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Douglas E. Johnston  

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  • Why I Am Still Long Calumet, Despite The Recent Drop [View article]
    Im not short at the moment. The shares are tough to borrow and you can drive a truck through the put bid/offer. One has to wait for the right time and price. This LP has way too much risk to be long - that I am sure of. It might work out fine and dist will get covered in '16 and then begin growing again in '17 and beyond but if it doesn't...
    Oct 24, 2014. 09:56 AM | Likes Like |Link to Comment
  • EXCO Resources: Compass Divestiture Simplifies Corporate Structure, Improves Credit Profile [View article]
    not sure justy. seems like they would have sold Marcellus a while back. They prob want to improve the properties a bit first - blocking out some acreage and getting a better handle on reserves. My guess is there are a lot of probable type reserves there and they basically want to wait it out for NG prices to go back up. Hence all the other deals etc. Unfortunately, so far it hasn't panned out but they still seem determined to basically bide time. how long they can wait is the question. Given where the strip is for 2015 - $3.65 and falling, things will be tough next year even with recent asset sale. My impression is E&Ps are being "forced" into hedging here and Mr market is charging a decent premium or iow, spot NG prices will probably average higher than $3.65 imo. The bankers seem like they are on their side with recent credit line up (50mn token gesture I guess) so seems like they can make it through. The one issue is that with oil now at $80 and flat futures curve, seems like they might not achieve KKR's drill return hurdle - how that all pans out will be interesting.
    Oct 24, 2014. 09:52 AM | Likes Like |Link to Comment
  • Why I Am Still Long Calumet, Despite The Recent Drop [View article]
    Patrick - i can only assume you are using the company provided EBITDA estimates for the North Dakota and Montana refinery projects - Those are mighty big redwoods in that forest of yours. You might want to take a look at them trees. And if you think the balance sheet is adequate, then you must be looking at the forest with rose-colored sunglasses...

    "verticals into retail offer serious growth potential..." - spare me
    Oct 23, 2014. 04:40 PM | Likes Like |Link to Comment
  • Potash Corporation: An Excellent Entry Point [View article]
    try not to buy commodity stocks when the underlying price is going hyperbolic increasing like 500% in two years....
    Oct 23, 2014. 04:19 PM | 1 Like Like |Link to Comment
  • Distribution Reduction In The Cards For Calumet Specialty Products? [View article]
    @tim - the pumping machine this LP has running is impressive to say the least. Q4 is going to be even uglier. What really cracks me up are the articles that cite management ebitda guidance without even checking if they're nonsense....
    Oct 22, 2014. 11:33 AM | Likes Like |Link to Comment
  • Cliffs plans Q3 writedown of $6B in assets [View news story]
    there is nothing out on the credit line so I am guessing they would just pull it. But with only 250mn in cash and no other liquidity source (and winter inventory build approaching) - they'd have to do something....question is are there any cross-defaults on their unsecured bonds? I don't know.
    Oct 20, 2014. 09:42 AM | Likes Like |Link to Comment
  • Update: Cliffs Natural Resources Short Thesis Under Question? [View article]
    agree - now that they've stated that book value is well below market, they can do a rights offering. This allows investors like Casa to add to their stake - i think there is a reason they have not bot more - look for div cut too....
    Oct 20, 2014. 09:36 AM | 1 Like Like |Link to Comment
  • Update: Cliffs Natural Resources Short Thesis Under Question? [View article]
    big inventory sales in Q3 added to cashflow
    Oct 20, 2014. 09:33 AM | Likes Like |Link to Comment
  • Update: Cliffs Natural Resources Short Thesis Under Question? [View article]
    div is a goner
    Oct 20, 2014. 09:33 AM | Likes Like |Link to Comment
  • Update: Cliffs Natural Resources Short Thesis Under Question? [View article]
    they are also likely in violation of the interest coverage ratio covenant within a few quarters so they are going to have quite a bit of negotiation.
    Oct 20, 2014. 09:32 AM | Likes Like |Link to Comment
  • Why I Am Still Long Calumet, Despite The Recent Drop [View article]
    i would be more concerned with the down side here if expectations are not realized regarding their DCF coverage. Where will s.p. go if they need to reduce distribution 50% (or down to 1.80ish threshold) vs the upside (yield included) .... I think its $15 vs low 30s. So its close to 50/50 bet...not my idea of a good time.
    Oct 18, 2014. 08:57 AM | Likes Like |Link to Comment
  • Why I Am Still Long Calumet, Despite The Recent Drop [View article]
    as a concrete exercise, north dakota is suppose to bring in 40mn in ebitda starting next year at 10k boe/day. The montana expansion, also at 10k boe/day, is suppose to bring in 135mn in ebitda - all according to CLMT's estimates. If my math is correct, then the assumption is that Bow River needs to be at a 25-30$ discount to Bakken - Now that is where that discount was when CLMT produced these numbers back in 2013. Currently, it is nowhere near that. Estimates are that Bow River will be 15-20 thru WTI come 2015 as more delivery constraints are lifted (e.g., recent eastern flow pipeline OK'd by CAN). And Bakken is say 5 thru WTI. That means that Bow River is maybe 10 thru Bakken vs CLMT's assumptions?

    SO i don't see how you can believe that Montana will produce close to 100mn more in ebitda vs ND? And then there is the case of whether ND producing 40mn is reasonable. I think not.

    Maybe CLMT will produce some concrete analysis behind their assumptions at the next presentation.
    Oct 18, 2014. 08:54 AM | Likes Like |Link to Comment
  • Cliffs plans Q3 writedown of $6B in assets [View news story]
    yes - i think. I am not a corporate accountant but the way i read it, it was $6bn after tax. How that all works out on the balance sheet i don't know. I think they get a deferred tax asset of $2bn (assuming 25% rate) but if they have the assets as held to sale then they can claim a capital loss which gets deferred ad-infinitum until they have an offset.....but yeah i see BV as zip...pretty big haircut...seems like a prelude to asset sales, everything must go! all non USIO....left with 400 in ebitda, 2bn net debt, 50c earnings...but its really a guess...we sold out of our small position - have to wait for dust to settle and thinking it will trade down as there is no buyback, div will be eliminated, credit line renegotiated. and i don't see any +tive catalyst so shorts will keep pushing.
    Oct 18, 2014. 08:47 AM | 2 Likes Like |Link to Comment
  • Why I Am Still Long Calumet, Despite The Recent Drop [View article]
    contract is for supply - price is not fixed
    Oct 17, 2014. 05:34 PM | Likes Like |Link to Comment
  • Why I Am Still Long Calumet, Despite The Recent Drop [View article]
    they hedge the spread and they lost money on their hedges in Q2 when spreads widened. Now they are coming in so they should see some hedging benefit. Its moot since it merely locks in a price ~20 on gas and 26 on diesal....but not alot of production is hedged like 50% in '14 and 30% '15
    Oct 17, 2014. 01:02 PM | 1 Like Like |Link to Comment
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