Seeking Alpha

Douglas E. Johnston

 
View as an RSS Feed
View Douglas E. Johnston's Comments BY TICKER:
Latest  |  Highest rated
  • Teekay Tankers: An Explosive Growth Story That Is Set To Sail [View article]
    thanks...i have to imagine, with VLCCs north of 40k per a week ago, they have to be happy. Ultimately, they will sell them I think as they are more of a mid-size operator, possibly into the JV they already have set up or into the new PE (TIL) and get back all interest/cost/prin....so worked out.....interesting they did not discuss the LR2s they had on order with the BK shipbuilder but I suspect that is going by the wayside as they put the $25mn into TIL....
    Feb 26, 2014. 04:33 PM | Likes Like |Link to Comment
  • Teekay Tankers: An Explosive Growth Story That Is Set To Sail [View article]
    i admit that it depends on the recovery in the tanker market playing out...signs are good...i think of this as a call option on continued economic recovery as the chart 2 highlights....(i have some shorts on too, some of which have been pains)
    Feb 26, 2014. 02:51 PM | Likes Like |Link to Comment
  • Calumet Specialty Products Partners Earnings Analysis - Is The Distribution Safe? [View article]
    Adam - you've done a lot of work on the last two articles for CLMT - in fact, you've written quite a few congrats - but, i have to say, I was surprised to see that you are not long...are you waiting for a better entry level or just don't have any equity risk on at the moment?
    Feb 26, 2014. 02:43 PM | 2 Likes Like |Link to Comment
  • Calumet Specialty Products Partners Earnings Analysis - Is The Distribution Safe? [View article]
    @rasta - yes they are lower but the discount has declined. For example, WCS was trading 30 through WTI not long ago but now is about 20 through. Similar, Bakken was -10 in Q4 but looks to be -5 or less for 2014....as more of the infrastructure is resolved, these discounts are dissipating....this is where CLMT saw the most benefit. WTI-brent is more of a secondary effect and, in fact, widening WTI-brent sends more crude to east coast for refined export
    Feb 26, 2014. 02:41 PM | 2 Likes Like |Link to Comment
  • What Do The Hedge Fund Tea Leaves Tell Us? [View article]
    you may find the following dated and geeky article i wrote of interest

    http://seekingalpha.co...
    Feb 26, 2014. 12:26 PM | 1 Like Like |Link to Comment
  • SandRidge Mississippian Trust II: Don't Get Caught When The Music Stops [View article]
    @Mike - got it...thought you were suggesting, as some others, that somehow SDR will benefit....it does raise the (insidious) question is can SD drink SDR's milkshake with a straw
    Feb 26, 2014. 08:55 AM | 1 Like Like |Link to Comment
  • Will Calumet Specialty Products Be Forced Into A Dividend Cut? [View article]
    you pegged it...that is the game (with all MLPs)
    Feb 26, 2014. 08:52 AM | 1 Like Like |Link to Comment
  • Will Calumet Specialty Products Be Forced Into A Dividend Cut? [View article]
    and what about all the articles pumping the stock right before a secondary offering? I guess that is ok
    Feb 26, 2014. 08:51 AM | 2 Likes Like |Link to Comment
  • Will Calumet Specialty Products Be Forced Into A Dividend Cut? [View article]
    i don't see the point....there are longs and there are shorts....who cares...each has a view
    Feb 26, 2014. 08:50 AM | 3 Likes Like |Link to Comment
  • Calumet Specialty Products Partners Earnings Analysis - Is The Distribution Safe? [View article]
    one last word and then i will be quiet....i think taking historical EBITDA as a percent of sales and using that to project EBITDA (or DCF) going forward is dangerous. For example, you are not accounting for the fact the GP is now taking $19mn today, or interest payments as a % are higher as are operating costs and margins have changed.
    Feb 26, 2014. 08:49 AM | 3 Likes Like |Link to Comment
  • Calumet Specialty Products Partners Earnings Analysis - Is The Distribution Safe? [View article]
    Here are my numbers for 2014:

    Sales: 5964 (10% increase from 2013)
    RINs: 26
    COS: 5478

    This leads to a spread per BOE of 11.83, in line with Q4, and in line with regressing crack spreads vs CLMTs previous results. We would note that using only 2-1-1 and WTI-Brent is not right. One must include Bakken, WCS, Bow River, LLS, etc. etc. In fact, WTI-Brent is really not the main factor.

    So net gross profit of 487, 8.2% margin, better than '13 in line with '11.

    Assuming the same average operating margin as '13 would give

    Operating Income: 135
    minus Interest of 97 and ignoring any hedging results in net income of ~55mn.

    After taking away the GPs interest and IDRs results in net income to common unit holders of 33.6mn

    As per CLMT, replace capex and turn around will be 77.5 and growth capex at 270 I've pegged (low vs their recent statements but consistent with previous guidance).

    So net income per share is about 50c, EBITDA of ~300mn, DCF (to common unitholders) of ~100mn. Given the 190+ in distributions and 270mn in capex, the coverage is 50-60% well below what you've stated.

    While they have liquidity, on the credit line, you are overlooking the fact that their leverage is already in the high 4s and fixed coverage is dangerously low at 2.25ish. (1.75 is a covenant breech and should be a concern). The only choice they have is to issue 10-12mn new shares, similar to last year which will reduce those metrics.

    Given share count will increase by about 15%, one must consider that (assuming 100 shares owned), the $274 in distributions will not cover the 15*27= $405 that will need to be reinvested to not dilute ownership %.

    They could very well get a short term boost in q2 as crack spreads have their traditional widening and I am sure management is banking on that for their secondary offering but one should look beyond just one quarter.

    No offense, but I think you are well off base but time will tell....good luck
    Feb 26, 2014. 08:37 AM | 4 Likes Like |Link to Comment
  • Will Calumet Specialty Products Be Forced Into A Dividend Cut? [View article]
    why is it in the 15 bullish articles out of 19 written over the last year that no one asked the pointless question: "Are you or someone you know long CLMT?" ?
    Feb 25, 2014. 03:23 PM | 5 Likes Like |Link to Comment
  • Will Calumet Specialty Products Be Forced Into A Dividend Cut? [View article]
    i think the market is fearful of div cut, given what happened e.g. over at BWP where 50% of market value wiped out (albeit on big div cut). When times were good and coverage was well over 1, this yielded 8%. Now it appears coverage will be 60% so just taking 4*.685*60%/8% = 20.55 tells me we can trade lower....the bottom line is they boosted distribution too much when during a (once in a lifetime) crack-spread blow-out vs internally funding growth....management now seems to be in denial...
    Feb 25, 2014. 09:02 AM | 2 Likes Like |Link to Comment
  • Calumet Specialty Products Partners: One Of The Best Refiner MLPs; Even If The Distribution Gets Cut [View article]
    adam - it looks like they increased their hedging so did not see the full benefit of crack widening (possibly) but their operating cost was real culprit - it appears to me they will need to issue 15-20mm new shares over next two years to fund distribution and growth. I am using a 10% growth on volumes next year which I think is fine. I don't think they cut distribution unless something goes wrong with Montana. But still true DCF yield is ~7% implying significant reinvestment of distributions back into offerings are required....glty
    Feb 24, 2014. 03:59 PM | 1 Like Like |Link to Comment
  • El Paso Could Be The Next Problematic MLP [View article]
    wouldn't bet on the commodity curves going contango anytime soon...the events (e.g., over NG supply) of the last few years have shown that a negative risk-premium is warranted
    Feb 24, 2014. 01:28 PM | Likes Like |Link to Comment
COMMENTS STATS
1,740 Comments
1,073 Likes