Under the present situation refiners are the best choices. I have to qualify refiners: The refiners off the GOM such as ALDW are well situated to get descent discounts. The WTI and WTS are over produced and the pipeline flow rates are not enough to accommodate the production. ALDW Big Spring refinery is especially well placed to get excellent discounts because it location near Midland TX.
ALDW Big Spring has modified it process and is able to use WTI or WTS. This makes ALDW, in my view, a good investment. NTI is located in Minnesota and get its discount from the North Dakota production overflow. NTI has changed daddy, I believe WNR, need to understand what WNR wants to do. VLO is on the GOM and has invested $3 billion in modifying its 3 refineries to use WTS. The Brent was a better deal, because the API degree favored the production of more diesels. Diesel means export and good profits. HFC is another possibility.
I hold a bunch of ALDW, and so far so good. If you are investing in O&G what are the choices you have:
E&P are down because the prices are down. These prices will stay down for sometimes. When they start to go up it will be very slow.
The pipelines stock are an alternative, their earnings are fee based. The price of the oil or gas does not matter. The quantity of crude or gas dictates the earnings.
The refiners off the GOM are the best way to make a profit. Their profit base is the Crack Spread. So far this quarter the Crack for ALDW, NTI and CVRR average $17.85. I am using the EIA data but these 3 MLPs have discount because of the over production and their location inland away from the GOM. In the O&G play these are the most promising.
I believed a dilution would take place with 200 million new authorized shares. The plus is that a new management is at work. The goal is to invest in O&G H2S market. The competition to control H2S is putty much chlorine which is more expensive as a chemical but also to dispose of.
The negative is that the oil & gas market is down, so only the sweet spots wells are getting attention. I would expect the number of new wells under treatment would slow down, especially that fewer drilling rigs are working. The lowest share price has been $0.03, I believe $0.05 should be the bottom . I still believe in the H2S potential.
The Gulf Oil CEO in an interview has stated that the saving per year with delivery 18 wheelers was $20K per truck. Truck engines have to be overall every 7,000 to 8,000 hours of driving. The extra cost of up grading to a LPG or DNG engine is amortized in the first year.
DNG is the new fuel, Dual or Diesel Natural Gas engine. Natural gas does not explode under pressure as diesel can. So the DNG engine introduces in the cylinder a very small quantity of diesel as the piston applies pressure. The diesel blows under pressure and light up the natural gas.
It is understood that 6 MMBtu of natural gas equal 1 barrel of crude. The Henry Hub natural gas is $2.55 per MMBtu whereas the WTI is $53.38 (6/9/2015) $2.55 x 6 = $15.3. This is a 38% saving. Even with the power loss of 20% between diesel and natural gas, we still have a 30% saving. Conversion is a win win.
Yes the 200 million are authorized; looking at last March Q K8 IEVM has a deficit. Cannot go on much longer before these 200K shares are on the market??
Now that the dilution has passed the BOD, no one has comment?? My comment is: I am hopping the 200,000,000 new shares roughly $1.2 million will be used to expend the Excelyte production units in new prospective O&G field tainted with H2S. The latest disclosure from IEVM management is that 174 wells are under Excelyte treatments. This new capital should make investments in new O&G fields easier? Should the number of new wells under treatment no increase, Excelyte is not working or this management selling model is not with it. This will be the time to re-evaluate IEVM.
This is not unusual. Delek has completed the majority stock purchased of Alon Israel. I would not be surprise if ALDW becomes a 2 refineries MLP! If this happen it will be by summer end!
I agreed that if you have more than one MLP in an IRA all UBTI cumulate. On the question of converting WPZ to WMB it will take place within the IRA. Since all assets stays within the IRA there will be no taxable amount until the IRA owner makes a distribution.
This UBTI, I understand, get higher with time. Since the WPZ was purchased in 2009 there may be some UBTI. I like MLPs as an investment, I hope that these 2 MLP buy out will not become a trend. MLP is a way to generate capital that otherwise would be a bank loan. I believe MLPs to be a good way to stimulate the economy. We need that!
I am no expert but any MLP or trusts or stock inside an IRA is free from Capital Gain. The only possible tax is the EBITDA. My understanding is that the tax starts for $1000 EBITDA or more.
I have to qualify the statement that IRA is not taxable. It is as long as you do not take money out. The tax is on the IRA distribution which becomes part of your total revenue. If you keep your retirement revenue below the minimum taxable amount, you stay tax free. It is up to you to set up your IRA distribution level, to minimize your taxable revenue.
The futures of Excelyte reside in the O&G drilling and H2S management. According to IEVM management each well uses 25,000 to 40,000 USD of Excelyte. Multiply these figures by the number of wells and you get a lot of Excelyte to produce. Naturally Excelyte is mostly water that is processed to get Excelyte. I expect a fraction of a dollar profit per USG. At $.01 x 25,000 x 171= $430,000. I think this new management is on the right track. We could see 1,000 wells under service by the end of the year. As the reputation of Excelyte grows, the number of wells will grow as well. In the O&G business reputation is everything.
I have hold IEVM for a year, so far I am even. The only reason I keep my shares of IEVM is that I believe Excelyte is a cheap and safe way to control H2S. I have experienced H2S in off shore drilling with 2 drilling contractors.
Excelyte has FDA approval for food processing and hospital biocide control. The drilling H2S control is where the money is. Marketing for hospital and food processing will make Excelyte expensive although cheaper than most of the competitive biocides.
I hope this new capital will be for developing the H2S and drilling mud environmental control and dumping. The B of D needs to have an O&G cognizant director. The O&G business is a fraternity of sort.
ALDW is well located and has a good market to develop good distribution. The only down side is as a refiner fire is always a possibility. Nothing is perfect!
IEVM or IET the corporate entity want to increase the number of outstanding shares from 400,000,000 to 600,000,000 or an increase of 200,000,000.
Sound they need capital to grow? The O&G side of the business will grow; I have to give IEVM another year, but no more? The old team was not up to part. The new team (B of D) does not have an O&G experienced director???
Pursuant to the filling of: SCHEDULE 14A; Proxy Statement Pursuant to Section 14(a) of the Securities Exchange Act of 1934:
“At the annual meeting, you will be asked to consider and vote upon the following: (1) the election of six nominees for director; (2) the proposal to approve our amended and restated articles of incorporation to increase the number of authorized shares of common stock from 400,000,000 to 600,000,000; (3) a non-binding advisory resolution approving executive compensation; (4) a non-binding advisory resolution to determine the frequency of the vote to approve a non-binding advisory resolution approving executive compensation; and (5) such other business as may properly come before the annual meeting or any adjournment or postponement thereof.”
Assuming the new shares a sold at $.0775, we are talking at 15.5 million.
MMLP is involved with pipelines from Permian basin to Corpus Christy. MMLP is also a major operator of the Corpus Christy port. MMLP dock takes NGL and other productions to the other states and export as well. So MMLP is well placed and its earning is fees based. MMLP should do well especially that all producers want to get to market, home or export markets; they have to use pipeline and port facilities, MMLP facilities.
According to IEVM management the water usage per well varies between 5,000,000 to 8,000,000 USG. The concentration of Excelyte is 25,000 to 80,000 USG time the number of wells, 141, under Excelyte application. Presently IEVM is selling from 3,525,000 to 5,640,000 USG of Excelyte. The cost of Excelyte is made of the water, the processing unit rental; H2S follow up specialist and the delivery cost to the well site. The cost of a gallon of Excelyte cannot be delivered to the drilling site for less than a dollar per gallon. My guess is the Excelyte cost per drilled well is $25,000 minimum. This price appears, to me, to be quiet low, the cost of drilling a well has come down a lot, from $3 million down to $2 million. This lower cost is associated with new drilling methods down to less than 60 days.
The quantity of water used in the drilling technology is set by the depth of the drilling and the density of the mud. According to IEVM management the water usage varies between 5,000,000 to 8,000,000 USG. The concentration of Excelyte is 25,000 to 80,000 USG is used time the number of wells under Excelyte application. Presently IEVM is selling from 3,525,000 to 5,640,000 USG. Now days, it takes less than 60 days to drill a well on land. I would assume that it is possible to multiply by 4 the quantity of Excelyte produced and sold. I would assume that IEVM is no longer a losing proposition. I have no price per USG, my guess is in these large quantities the price per USG around $2 to $5.
Marcellus is the NG that has stopped the NG from Texas to go to the North East. The Texas NG redirected the NG from the Permian basin to Mexico. This Mexican revitalization policy had perfect timing. That is all I was saying!
In a drilling application where H2S is present the quantity of water used varies between 5,000,000 to 8,000,000 USD. The quantity of Excelyte concentration varies with the water used and the H2S concentration. From management 25,000 to 8,000 USD of Excelyte is used time the number of wells under Excelyte application. At this time there are more than 100 wells under Excelyte application.
In a hospital, food processing or vet applications the usage of Excelyte would be 1 gallon at a time. The marketing effort would be such that it would lower profits.
Excelyte application in the O&G industry is the winner. As an extension to possible market the health care and food processing will be the cherry on the cake.