Hey shortie, do you know anything about the refining business? If not, get the heck out of here, otherwise you will lose your investment. Going to 18 shortly.
Move to 16 is realistic. Crack spreads are widening despite the low gas prices. News that we are now exceeding the amount of imported oil should drive crude into the 80's. What does that mean, short and long term it means you better own a couple thousand shares of refiner stocks. Take your Pick WNR, CLMT, DLK, CVI, Vlo, etc.
It's good for one important reason and listen up carefully, WNR is in the refining business and the Minnesota refinery has the capabilities of being a gold mine (IE runs canadian crude). The former owners were an investment group and had no idea about running or financing a refinery. This is a good takeover!
Oil has dropped from around $110/barrel to about $94.00/ barrel recently. This drop has really not been reflected in the WTI pricing, nor has it reflected in other refiners stocks/mlps. So, what's in store? Last week they announced earnings and the stock dropped. Somewhat disapointing. I saw an article today where they indicated the stock would likely hit 14 in the future. It also got an upgrade yesterday and they continue to defer start-up of the California refineries, pending some lame excuse about permitting. I also believe alot of shorts were piling into this stock driving it lower. Some have likely left which in turn whill cause a slight rise in stock price.
Here's my take on what I think will happen. They do have access to pipelines and have hopefully been shipping finished product to the midwest, where they have had some significant operational issues. Margins up here in the midwest are pretty decent. Several gulf coast refineries are taking turnarounds next year, which will help improve margins. Motiva still has issues at Beaumont, so margins on the gulf coast should improve slightly in the 1st qtr, if not sooner. IF they can run reliably without any disruptions (Fire, unit outage, etc.) for 1 or 2 consecutive quarters at all their refineries, this stock will see 18-20, not the 14 they are forecasting. Not afraid to tell folks, I own about 10 k in shares on this and another 1 k on ALDW. Also own NTI, EPD, CLMT, CVI etc. So, the refining stocks are down a little now. Gasoline prices are down a little, too. I'll use the cliche, just run baby and you'll be fine financially. Not wishing anything bad to happen to anyone, but if they have any disruptions (no-ALJ) this is an easy 20 bagger by March 1. If we drop to the 8-9 range, I'll buy 20k and average down! I equate this to the metals market. When they are down, gobble them up cause you know sooner or later it's an easy double, just have to be patient.
Sentiment: Strong Buy
Calumet's refinery in superior runs canadian crude which is much cheaper than WTI. Midwest margins are pretty steady so that refinery is a cash cow. I'm guessing that refinery alone makes about 10 mil/month in avg times! So, you throw in the problems that CITGO is having in Lemont, IL and you begin to see that the 4th qtr. will be extremely good to Calumet. That one refinery can carry the load for the entire company. Did I forget to say that crude prices have come down to a peak of $110.00 in July to about $93.00 today. That is bullish for refineries.
I'm am going to buy about 3000 shares if this thing gets anywhere near 10. I am a long term perspective type buyer. The dividends alone will help off-set any stagnation. Refuinery margins are down now, but they will not stay there forever. Secondly, this refinery is making decent money for this MLP. Gulf Coast margins were not oo bad in this past qtr. They most likely will break even in the 4th qtr. Still, all in all not bad. I suggest waiting for a little more drop. The other thing with MLPS is that they are required to give quite a bit of ther monies back to shareholders. Who knows, we might even see a one time special dividend. If you hold onto this and we have a major event or a supply disruption, this MLP could really take-off. Go back to 08 and look at the ALJ charts. Same pullback and then in 12 it sky-rocketed!
The other thing that occurred during the week that I thought was very, very odd was the cancelation of the Mad Dog expansion. That is about a 10 bil cost with a real nice payout over five years. Very odd things going on so maybe some of this lends credence to the takeover talk.
s some attractive assets and the stock is going nowhere fast. So as to the board of directors of BP that is a non-issue. XOM could buy them, divest some of the assets and make huge profits in the process. XOM needs some oil reserves and some Midwest refineries to run Canadian/bakken Crude. Oh, who conveniently dispose of their California and Texas refinery? Who has a couple of Midwest refineries? Who has some attractive pipeline assets in North America? I could go on. Never, say never. Exxon took over Mobil in the October/November timeframe, BP took over Amoco in the October/November timeframe. BP will be bought by someone, just a matter of time! As I have stated before Dudley was schooled well by Larry Fuller! Me think the purchase price will be around $10 bucks above it's current price! It's coming. The litigation is winding down on Macado.