I am long too, and think the stock is undervalued. But just because they had $40 million in cash vs about 50 million fully diluted shares outstanding, or close to $.80 per share, we have to remember that they are burning through the cash to do the trials. By the end of 2016 I expect them to have very little cash, but have or nearly have final approval, and a big league marketing partner (like Baxter), or be bought out. Best of luck to us all.
Yes oil prices, their raw feedstock, are lower, so they benefit from that, but crack spreads have narrowed in the last quarter about 25%, hurting margins in the refined fuels division. But since they hedge, some margin narrowing is mitigated. The Dakota-Prairie diesel refinery may not be making any money, it wasn't last quarter, and the oil/energy fluids division most likely is still bleeding red ink. So with all these moving parts, the jury on earnings is out. I do not expect an awful earnings report, nor a great one, just mediocre. What will make or break 2016 is the 3 recently completed expansion/growth projects that could add $100 million to EBITDA. If they do, that is great, but remember that Dakota-Prairie was suppose to throw off high teens margins, and it is not even close. The turnover in CEO's is unsettling, I don't know what it means.
I have a different opinion. With MPLX at $39 now, if the deal goes through, MWE is worth about $10 more than $39 (1.09 x $39, plus $6.20). Of course we do not know if MPLX will still be at $39 after the outcome is announced, but with MWE trading around $45, it is possible it rallies even more, maybe closer to the $9 to $10 premium. So it could go to $48 or $49. But if MPLX drops after the outcome of the vote is announced, if it is approved, then $48 or $49 is not going to happen. The arbs will dictate the prices of each right before, and after, as they unwind their bets. The jury is out still !!!