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Douglas E. Johnston  

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  • Barring An Increase In Iron Ore Pricing, Cliffs Is Insolvent In The Medium Term [View article]
    i don't think the economics would force the domestic price to $100 - it simply bars imports from being a direct issue. Just because the kid down the block can't make lemonade for less than $10 a glass doesn't mean any cars will stop at my stand for $9.99. CLF is still subject to supply and demand which is a function of (domestic) steel prices I guess. I wonder how much more they can do with their cost structure - can they get it down to $40 e.g.?
    Feb 9, 2015. 04:18 PM | 2 Likes Like |Link to Comment
  • Barring An Increase In Iron Ore Pricing, Cliffs Is Insolvent In The Medium Term [View article]
    Why use a 15% premium to index pricing for transport/fines vs fixed amount like $20....on the last call, they said that landed price from Brazil was $100 so $40 north of spot. At the forward curve (which might be too illiquid for use) it seems you are assuming only a $10 premium?

    Also, I suspect they bot some of those '18 bonds in dec/jan at 60-70c/$ so may not be as much outstanding - i think they said they will give out tranches in the Q. I wouldn't rule out an ABS line/asset sales going to knock out the '18s.

    I think it is too early to say CLF is insolvent - even in the medium term - but I would agree that some firming IO price would certainly help.
    Feb 9, 2015. 03:43 PM | 1 Like Like |Link to Comment
  • Cliffs Natural Resources: How The U.S. Iron Ore Segment Is Affected By Steel Prices, Platts Iodex And Other Factors [View article]
    how much of the decline in steel price is the result of lower energy prices? I read somewhere that its about $75/ton. Also, do u know the breakdown of costs for USIO production (e.g. energy/labor/etc.)?
    Feb 9, 2015. 02:35 PM | Likes Like |Link to Comment
  • Falling Rig Count Could Cause Natural Gas Production Decline [View article]
    thanks for keeping us informed - my guestimate is you need to see sub 1000 (e.g., us oil) for production to slow and probably 800 for anything meaningful. It will be interesting to see production response in 2H given declines. Would be nice if gas rigs dropped some too....
    Feb 9, 2015. 11:28 AM | Likes Like |Link to Comment
  • Thoughts On Cliffs' Conference Call [View article]
    they can issue secured ABS and use proceeds to buy back debt/equity. Financial engineering but one could argue smart move ("arb"). Doesn't change things liquidity wise but would certainly be an interesting move (for the shorts)
    Feb 7, 2015. 11:54 AM | 1 Like Like |Link to Comment
  • Thoughts On Cliffs' Conference Call [View article]
    "...our new borrowing structure would have included an asset based backed lending facility that would have likely had a capacity of $500 million to $550 million. Despite the deal not going through, this is still the direction we are headed capital structure wise."

    Im guessing that will be a possible source for buying back debt/stock. More positive for the equity given the bonds will be (quite) unsecured. Equity is already a call option at this point
    Feb 6, 2015. 02:53 PM | Likes Like |Link to Comment
  • Key Takeaways From Cliffs Natural Resources' Earnings Call [View article]
    I see you changed your view Vlad. Its definitely worth a look here in the 6s. But EBITDA is somewhere in the $350 range and don't see any improvement in their debt metrics given big interest and pref. divs. Maybe they can get that to 400+ by selling NAC . They've definitely bought time but, ultimately, we need to see IO back up in the 70+ range for '16 for this to have legs. Bit speculative.
    Feb 6, 2015. 11:51 AM | Likes Like |Link to Comment
  • Falling Rig Count Could Cause Natural Gas Production Decline [View article]
    Nice work - another factor pushing NG down lately has been the rejection of ethane. This should reverse out too as wet/oil rigs decline....
    Jan 16, 2015. 03:51 PM | 1 Like Like |Link to Comment
  • Is The 'Oil Glut' A Myth? [View article]
    the question to ask is who sold all the puts that the E&Ps bought to hedge their '14 and '15 production? And where did they off load that risk? Classic tap-on-the-shoulder moment for some funds/desks that were short low-delta puts....
    Dec 18, 2014. 04:32 PM | 2 Likes Like |Link to Comment
  • Hold Your Nose And Start Buying Royalty Trusts [View article]
    Id wait on all the trust inc. DMLP, which I've owned and like. I see their dist getting down to the 80c-$1 range given oil strip - probably see the $15-20 range before this is over....MHO of course
    Dec 3, 2014. 03:51 PM | Likes Like |Link to Comment
  • OPEC Stands Firm: The Wake-Up Call The Oil Industry Needed [View article]
    "great opportunity to get hold of some really strong companies at depressed prices."

    any specific names?
    Nov 28, 2014. 01:04 PM | 2 Likes Like |Link to Comment
  • Denbury Resources -8% on capex cutting plans, two downgrades [View news story]
    well i guess the big concern is management's credibility. The production numbers for this year have been disappointing although there are fixable problems. If they don't improve operations, then the idea of 550mn capex and flat production comes into question. Market seems to be erring on the side of caution. On the other hand, their cost numbers for Q3 were good. If they can maintain discipline, then they should be a cash flow machine. I was a bit put off about the short 65 puts - why didn't they have that in their other presentations....
    Nov 20, 2014. 01:34 PM | Likes Like |Link to Comment
  • Uralkali Mine Shutdown Means N.A. Potash Producers Could Benefit [View article]
    Weren't you very bearish on POT? Does this event change your view or is it just for a trade?
    Nov 20, 2014. 01:30 PM | Likes Like |Link to Comment
  • Denbury Resources -8% on capex cutting plans, two downgrades [View news story]
    the best is wunderlick:

    "we looked at Denbury's asset base and financial plans as having strong downside protection in an environment like this; but the moves made by management for 2015 and potentially beyond have in our view muted these strengths,"

    what jibberish...that was the whole point - they can cut capex in 1/2, generate 200-300mn in total free cash (buybacks, M&A, etc.) while maintaining flat production...these analysts are worthless
    Nov 19, 2014. 03:05 PM | Likes Like |Link to Comment
  • Potash Corporation - Attractive Dividend Hides An Overpriced Stock [View article]
    Can I have my page hit back....these bots generating 5 articles a day really dillute SA's value IMO
    Nov 19, 2014. 10:17 AM | Likes Like |Link to Comment
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