pddane: the NAT fleet appears to be in tip-top shape, and you are right, the price of tankers fom the yards today is much higher than the value of the ships on the water. While it is highly unlikely that accounting rules will allow NAT to "Mark to Market" their floating assets, you can bet that those values exceed the book. So focus on the cash generating ability of those assets. roughly, a tanker operatin g 300 days pet year will generate, at $25,000 per day, revenue of $7,5000,000, while, in NAT's case, costing $3,600,000 to operate.in direct operating cost. While rates averaged about $26,500 in the first quarter, they only averaged about $16,500 in Q2. So NAT will show a LOSS for Q2, though it will continue the dividedn from positive cash flow.
Since NTI uses Canadian and North Dakota Crudes, none of which is NGL , their cost of production should not be affected. I would be buying now, at about 26.25. It's on sale. Yes, it might go lower, so? It's on sale now. Can't buy more or I would.
Sentiment: Strong Buy
The decision to allow export of unrefined NGL (Natural Gas Liquids) which is what most "Ultra-Light Crudes" are will affect refiners that use a lot of NGL in their refineries. I do not believe that either NTI or ALDW are in that catagory. In any event the increase in the price of Bent relative to WTI and WTS will increase crack spreads more than the eport of NGL will. I think this is a way overblown reaction and purchased 8000 shares of NTI, to go with my 2000 ALDW.
Sentiment: Strong Buy
About time! NGL has been way low in price due to over supply! Should be good for the gas producers with wet gas. Will affect some refiners but NTI should not be affected.
Sentiment: Strong Buy
According to consumer advocate "Megan": 212-364-8200 at the office of President Rob Marcus, TWC has a massive internet outage affecting millions of customers from California to Norh Carolina. This problem has been on-going for at least three days. She said that the Office of the president does not know what the problem is, do not have a time to repair, and the office is unaware of exctly what number of consumers are affected. A call to the office of Public Relations at corporate offices was answered by message machine and has not yet been returned.
According to consumer advocate "Megan" at the office of President Rob Marcus, TWC has a massive internet outage affecting millions of customers from California to Norh Carolina. This problem has been on-going for at least three days. She said that the Office of the preident does not know what the problem is, do not have a time to repair, and the office is unaware of exctly what number of consumers are affected. A call to the office of Public Relations at corporate offices was answered by message machine and has not yet been returned.
The Suezmax day rates are higher than last year. During this second quarter of 2014 they appear to be trending to an average of $20,000 per day. On a rough basis, with 20 ships, and 90 operating days, we end up with revenues of about $36,00,000 and operating expenses of roughly $38,000,000. Adding in interest and other expenses, the total costs will be about $41,000,000. This suggests that on a GAAP basis there will be a $3,000,000 loss. Perhaps, on a cash flow basis, once NAO is added back in, that there will be a slight positive cash flow. As a back of the envelope calculation, this is encouraging. Prospects look good going forward.
On the international front, China appears to be building their equivalent of a Strategic Patroleum Reserve. Imports and production of crude exceed their refinery output by about 600,000 barrels per day. This is likely going into long-term storage, and represents an increase in shipping above current requirements. This is a positive development.
They know this is a short-term drop. Their current shareholders. like me will see it as a "sale" and get some. I got 2000 at 12.70. So why do you think they not caring?.
Some rough numbers: It costs about $10,000 per day in direct operating costs and $5,000 per day in depreciation costs for a Suezmax tanker (these are rough numbers). This suggests that NAT will end up with a net cash flow if prices are above $12,000 per day (including money for repairs and overhauls), and will make real money if thet total is above $17,000 per day (All-in costs). A look at the SUEZMAX day rate charts on TEEKAY suggests that the second quarter tanker rates will average about $20,000 per day. At those rates, the price of $35,000,000 would result in a positive cash flow per tanker of around $8,000 per day or a cash on cash return of about 8% - not great, but acceptable. In addition, as NAT sops up available tankers, it gains some pricing power in the spot market. Not a super strategy, but , as I said, NAT is a good company in a bad business. my buy-back point is about 8.07
The sloping channel OZM is trading in has risen with a low of12.81 and a high of13.05. Purchased 5000 today at 12.08. The channel slopes up at about $0.05/day. you can program in rising buy and sell points with a difference of $0.25 between the lower buy price and the higher sell price ( if you are a day trader.)
Clamos: All is not lost. NAT is trading in a channel with wide limits of 8.07 and 9.03, and narrow limits of 8.31 and 8.55. The difference between 8,31 and 8.55 is 24 cents or 3%. In the period 5/2/14 and 5/20/14, NAT was at the higher price 3 times and at the lower price4 times. Trading between these prices, with leverage of 3X would have gained you 3x3x3 or a 27% return.. While I am not suggesting that you do that, you could play a recovery game for a few weeks, and take your money to some safer and more stable spot.. However, since the past does not predict the future, any significant change in the market (war, revolution, economic down turn, oil field disruptions) could change the picture. High risk can mean high reward or high losses.
I did not mean to imply that Suezmax shipn needed to use the Suez, However, in an attempt at brevity,I was not clear in what I said, What I meant to say is that less ships are coming to America due to Fracking, less than expected ships going to Europe, due to slow growth, and more ships going to Asia, but not as many as expected.,.
Your comment is ABSOLUTELY true,in all points.
From my perspective: 1. NAT IS the best bet, in a bad business.
2. There are too many ships of all sizes, due to slower than expected growth. 3. NAT can survive, and in the long run, is your best tanker purchase in terms of safety. 4. Investors viewpoints depend on a lot of things, but usually they want increasing revenues, increasing profit and increasing stock prices. AT PRESENT, NAT has three strikes against it, But this is not baseball. NAT is up 2.6% this norming, with no directly related news, you may have noticed.
Learn2Earn asked us all question, and I will attempt to answer it: How can Rates Not go higher? The simple answer is Bankruptcy. The current market price is too low because too many people made some incorrect assumptions about growth, Neither the US economy nor the Europen economy has grown as fast as expected, and there were too many tankers built. As this occurred at the same time as the single-hulled tankers were being sent to the breakers, this resulted in a large number of new and almost new ships.
Making the situation worse, from the SUEZMAX viewpoint, is the fact that America is producing much more oil, meaning that less ships are coming from the Middle East.
If compeditors of NAT go bankrupt, the purchasers will buy ships at reduced prices and possible undercutting NAT. NAT is attempting to prevent this by buying all the ships it can. As long as NAT is the lowest cost producer (or shipper), it can stay in business. But that does not speak well for the stock price.
The resistance stock prices for NAT are at, approximately 8.29, 7.75 and 6.97. It s likely to hit some or all of these prices before it heads to the $10 price some people on this board ars touting. I have sold all except 2 shares, which I am keeping to help me track the stock price. I will buy back when it is clear that European growth and American growth have significantly improved, or oil market dynamics increase demand, and SUEZMAX day rates improve. Long rterm, this is a buy (2 to 5 years). But it is a short-term sell.
Sentiment: Strong Sell
flwsinvestor: I think you are right that ECA is out. However there are several possible reasons for them doing so. They wil be pulling about $20,000,000 in cash, certainly because they beieve they will get better returns than keeping the money in ECT. What we do not know iswhat the alternative projects are. The alternatives may be great for them, but unavailable to us. I agree the risk is high. Projections of Sunspots by several organizations suggest another very low amount, resulting in another very cold winter, at least in the USA, and better than average Nat Gas prices. IF TRUE - increased prices may compensate for decreased production.
Past is not Prolog. An extremely strong winter Crude Oil loading does not appear to have proceeded into the Spring. Look at the first month and a half for the quarter, where prices have dropped to about 11.000 per day for the SUEZMAX carriers. Decreasing growth rate in Eurozone will combine with economic disruption from Russia's actions, and the increasing "green" energy usage to reduce shipments to Europe. Meanwhile, the slowing growth rate of China will not result in as large a demand from Asia. While shipments will actually increase, it will not be by enough to significantly raise prices.
Good explaination of the details. I agree completely. But i come close to betting that NAT will buy two more ships with the money. If someone busts a couple of Ukranian pipelines, there will be plenty of business for NAT. If the US decides to sell excess Strategic Petrolium Crude, that would also increase business. There are upside scenarios.
Natoil: You are absolutely right: 1. Rates are volitile 2. The quarter is only half gone. 3. NAO will contribute to the bottom line. BUT, for NAT to make money this quarter the day rates would need to be about double the present rates, European economy is slowing, and I would not take bets that oil shipments vie Suezmax would increase. NAT is a good company in a bad neighborhood.