Harvest Energy Trust: Not Like Other Refiners

Since I last wrote about Harvest Energy Trust (HTE) on December 20th, the trust is up about 14% and that does not include the distribution of roughly a point and a half a month.

HTE has actually been getting knocked around a little recently as the market is lumping the trust in with other refiners. The generic crack spread is down roughly 20% in the last couple of months.

However, due to the uniqueness of each refinery, the generic crack spread can be a misleading indicator. Harvest's crack spread is better represented by the 312 crack spread and this crack spread has been showing higher margins this quarter.

Harvest reports on May 7th. The 1st quarter numbers for HTE are going to be very good. The CL and NG pricing have been terrific. I estimate CL is 7% higher in the 1st quarter from the 4th quarter. NG pricing is about 18% higher from 4th quarter to 1st quarter. I think a low estimate would be an 8% increase in revenues on the upstream. Also, the refinery was running at significantly lower capacity for 2 months in the 4th quarter because of maintenance. Unlike many refiners, HTE's refining margins will also show nice improvement.

Disclosure: Author has a long position in HTE

Comments

[oneijoe:]

Short, to the point, and accurate.

Also, not many realize HTE's refinery gets a premium for its low sulfur diesel output. Very high demand for the product in Europe.

2008 May 06 08:53 AM

[NOWHEREMAN:]

I've owned it pre-collapse, pre-refinery...bought it high and low...it has 60+ gas stations and is expanding the refinerys capacity...only problem is getting its heavy to its own refinery...

2008 May 06 09:27 AM

[adamn111:]

Too bad they hedge it all away.

2008 May 06 09:52 AM

[andrewh10:]

HTE is an interesting story but you forgot to mention what the implications are if they decide not to be a trust going forward (you will lose some of the yield) The stock is definitely being mixed in with the other refiners such as VLO, TSO, SUN, FTO because of the pressure on the crack spread. However, it has held up due to the natural gas component of the business. The big question for these refiners is where does the price of oil reverse or correct. The recent semi parabolic rise is mostly based on speculation and hopefully corrects in the near future to sub 100 oil. Of course much depends on the strengthening of the US dollar, lets hope for those rate hikes in the Fall.

2008 May 06 10:25 AM

[NOWHEREMAN:]

go peddle your wares elsewhere....

another Carbon Science type...at least they have a prototype.....looks like patent infringement time...or maybe...you have won the UK National Lottery

2008 May 06 03:51 PM

[Urbane Gori...:]

Grant Hudlow seems to have adopted Alpha as a spam vehicle..

I used to own a lot of HTE.. They just are not trustworthy. My past experience was that they cared little for the stockholders, so I sold and would not buy them back again.

Thx jegan ;-)

2008 May 06 04:09 PM

[Genesisgkh:]

HTE is a consistent underperformer among CanRoys. If you want something in this area buy some ERF or PWE. Stay away from this dog.

2008 May 06 05:02 PM

[whisperonth...:]

I've got HTE, ERF & PWE, plus a couple other nice energy stocks, and I'm really happy to see them in the positive when so many other stocks are negative these days. Finally I'm gaining ground again.

2008 May 06 07:22 PM

[C. Hendry:]

Taxes extra on profit for Yanks.

2008 May 07 06:20 AM

[wocojoe:]

Can someone please block this imbecile from posting his resume as comments on this web site. He also posted the same comment about himself in an article about FRO:

May 06 01:04 PMMy WebsiteALLIED SCIENCE, INCORPORATED
P.O. Box 2629, 4161 Mary Lou Street, Pahrump, Nevada 89041
alliedscience.org Telephone: [phone] E-mail: [e-mail]

2008 May 07 12:11 PM

[amateur:]

What happened to the 1Q results, weren't they due on May 7?

2008 May 07 05:47 PM

[amateur:]

well results are out now, are they as strong as you xpected?
I see flat per-unit cash flow yoy, may be the comparison looks better in the face of 4q07, and of the pesimistic market expectations.

Old hedges are slowly consumed and replaces by better ones, bit by bit.

The 0.30 distribution monthly was confirmed , and 3.6 $C yearly seems sustainable now, and that makes the 23 dollar/unit very cheap. Even 29 would still be a multiple of 8!

2008 May 07 10:20 PM

[drooyrich:]

big bonus for this company is the natural gas production - the NG prices are set to explode upwards to 15 this summer - I hope they have not hedged the price - any info on the prices they have hedged oil ? Thanks

2008 May 08 01:48 AM

[skrummydummy:]

CAN ENYONE EXPLAIN HOW CURRANCY FLUCTUATIONS AFFECT HTE? I WOOD GREATLY APPRECIATE SUTCH INSITES. THANX, SCRUMMY.

2008 May 08 09:17 AM

[GeorgeMo:]

SkrummyDummy> HTE pays its dividend in Canadian currency. So, when the Canadian dollar rises against the US dollar, the dividend effectively gets a boost. A bunch of people bailed on the company when they dropped the dividend down to C$0.30 per month, but that was when the US dollar was much stronger. In the last 3 months, the value of C$0.30 has gone from US$0.20 to about US$0.31.

The relationship between currency fluctuations and stock price is a bit murkier. But, if the US dollar keeps going down like a rock against the Canadian dollar, it's bound to boost revenue for the company, and, theoretically, stock value.

2008 May 08 05:33 PM

[GeorgeMo:]

SkrummyDummy> HTE pays its dividend in Canadian currency. So, when the Canadian dollar rises against the US dollar, the dividend effectively gets a boost. A bunch of people bailed on the company when they dropped the dividend down to C$0.30 per month, but that was when the US dollar was much stronger. In the last 3 months, the value of C$0.30 has gone from US$0.20 to about US$0.31.

The relationship between currency fluctuations and stock price is a bit murkier. But, if the US dollar keeps going down like a rock against the Canadian dollar, it's bound to boost revenue for the company, and, theoretically, stock value.

2008 May 08 05:33 PM

[investorslive:]

I wouldn't trust - it should be moving up in this market, its been going sideways - someone is unloading

Check out this site for scans

www.investorslive.com/.../

2008 May 08 07:03 PM

[amateur:]

Live, HTE has just issued convertibles, so the holders are selling shares short, and calls. They will run out of stock eventually, question is, will that be before or after oil prices turn down?

2008 May 10 05:21 PM

[wocojoe:]

I would like to thank the Seeking Alpha Web Master for their quick action on my May 07 12:11 PM request.

Thank you very much.

Sincerely WocoJoe

2008 May 25 08:40 AM

[rettihsllub:]

Where can I find out about the tax ramifications for HTE?
Do US investors have to pay the Canadians anything?

2008 Jun 11 05:14 PM

[jfr1107:]

HTE wanted to spend almost $2 BN CDN to expand their refinery and then changed their mind and said the refinery is doing fine without the upgrades.
If this is the case, why not take the $2 BN CDN and build/buy a pipeline from their western Canadian oil reserves to the refinery so they can refine their own crude, etc.


On May 06 09:27 AM NOWHEREMAN wrote:

> I've owned it pre-collapse, pre-refinery...bought it high and low...it
> has 60+ gas stations and is expanding the refinerys capacity...only
> problem is getting its heavy to its own refinery...

Mar 02 10:42 AM

[toomuchgas:]

The dividend cuts and share price tell the whole story.

Mar 29 02:49 PM