. Hope some of you did better.
Thank you, but 2 questions.
1. Where can I get that data in the future? Is there a web site that shows the stats?
2. And embarrassingly, what do the numbers represent. I assume the first number is the current price of the various grades of oil (in Canadian $), and maybe the second number is the daily price change, in cents. But after that, I'm lost.
At first, I thought the first number was the spread, but yesterday WTI closed at $ 41. If I gross up for the Canadian dollar, that would be about $ 53.93 Canadian. Subtract the $ 33.28 you show for WCS, and I get the WTI/WCS spread you show of $ 20.54. So I assume the first number is the price of WCS itself, for example.
Per the eia daily prices, the price of gasoline and diesel have dropped a bit more than the price of WTI in the last 2 weeks.
I don't know where to get PADD 2 gas/diesel prices so I just use the eia numbers as directional, not exact for NTI.
And while the eia site also shows oil prices dropping, they don't show North Dakota or CWS, which I assume are dropping similarly.
But putting things together, the eia shows the Gulf Coast crack spread dropping from almost $ 24 on Aug 12 to $ 15.25 yesterday. That spread jumps around, nut the last 2 days have shown the lowest crack spreads of Q3 and the trend is down. Normally, I would add anything from a few bucks to $ 6 to the Gulf Coast spread to guess at NTI's gross profit, but the trend is still down.
Short term, I would think the Whiting refinery partially shutting down will keep PADD 2 prices high for a while at least. But if the shut down persists, I would think gas will find its way to the upper Midwest from someplace else.
I still own NTI and have since shortly after the IPO. But a week ago I was tempted to buy more and now I'm not tempted. The whole market stinks just now, MLPs have begun another drop, and NTI (and the other refiners) are just bets that gas prices will drop less than oil prices. Probably a good bet, but I'm not adding just now.
BTW, I heard a news story yesterday that US drivers drove more than 1.5 trillion miles in the first half of 2015, which I think they said was a record. So demand is still there, helped by lower prices. (The darker side is that, adjusted for population growth, mileage driven peaked in 2005 and is 7% lower today.)
From the prospectus, Risk Factors: Our sponsor owns and controls our general partner, which has sole responsibility for conducting our business and managing our operations. Our general partner and its affiliates, including our sponsor, have conflicts of interest with us and our unitholders and limited duties to us and our unitholders, and they may favor their own interests to the detriment of us and our unitholders.
Standard language in MLP offerings. I don't know of any MLP agreement that imposes fiduciary standards on the GP/controlling owner.
As to sales of the GP's interest in OCIR - look at WNR, which purchased control of NTI from the former manager without making any offer to the public unit holders. Or Murray Energy which bought control of FELP without making a similar offer to the public unit holders. Or CF Industries which is acquiring control of OCIP in a private deal without offering any exit for the public holders, although that deal is a bit convoluted, to be fair. And take a longer look at TNH, whose controlling GP has been sold twice without anyone making a related offer to TNH holders.
Welcome to MLP land. If the Turkish company wants out units, they will make an offer. But I doubt they will. Now that OCIR is just about entering IDR territory, why would they want the public units?
More important to me is that OCI (the parent) had other business relationships with OCIR, especially with regard to exports. I haven't taken the time yet to figure out what's happened to those.
And the $ 28 equivalent purchase price is a soft number. It all depends on the value you place on the other interests that the Turkish company got in the deal.
A new ETF specializing in refiners - CRAK. I just saw the news release, I don't know when it starts trading. The only relevant point for this board is that the ETF will own only 1 MLP, and that it CLMT. It will be 1.9% of assets.
I seriously doubt that CRAK will attract enough assets to make a difference. I'm just posting the news because CLMT is mentioned.
CRAK will own some C Corp sponsors/controlling owners of MLPs such as WNR. But CLMT will be the only directly owned MLP.
Just a small point. Not trying to be critical, just accurate. WNR can't "covert itself" into an MLP. Chnaging from a corporation to a partnership is a taxable event, both at the corporate level and the shareholder level. That's why you never see it done.
What happens is that the corporation contributes some of its operations (could be 100%, but that's not usual at the start) to a newly formed partnership and does an IPO of the partnership, with the corporate parent keeping most of the units. That can be done on a tax-deferred basis because it keeps the corporation alive and the corporation keeps paying corporate taxes on its share of the partnership's income. But it's very hard to get rid of the corporate shell itself.
Also, when the corporate parent holds back some of its assets from the MLP, it has the future ability to do drop downs when the MLP is better able to finance them.
And if the MLP gets large enough, it can eventually acquire the corporate parent and run it as a subsidiary. Take a look at some of the deals that ETE has done and you will see variations on this theme.
But no direct conversion to an MLP. It's way too expensive, tax-wise.
FWIW, I think it's a toss up between WNR acquiring the rest of NTI or WNR using the NTI MLP structure to drop down some of WNR's other refineries. The problem with using NTI in this way is that NTI has no IDRs in place, so WNR won't get the benefit that would result from the IDRs. But because NTI is a variable distribution MLP, I don't think IDRs are practical anyway. None of the other other variable distribution MLPs have them.
Either way (status quo, or WNR doing a deal) I think NTI is the best positioned refinery MLP out there.
From a longer story about the partially shut down Whiting refinery: "The increase in spot prices has led to higher retail gasoline prices throughout the region. On August 17, regular retail gasoline prices in the Midwest (PADD 2) increased 32¢/gal from the previous week to $2.79/gal, the largest weekly increase for Midwest gasoline prices since the aftermath of Hurricane Katrina in 2005. Average retail prices for regular gasoline in Chicago and in Cleveland, Ohio increased 68¢/gal and 43¢/gal, respectively, from the previous week to $3.37/gal and $2.83/gal, respectively."
As others have posted on this board previously, the higher prices have spread throughout the region. With lower input costs, I don't know if NTI will be able to capture the extra profit - I have no idea if MN has rules about price gouging. And the story said nothing about how long the shut down might last - I have seen estimates from 1 month to much longer. But it would certainly seem that Q3 should be as good as Q2 at the very least. The benefit won't last long and the market probably won't pay much for 1 really good Q, but I'll take it. As long as I don't have to pay those higher prices to fill up.
I noticed your name so I figured you might have an interest in them. I think they are less risky than the price suggests. I think NRP's biggest risk is that it will violate some debt covenants that are based on coverage ratios. But I think most of the debt that has covenants is already in front of the 2018 bonds so there can't be much added risk there. Good luck with them.
There's a revolver due in 2017 - about $ 200 MM and a term loan due this coming January for $ 75 MM. Plus there are $ 80 MM per year of principal payments due on various long-term debt that matures at various times in the 2020s. Throw in the $ 425 MM of 2018 bonds and you get the problem.
The 2018 bonds are the only publicly-traded debt - everything else is bank debt. The 2018 bonds currently trade around $ 70, so the yield to maturity in 2018 is above 20%. I have no idea how frequently they trade, but if you like NRP, they might be a better investment than the common units.
Just read a few of the messages on this board for your answer. Mostly, it's the combination of a terrible coal market and a ton of debt. NRP has $ 1.4 billion of debt, with just about $ 1 billion of it coming due in the next 3 years. So NRP finally bit the bullet, cutting the distribution for the second time in 2 years, and plans on using most of its cash flow to repay debt for the next 2 1/2 years. If the plan is successful, and if the coal markets recover in 3 years, NRP should be in a decent position going into 2018 or 2019. But that's a lot of "ifs". So the units are trading on the distribution for now.
In the meantime, don't put much faith in the reported profit. NRP's biggest asset by far is the coal reserves it owns, and the CAPP reserves (about 40% of the total) are probably close to worthless right now.
I don't understand. Mr. Hogan has acted intelligently and avoided NRP units and the losses suffered by Mr. Robertson. Throwing good money after bad is the phrase that comes to mind - Mr. Hogan avoided that.
But my question: how would taking more losses make him a better executive for NRP? I think he deserves a raise for his intelligence. I think Mr. Robertson is the one that should step down.
That's all just a bad joke on my part. The truth is that they should fire whoever was responsible for the oil & gas investment.
Just to clarify the prior answers. UBTI can only apply if you own an MLP such as UAN in an IRA or other retirement account. If you hold UAN in a taxable account, you just pay income taxes on the regular taxable income pass-through on the Schedule K-1 (more likely losses, which get recaptured when you sell). There's a lot more complexity, but the key question is where do you own UAN - in your IRA or in a taxable account?
From today's NY Times, old news except (to me) the current price of Western Canada Select:
A breakdown at a BP refinery outside Chicago is sending jolts across the energy markets of the Midwest and Canada, pushing up gasoline prices even as oil prices over all reached a six year low.
Since a mechanical breakdown at BP’s refinery in Whiting, Ind., on Saturday, the wholesale price of gasoline has climbed 50 to 80 cents a gallon in a region that stretches from Great Lakes states like Michigan to as far south as parts of Kansas and Oklahoma.
In Illinois, the average price at the pump jumped on Thursday by 15 cents, to $2.78 a gallon for regular gasoline, according to AAA. In Michigan, regular gasoline jumped by even more, 23 cents a gallon to $2.81, AAA said, an almost unheard of increase, except when hurricanes barrel through the refineries on the Gulf of Mexico.
At the Whiting refinery, leaky pipes on a crude distillation unit built to process Canadian heavy crude forced BP to shut the unit, and experts say it could take as much as a month to fix the problem.
Refinery breakdowns are not unusual, but this one comes at a particularly bad time for Canadian oil producers. Because the Whiting plant is one of the primary processors of Canadian heavy crude in the United States, inventories are building north of the border.
The price of Western Canada Select, the benchmark for diluted bitumen from Alberta’s oil sands, sank to roughly $23 a barrel this week — about half the price of an American barrel of crude.
I had not heard the $ 23 price before.
The ex-CEO made a little over $ 2 million at NHI in 2014. The person he's replacing at HCP made $ 3.3 million in 2014. So my guess is that he changed jobs for the money and got a nice raise,
In addition, he's 40 years old (maybe 41 now). He seems to be the number 2 person at HCP now. The CEO is 64, so maybe he sees a chance to run a much bigger shop in the not-too-distant future.
The Deer Run answer is easy. The minimum royalties are $ 4 million plus a little per quarter, or about $ 17 MM per year. The minimum royalty applies no matter how low the production level might drop. But, there is a clause in the agreement (typical for miners of all type) that says if the mine can't be operated for reasons beyond the miner's control, it can stop paying the minimum royalty until the mine is reopened.
This is how Mr Cline was able to stop paying royalties on the 2 Gatling mines, whose reserves he had sold to NRP and then leased back. Geologic conditions that no one expected made mining impossible so he could stop paying the minimum royalties.
For Deer Run, NRP disclosed that Foresight made a claim of force majeure in Q2 and NRP is disputing the claim. During Q2, Foresight replaced the coal that it would have mined at Deer Run from inventory, so it continued to pay regular royalties to NRP. There has been a series of problems at Deer Run (I love the term "combustion event"; can't someone just say "fire"?) but I had thought they were over and things would get back to normal again. But not yet, I guess.
I think FELP generated $ 82 MM of NRP's revenues. I suspect this year, it should be similar.