The cash flow of a trust comes from the sales of what is produced. All expenses have to be deducted from the sales. What is left is the distribution. The operator expenses includes his profits. The distribution is divided into the 2 types of units, that all. Some trusts have elaborate calculi to figure out the distribution, such as BPT. WHZ is putty simple.
Feb 7, 2013 WHZ distribution was announce to be $.65 and the price at the close was $17.51.
On the Feb 8, 2013 WHZ price at the close was $16.25. That represent a loss of $1.26.
I better cut my loses while it is possible, especially that the day after xdate WHZ will go down $0.65 the distribution and most likely more. I will buy it back around May 1 2014.
The Q2 turn around is been postpone to Q3. The modification to the Big Spring refinery is taking longer to plan. One can speculate on the reasons: Is it because the engineering takes longer or is it too expensive and the cash flow will not suffice. So postponing to Q3 allow more saving without IPO. The question is that 2013 Q3 did not fetch a distribution, can ALDW allows another consecutive quarter with no or very little distribution. My guess it can not. They may split the turn around in 2 payments. Q2 pay off the equipment and Q3 the installation. So there will be a distribution but how much!
I understand, but the calculi is backward!
They state the amount slated to each class of units. The distribution must represent the amount slated divided by the number of units of each class of units.
If you are right, and you may show the right amount, must be arrived at with the numbers publish. I would consider this as "faults advertising". At least bad communication.
Has anyone checked the distribution!
From the 8-K January 30 2014
Distributable income per Common Unit (37,293,750 units issued and outstanding)
Distributable income per Subordinated Unit (12,431,250 units issued and outstanding)
Distributable income available to unit holders $24,160,000
Common unit holder: $24,160,000/37,293,750= $0.64783
Subordinate unit holder: $24,160,000/12,431,250= $0.25 00
I have to be making an error?
Keeping track of all the K8 posted distribution, the average distribution is $0.74. It will not go bellow that. $0.80/$0.825 is a good number. The K8 report will be publish most likely Friday 7 FEB after closing. It is a guess!
You may believe that ECT will go on with good distribution, but you do not understand. In a shale play, what keeps the distribution going is drilling. Once you stop drilling the production will go down significantly. The point is that the production going down will not provide the earning to keep up with the distribution. Unless the index price increase 10% per quarter, the ECT distribution will become un-attractive. Fact of life for O&G trust. Somewhat different for MLP, they can modify their assets, thing that US Royal Trust are forbidden to do by law.
The refiners are down because the crude oil is down. Refiners make money on the Spread. The spread is the difference between the crude and the gasoline/diesel. To me when the crude price goes down the gasoline/diesel follow. Refiners are in the money regardless.
This thinking is totally different for the EPs. Their production cost does not vary greatly when the crude goes down. Their distribution adapt the crude price.
Of the two, refiners and EPs, the refiners will do better in 2014.
The Marcellus gas has direct access to NY city through a new pipeline. The volume has gone up and the NG prices in NY are down as compered to the North East, which does not have new pipeline. This new pipeline displace the Canadian gas. So US gas is starting to make a difference. I know, Liza, you are skeptical, none the less it is on the way?
I express a general point of view and you specifically stay with this trust. The demand for Marcellus NG is growing with the new NY pipeline and now the Florida leg. It may be too late but the last year may be a good one. I expect price to stay in the high 43 or low $4.
Liza it will happen and is happening. Just the trucking going LNG or LPG will quadruple the demand and WTI will pay. It is inevitable the cost per mile differential is against WTI. Between the trucking and the power plants NG will be the new king. NY is seeing the benefits of cheap gas where as MA and the North East states are still locked in with crude for lack of pipeline. CA is for NG as well, the nuclear power plant shutdown will be replaced by a little green energy but lots of NG power plants.
You are missing the point. Going back to the Tbill analogy: If you by a 5 years Tbill on the date of issue you will get 5 years on interest. But if you buy it 3 years after the issue date you get 2 years of interest. The value of the TBill is directly proportional to the Prime interest. If the new issued Tbill interest is less than your Tbill, the value of your Tbill is higher. But the interest payment over time may be less, as it gets closer to your 5 years Tbill end of life. Same with O&G trust.
"These refiners are volatile and pay pretty good put premiums."
Your statement implies "The refiners" where as you wanted to say " The refiners MLPs" refiners used as a market sector. I understood that since these MLPs distribute most of their cash on hand, they had to have cash to distribute. A statement you have made several times. I guess I did not read between the lines, this time!
No sense to buy until the refinery shutdown take place. Than the Hydrocraker will add competition by using WTI. The shutdown should start soon, 30/60 days.