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General Motors Company Message Board

reit_guru 7 posts  |  Last Activity: Apr 9, 2015 5:01 PM Member since: Sep 25, 2007
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  • Reply to

    Linbergh Bonanza

    by fishinanddreaming Apr 8, 2015 11:54 AM
    reit_guru reit_guru Apr 9, 2015 5:01 PM Flag

    It will resume in next fiscal year.

  • Reply to

    Linbergh Bonanza

    by fishinanddreaming Apr 8, 2015 11:54 AM
    reit_guru reit_guru Apr 9, 2015 12:31 PM Flag

    Fishing's number is very close to mine, gathered from PGH's releases at the investor's conferences. It is a strange accounting, though: PGH already sunk $1Billion into this project in the last 2 years, in order to now extract very low cost, long life oil. That's a bit of a "con" in terms of accounting. However, from our selfish point of view: The $1 Billion was paid for by the shareholders when PGH was $7/share :)
    We (those that bought recently, at $3 - $4) are getting that $1Billion investment "for free" and will benefit from the cheap oil coming out of Lindbergh "for free" (courtesy of old shareholders).
    By 2017, I wouldn't be surprised if Lindbergh is making more than 50% of PGH's cash flow. It was a company transforming long term investment. Unfortunately, it had a short term affect of sucking $1Billion out of the company, and collapsing the stock (and it didn't help that WTI crashed, too).

  • Reply to

    Linbergh Bonanza

    by fishinanddreaming Apr 8, 2015 11:54 AM
    reit_guru reit_guru Apr 9, 2015 12:21 PM Flag

    It could take 20 years to do a conversion of the trucking fleet from diesel to NG.

  • Reply to

    Linbergh Bonanza

    by fishinanddreaming Apr 8, 2015 11:54 AM
    reit_guru reit_guru Apr 9, 2015 1:09 AM Flag

    I don't know about the number $20 Canadian, but I do know PGH's Lindberg operations are very efficient. For example, the energy that would otherwise escape from the boiler for the steam extraction, is used to "cogenerate" 16 MegaWatts of free electricity. That's something like $10 Million/year.
    Currently, PGH is saying they can produce 50,000 barrels.day at Lindgergh once fully developed. They said they are spending $300M/year on CapEx. If we just used these 2 numbers, we get a cost of about $16/barrel. Now, we must add the variable costs (fuel doe boiler), and it looks like you're using about $4/bbl for those. I'm thinking more like $2, so I'm estimating around Canadian $18/bbl. The only bad news is that Lindgergh is in the middle of nowhere (unlike the other plays, near Ft. McMurray) and I don't know if it will cost a lot do ship th crude out. I hope they can make a good deal with Enbridge or KM for a feeder pipeline, since 50,000/day is a big deal. But it will take some time.

  • Reply to

    Linbergh Bonanza

    by fishinanddreaming Apr 8, 2015 11:54 AM
    reit_guru reit_guru Apr 9, 2015 12:49 AM Flag

    There are 2 reasons the refiners are "begging" (as you wrote) for the heavy, sour oil:
    (1) They have a much bigger profit margin on heavy crude, traditionally
    (2) Since the shale boom, there is a much higher percentage of light sweet than heavy sour on the market. Its almost like a relative "shortage" of the heavy.
    Paradoxically, the heavy type is considered inferior (more diesel and asphalt, less gasoline), and yet, due to market conditions, it is "hot" nowadays, as you wrote. At my local gas stations, they are charging more for a gallon of diesel than a gallon of gasoline. It used to be 10% cheaper before shale revolution.

  • Reply to

    NGLS is Hurting!

    by milecourse11 Mar 5, 2015 12:39 PM
    reit_guru reit_guru Mar 22, 2015 5:51 PM Flag

    I like Fishin's explanation below. It explains why we dropped, and also why we will recover. So don't fret about it. Enjoy collecting you (tax deferred or tax exempt) distributions. I'm considering buying more. I just need to sell some other stuff, and its getting closer.

  • ...but is still dirt cheap.
    Long way to go to $20

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