In a spin off, the entire new company is given to the existing holders. Example, when COP spun off PSX, the existing COP shareholders received one share of PSX for each two shares of COP. Then each company declared their own dividend the 1st quarter after the distribution.
In the case of OXY, they would need to decide how many shares the new company should consist of and then prorate those shares to existing OXY shareholders. In this case based upon Chazen's comments it sounds like the new company will be more of a growth story and use all of their cash flow to drill for more oil. The examples that you used, BBEP & MEMP are MLP's and must distribute most of their earnings as distributions to the units. Based on what has been described, the California company will not be an MLP.
Qatar’s national oil company has dropped out of a group of state-backed investors seeking to buy a stake in Occidental Petroleum Corp. (OXY)’s Middle East business amid a political dispute in the region, people with knowledge of the matter said.
Still interested in a joint-bid for the stake are Abu Dhabi’s Mubadala Development Co. and Oman Oil, said the people, who asked not to be identified because the matter is not public. Qatar Petroleum is weighing buying some or all of the stake on its own, and is seeking a financial adviser to help it do so, the people said.
Occidental is considering breaking up the assets and selling them to individual countries, Chief Executive Officer Stephen Chazen said last week. The split also creates the possibility of a contest for the 40 percent stake, which is expected to fetch as much as $8 billion, one of the people said. Shares of Occidental rose as much as one percent, and were up 0.7 percent at $95.58 as of 1 p.m. in New York today.
“The notion that they were going to somehow cooperate with each other in an oil investment is difficult at best right now,” Chazen said at the Howard Weil Energy Conference in New Orleans. “At their suggestions, we’ll probably make separate deals with the three countries with somewhat different assets in each one. In some ways, that’s a lot simpler.”
The political rift is over Qatar’s support for the Muslim Brotherhood, which runs counter to a regional crackdown on the Islamist organization after it gained power in Egypt with the 2012 election of President Mohamed Mursi.
The spead is down to $5. These prices are not necessarily what PSX pays for oil, only recent futures contracts for May '14 and are only guide posts for a very specific type of crude. Since almost every oil field has different characteristics, actual prices pain are all over the spectrum. PSX also has refineries that refine different grades causing different end product percentages form each. These futures spresda are not necessarily indicative of how well PSX will do.
Argus initiated coverage on Cummins (NYSE: CMI) with a Buy rating and a price target of $162.00.
The stock was up as high $149.99 earlier this AM. Currently around $149.10.
Looks like the down trend started at $6.37 and we continued to make lower lows and lower highs. Around January 14 we bottomed at $3.29 and now in a 2 month plus up trend. I am not a technician but would like to see these higher highs and higher lows play out for a while. It is the most encouraging signs in a long time.
This is 6 months later and I guess Zacks is pretty unreliable when it comes to predicting where this stock was headed. I would say it is pretty cheap even here based on the analyst's consensus estimate of growth for the next 2 years of over 22% per year, yet the PE based on this years estimate is only about 15.5 times earnings.
By the way does anyone ever post on this board. I own some shares and see that 90% of the shares are owned by institutions.
Question also is what type of rock are they drilling in. The shale with high BTU content is preferable and they can export the ethane and other LNG products. In fact i think Propane is also in very short supply. Downside is that a lot less methane is produced per well.
Most companies that pay dividends increase one time per year and the mid-July date when the stock goes X-dividend is the quarter to expect the raise. They held the dividend constant the first year after the split even though a huge part of the company was spun off into PSX. Since PSX started to pay a dividend immediately, that was the increase if you held both companies.
Looking at the past it appears that COP wants to pay out about 50% from earnings (not cash flow). They made $5.70 on a continuing basis in 2013 (excluding earnings form property sales) and expect to make $6.16 (average analyst estimate) this year. My guess is that they go to $2.92/share or a 16 cent increase per year (4 cents/quarter). This would put the payout at 47%. When raising dividends the payout ratio is usually the key determinant that boards like to use. Large mature companies with relatively predictable earnings like to use payout ratio as a guide.
No, the existing wells degrade to fast and the weather hampers operations in the 1st quarter and in December. The company has never been able to meet their guidance. Why would you even remotely consider 15 -20% increase over estimates. More importantly they should reach cash flow positive state. When that happened to the original natural gas companies back 7 - 10 years ago they almost immediately tripled in value. For non believers or bashers look at the charts of companies like SWN or UPL. It happened to every one of them. Floyd Wilso made a fortune when his company was taken over by XOM with a 30% premium after it had run up.
Why would you want to export oil?? The refiners are already exporting some gasoline along with a lot of the products that come out of the refining process that are used as feed stock for chemicals. The refined products are worth much more than the crude. They are also exporting NGL's such as ethane and Propane stripped out of shale gas. Between the refiners and pipelines the US is cleaning up. In the next few years chemical companies along the Gulf coast will spend about $125 Billion to expand chemical production.
What refiners want to do is ship oil from the Gulf coast to the middle Atlantic states refineries. Because of the Jones act only US flalg tankers can be used and there are not many of those.
The Abbot Labs Abbvie split which was really a simple operation, in that the Pharma company was split from the other medical businesses, took 15 months. Rumors about them considering a split were around a lot longer than that. Irani was only given the boot last May and then there were only rumblings that some form of restructuring would occur. Conoco Philips split in 2102, 10 months after the announcement; however, both companies continued to sell properties and restructure even to the current day. We will be lucky if the California split goes by the end of the year. One of the complicated things is to split the debt. Because corporate bonds have all kinds of covenants in them you cannot just divide them.
I think you are high by $10. As of this post COP = $68.69 & PSX = 77.34. We received 1 share of PSX for each 2 shares of COP. Therefore: $68.69 + 1/2 ($77.34) = $107.36.
The stock is trading at a premium price. PE based on $3.01 earnings per share in 2013 (average analyst's estimate) and current price of $64.28 is 21.35. Yet the growth rate is only 6% from '13 to '14 and 10% from "14 to "15. This is a pretty expensive stock and would not expect much in the way of price appreciation for quite some time. One thing they do have going for them is commodity prices have stabilized or in some cases have gone down which could lead to surprise increase in earnings. Buy backs and dividend increase will help. A lot of the price is based upon predictability. AS long as they keep on building for the future a few years down the road there will be another breakout.
I thought that with pad drilling and newer rigs that they are drilling whole pads in the Winter months. They move the rig along the pad and drill 4 wells in a little over 2 months. They can then start Fracking the wells in early Spring. Part of the problem in the past was moving the rigs around in the Winter. They have figured out what work activities fit best to the Winter weather. Apparently finishing crews are easier to hire and so they can add extra crews when needed.
The float and shares held by insiders are not the same. Insiders own 28.33% per stats in Yahoo and the float is 7.52M. The difference between the 8.07M shares could be treasury shares or insider shares for some reason tied up due to SEC rules. Regardless, there is significant reduction in earnings per share and concern that the management will continue to roll out these shares for management plans in the future.
GRAPHENE SUPER-CAPACITOR CELLS - HOW PENCIL LEAD AND A DVD BURNER WILL CHANGE THE WORLD.
N. A. Lee | 3 MARS 2013
Tesla currently uses lithium to make batteries that power their vehicles. While lithium is fairly inexpensive to manufacture, it has its drawbacks. Catching fire when exposed to air in a fatal accident, the inability to charge quickly compared to the fueling time of a combustion engine, and a limited life cycle, are but a few of the difficulties that have to be taken into account when using lithium as a power source for electric vehicles. But, what if there were a simplistic, cheap material that equally performs as lithium but is so environmentally friendly that it can be re-used as garden fertilizer? What unimaginable, absurdly fictional material could possibly exist with these properties?
What is graphene? It is essentially composed of the same graphite material found in millions of yellow pencils used by children around the world. The only difference with the writing material is the arrangement of the carbon into single atom-thick sheets rather than a random jumble of atoms. This material does not look like much on the surface but when it is arranged in this fashion, the carbon takes on some strange and amazing properties – such as the ability to hold and disperse large amounts of electrons.
Until recently, graphene was difficult to manufacture on a large scale. Thanks to some ingenious researchers at UCLA, making graphene is as simple as painting a liquid carbon solution on a DVD and running it through a Lightscribe DVD burner. The result is a material that has the same energy density of lithium, but can be charged in a fraction of the time along with the added benefit of being manufactured at pennies on the dollar.
Not panic selling. A large holder decided they do not want to own a stock that just diluted the shares outstanding by 10%. Although this will not happen all at once, it will happen if the proxy items get yes votes. Once this happens management will be back to the well again. There is not enough normal volume to sop up a big sale and then some investors will pile on once they see their gains disappear.
The stock seems to be coming back some probably do to the high dividend. I am still concerned with the dilution and the threat of insiders constantly rewarding themselves at everyone else's expense.
Mar. 24, 2014 5:39 AM ET (Seeking Alpha article - writer said he was long PSX)
At 9.9x consensus 2015 EPS, PSX only trades at a slight premium over its refining peers.
PSX should see multiple expansion as it diversifies into midstream and chemicals businesses which should command a higher valuation relative to refining
Future M&A activities and healthy growth in cash distribution should help realizing the multiple expansion story.
Over a long term, value downside would be limited by management's commitment to separate refining operations from midstream and chemicals should share price trade below their estimated asset value.
In looking at the assets that PSX dropped down, it does not appear that the splitter would fit. Basically they have the pipelines that interact with PSX and signed fee based contracts. They also may own other pipelines and midstream assets. For example they have right of first offer on both Southern Hills and Sand Hills pipelines. Whatever they do, I like there aggressive approach to building a Energy and Chemicals empire and increasing income by selling processed products over seas.