MEP is primarily a pipeline entity and is a subsidiary of Enbridge Energy Partners L.P. MEP is not a producer of NG, crude or NGL per say. The cost associated with pipeline and processing the streams of product is a value added. The value added is on top of the production, not part of the production.
I believe MEP profit will not vary much from its present distribution. What could lower the profits of MEP is if the production stream that is processed by MEP is less. I do not see a drop in NG production short term. When the LNG trains starts to be operational. MEP volume production streams should increase. 2015 may be a good year.
The IPO of MVO was 19 January 2007. I assume the end of MVO, according to you, is 12/31/2020. MVO has a life of 14 years. The equipment used for production is design for a maximum efficiency lasting 30% of the economic life of the equipment. At the IPO MVO production wells were not all installed. It takes several years to have all the wells set up for production. I believe this ramp up time frame to be 30% of the life of MVO or any US Royal Trust. The last 30% of life is when the rate of production starts to decline to become zero by the end life of the Trust. The production mix will start to change because of loss of pressure and location of heavies in the reservoir.
1/3 of MVO life is 4.56 years. MVO will be at 66% life in 1.45 years. MVO is still the max production second third, for another 1.45 years. The production rate should not vary much; this has to do with the equipment design. This does not means that MVO reserve will not deplete, it will. The value of the future distribution will be based on the WTI index price.
Is the management of the IEVM equity, not the company, crocked? Every morning before the opening of Wall Street, the “Bid and Ask” are always below the previous day closing. I cannot believe that every day IEVM is forecast to be lower.
I assume that brokers make money when the equities are sold or bought, there is a commission associated with each transaction. Is the broker managing IEVM skew the transaction by always showing a potential lose at the opening. In other words, he favors sales to make a commission.
Has anyone else witness this observation?
Absolutely, WMB earning are not associated with NG prices, but with the cost of transporting (flowing) through the pipelines. The only impacted it may have is if the volume of NG flowing is cut. I do not see this, I see more demand of NG all over the US, Canada and Mexico. This is good for pipelines. The producers may see their prices go down, because they over produce and not enough takers.
Benquasar is all over the MB pushing PennyStaockWeekly. He must have a cut of the action??
At this time any Republican is better than Obama. An Ideologue like Obama is not what our institution can tolerate. He is transforming America into a European system like France. We have to go back to what our institution was dreamed up by our forefathers.
You are confusing WHX with WHZ. WHZ has a few years to go before zero, or as said in the IPO: 11,790,000 BOE. I calculate we have 7,205,495 BOE. We are not even halfway through.
The meaning is simple, the US O&G is producing too much, and the US refineries throughput is too low. Building new refineries is not an option. So the remedy is simple but cannot be changed with this administration “Export”.
For the next two years what you see is what you will get, and it may even get lower. In 2017, January, Crude oil status will change and export will be allowed, assuming that a Republican is president. The chances of another democrat in the White House are not the norm after a 2 terms president, the party change.
Can the new Republican majority in congress force crude oil to be exported, 60 votes are needed, and the Republicans do not have it.
I invest in O&G, because I worked in this business for 40 years. I am not right all the time, but I understand why.
The average is $0.74, in view of the index crushing, it would still be OK. The previous 2 years it was $0.65 this quarter. Still better than a T bill??
It is not that difficult really:
Until the Big Spring refinery modifications the potential daily production was 70MBPD. The Crack Spread for the quarter averaged $13.34 between 5/14/2014 and 10/14/2014. I assume those dates are the quarter. It takes 30 days to close the books on the quarter expenses, production and publication.
Multiply the production by the crack and you get the total possible revenue. You can figure out the expenses and reserve amount from previous K8 filling.
Naturally, very difficult to forecast shut down of the refinery, which is the biggest possible problem with any refinery. CVRR and ALDW have had this problem this past 12 months. This quarter I believed ALDW had not totally paid off the refinery modifications, an added expense that I took as an increase to the expenses. I took total expenses and reserve at 30% of revenues.
I posted a $1.00 plus 2 week ago. I was in the ball park. Next quarter the max production will be 75KBPD because of the modifications.
TwelvePM, appreciate your comments because they are well taught of. Comparing equity with a US Royal Trust is really comparing oranges and apples. Comparing US Treasuries or Bond makes more senses. Both have an end date but with treasuries you do not lose the capital, if you do not sale before the end date.
The particularity of a US Royal Trust is that the capital dwindles to zero or the value declared in the IPO. US Treasuries never loses value, what drive the price of the treasury down is the interest rate rising. The opposite is also possible, as the interest rate goes down, the treasury will go up. Bonds are more risky because you are dealing with private concerns that have reputations you must investigate. Rating agencies do that for a living. But higher the interest rate, higher the risks. If the bond issuer goes bellies up, you lose your capital. Remember the GM bonds???
The risks associated with US Royal Trust are manageable, no guaranties but I can understand more times than not the risks that I am taking.
Equities are another deal that I stay away from. MLPs are somewhat understandable but are not US Royal Trust. O&G is in a transition today, but I understand what drives the business. I am trying to diversify but I am cautious.
That is the trust of my comment. On one hand the unit price which represent the value of the US Royal Trust. One has to quantify what is the value of the US Royal Trust; it is what is left to be produced multiplied by the index price.
The distribution is today production sales revenues less expenses. Has the value of the US Royal Trust goes down because the index price crash or the volume left is not enough to cancel the index price, the unit price is down. But the distribution is OK and represent today price.
In short, as the unit price goes down and the distribution says the same, the percentage will go up. So you made money, but your invested capital is in the gutter.
Buying at the IPO of a US royal Trust and keeping it until the end is gutsy, if not stupid. It may work but not worth the trouble. I buy on the low and sale before xdate. The certainty of xdate is that at minimum the unit price will lose the price of the distribution. If you keep it, you believe that the index price will increase more than the distribution. It happens but not my cup of tea. Many like me will sale before xdate. After Xdate many will realize that the price is further down and sale. It take some monitoring but one can buy back and make money more time than not.
Having been in the drilling business Excelyte makes sense. This H2S is extremely potent. Our alarms in the mud pits would go off at 3 PPM. At 5 PPM you lose your sense of smell and soon after you lose consciousness. Mud bottom up depend on the bits depth. Assuming an average depths the mud going in bottom up withing 2 hours. Should Excelyte eat up the H2S in that time is a very big deal? The mud treatment in the mud pits takes longer depending on the pits volume. Treating in the pits with Excelyte is another very good deal.
I am assuming that the Big Spring refinery has produced 70,000 BPD from July 14 2014 through October 13 2014 or 152 days. The average crack during this time is $13.22. The expenses and capital on hold is 30%. I calculated the potential distribution to be $1.51. I know that the refinery modifications has not been fully paid off.
My guess is that it will be above $1.00.
Do not quiet get the comment. But if you question why the unit on Xdate goes down, the assumption is that the distribution is a cost that lower the value of the trust, in this case WHZ. So if the distribution is $0.75 the unit will automatically drop $0.75. On average many divest themselves just before Xdate. Why stay in if you know that the distribution is deducted, unless you are long. Then you speculate that the index price will increase the worth of the trust?? To each is own.
Politic has taken over all index prices, the WTI and the Brent. The Saudis do not want to lose market share and have let the Brent crude price go down. It appears that the Saudis can keep the Brent crude at the $80 level for some time. The Saudis keep the cost of their production very close the vest. My guess is that they make a profit at or below $60 per barrel.
The Saudis with a small population do not have the problem Iran has. Iran, Venezuela, Nigeria have large population and crude is their only earning to keep their population happy and none belligerent.
The US, so far, does not export crude oil as define by API. Plant condensate can be exported and recently field condensate can be exported as long as the light gas particles have been separated. But regular WTI cannot be exported. The US GOM refiners are exporting refined products, Diesel in particular. My view is that the Saudis and other OPEC members want to make available crude oil to none US refiners at a competitive price. The diesels demand in South America is big, lower Brent crude price, once refined, will make diesels competitive with GOM produced diesel.
I would not, necessarily believe that the WTI price will be back to the mid-90s soon. The game changer would be for the US to allow WTI export. If it happens it will not be before 2017. Obama is out to kill the O&G economy. The next couple of years are going to be very volatile and require good nerves.
Analyzing a US Royal Trust many confuse the distribution with the unit price. The two have to be treated differently. The unit prices are set at the IPO and represent the value of the expected production. As the production reduces the volume to be produced, the unit price will go down. What composes the value of what is left to be produced is the WTI index price, or the agreed leveraged price agreed by WHZ. The WTI index price may increase the unit price when the volume to be produced cancel the loses due to production.
In the situation we are in today, the WTI index price has corrected according the future demand versus the WTI market availability. In other words the volume of produced WTI will chase fewer buyers, so the price will become competitive and will go lower. This is why the unit price is down.
The distribution represents the amount paid by the buyer or the customers of WHZ. The distribution represent today price less expenses. The price paid by customers may be less or more than the WTI index price depending on the API quality and the production location, meaning the cost of pipeline.
When the earning percentage is shown, it is misleading. But as the unit price dump and the distribution do not follow the index price, the percentage may be high, but the dollar may be lower. It all depend on the unit price, in some cases in went down 40% since July 1, but the distribution is somewhat the same, so huge percentage. But you may have lost 3 times the distribution amount, the unit price got killed.
Bottom line today we have to bit on the future earning in this evolving economic situation.
No, Xdate is this Friday October 10th. The 14 is the owner date of record. It takes 3 days to sale a unit or stock to settle. So to be the owner on the 14 October, you must buy it no latter than the Friday the 10th or the Xdate. The distribution will be subtracted from the unit price on Monday at the opening. I expect MVO to drop $1.50 Monday, the distribution plus another $0.60.