Seeking Alpha

Michael Fitzsimmons

View as an RSS Feed
View Michael Fitzsimmons' Comments BY TICKER:
Latest  |  Highest rated
  • Chevron: Finally Cashing In On Big Angola LNG Investment [View article]
    Makes sense if you are China. That said, spot market prices are higher than long-term contracts. This could be the reason they are having trouble nailing down a Russian gas contract. As far as I know, that pipeline deal between those two countries hasn't been closed yet. But even if China does have significant gas reserves, and all indications are they do, it will be sometime before the have the infrastructure to deliver it. Remember, the US had the best nat gas pipeline distribution system in the world prior to the fracking revolution, so we were more or less able to put the gas right into the system. China is basically starting from ground zero.
    Jul 24 06:44 PM | Likes Like |Link to Comment
  • Phillips 66 Partners: Raging Success Of IPO Bullish For PSX Shareholders [View article]
    gorgo - honestly, i don't know enough about dpm & cvrr to venture an opinion.
    Jul 24 06:40 PM | Likes Like |Link to Comment
  • Phillips 66 Partners: Raging Success Of IPO Bullish For PSX Shareholders [View article]
    BigK, Mister.b: I will refer you guys to my article: "Phillips 66 Partners MLP Part2: How Existing PSX Shareholders Benefit":

    http://seekingalpha.co...

    You saw one benefit today as PSX stock was up +2.6% due to the very successful IPO.
    Jul 23 07:44 PM | Likes Like |Link to Comment
  • Phillips 66 Partners: Raging Success Of IPO Bullish For PSX Shareholders [View article]
    NH: the two companies are very different. With PSX, you have ownership of refining and chemical assets as well as additional midstream assets plus 50% ownership of DCP Midstream (Spectra Energy owning the other 50%). The MLP (PSXP) is only comprised of the initial assets spun off (see my earlier articles for a full description on these), and will come with a K-1 form at tax time. Yes, most of the differences are explained in previous articles I have written so you may want to check those out. I chose not to buy into PSXP for a few reasons:

    1) As the previous comments alluded, the yield is not expected to be that high for the first 12 months
    2) My taxes are hard enough and I didn't want to deal with K-1's
    3) I like the diversification of PSX's businesses and I already have a stake in that company.

    But that doesn't mean that an investor that already owns MLP's, likes the income, and is used to dealing with K-1's won't consider buying PSXP. As someone on TV said today, it immediately comes with a "blue chip" attribute because of its close connection with PSX. It should be a nice midstream growth MLP. I suspect within the next few years, PSXP will own a 1/3 stake in either the Sand Hills or Southern Hills pipelines, or possibly both.
    Jul 23 04:21 PM | Likes Like |Link to Comment
  • Phillips 66 Partners: Raging Success Of IPO Bullish For PSX Shareholders [View article]
    Yes, but just to be clear the $0.85 cent number is the minimum quarterly distribution. as my previous comment said, the estimated distributable cash flow for the next 12 months is expected to significantly beat it. That said, your points are well taken.
    Jul 23 04:16 PM | Likes Like |Link to Comment
  • Phillips 66 Partners: Raging Success Of IPO Bullish For PSX Shareholders [View article]
    Grayrock: This is what we know from the prospectus:
    "Upon the consummation of this offering, our partnership agreement will provide for a minimum quarterly distribution of $0.2125 per unit for each whole quarter, or $0.85 per unit on an annualized basis."

    So with a minimum distribution, and @$30/share, the yield would be 2.8%.

    But also consider PSXP's estimated distributable cash flow for the twelve months ending June 30, 2014, will be ~$67.2 million. This amount would exceed by $6.1 million the amount needed to pay the aggregate annualized minimum quarterly distribution ($61.1 million). So perhaps ~$0.93/share would be a better estimate of first year distributions based on estimated distributable cash flow. That works out to 3.1%. But of course, the goal is to grow the distribution and with the proceeds from the IPO (much better than expected) PSXP is certainly well capitalized to do that.
    Jul 23 02:18 PM | Likes Like |Link to Comment
  • Phillips 66 Partners: Raging Success Of IPO Bullish For PSX Shareholders [View article]
    We'll find out next Wednesday. Interesting that some of the refiners came out with lower earnings warnings, but PSX did not. I expect decent refining results on the back of low WCS feedstock, and strong chemicals earnings. Midstream results will be very interesting. As for the spread to widen, a couple reasons:

    1) domestic light-sweet refining capacity will soon begin to have a tough time absorbing all the production growth coming from the Bakken, Permian, and Eagle Ford (see: http://seekingalpha.co...)

    2) Pipeline bottlenecks for WCS are abating and WCS still cheaper than WTI. See: http://bloom.bg/15dxnS9. As a result, refiners may be really shy to spend a bunch of money to retool heavy infrastructure to take more light-sweet especially after they spent years (before the shale boom) of cap-ex expecting to import heavy from Venezuela, Canada, and Saudi for the duration...
    Jul 23 11:29 AM | 1 Like Like |Link to Comment
  • Forget LNG - Exporting Gasoline Is Where The Action Is Now [View article]
    The EIA statistics on oil and gasoline imports and exports are generally thought to be very reliable.
    Jul 22 04:39 PM | Likes Like |Link to Comment
  • Chevron: Finally Cashing In On Big Angola LNG Investment [View article]
    Thanks ljay. With respect to Kitimat, I don't know alot about the project, but here's a summary:

    Chevron Canada, a subsidiary of Chevron Corp (NYSE: CVX), and Apache Canada each have become a 50 percent owner of the Kitimat LNG plant, the Pacific Trail Pipelines and 644,000 gross undeveloped acres in the Horn River and Liard basins. Chevron Canada will assume operatorship of the LNG plant and the pipeline. Apache Canada will operate the upstream assets. Apache's net proceeds from the transaction were $405 million.

    It seems to me CVX is hedging its bets on the NA West Coast since it is not involved in Alaska where XOM, BP, and COP are working on preliminary plans for an LNG plant and other infrastructure on the North Slope:

    http://1.usa.gov/18vOBf1
    Jul 22 04:28 PM | Likes Like |Link to Comment
  • International Business Machines Corp.: The Best Investment In Metadata Storage Solutions? [View article]
    The whole reason I wrote the piece was because in my previous article on WDC someone questioned if IBM wasn't a better play on HDD's since they bundled up the HDD's in big storage systems and supplied installation, software, and warranty services. This article was in response to that comment because I thought it was a good question. And the article points out that the Systems Technology segment (which the Storage Group is in) represented only 13.8% of revenues in the latest quarter. This is why the first line of the "Summary & Conclusions" section of the article is:

    "There may be good reasons to invest in IBM, but as a pure play, global storage systems is not one of them."

    The graph was provided in the context of comparing the two company's stock performance, and did not mean they are comparable in terms of over all scope. It's quite obvious (at least to me) they are not.
    Jul 22 11:43 AM | 1 Like Like |Link to Comment
  • Phillips 66 Partners: Details On The MLP's IPO [View article]
    Yup, I noticed the roadshow presentation said it should be priced on July 22 (today), so it should begin trading tomorrow. I am very interested to see how it trades and whether the extra allotment is subscribed.
    Jul 22 11:34 AM | Likes Like |Link to Comment
  • International Business Machines Corp.: The Best Investment In Metadata Storage Solutions? [View article]
    1997 huh? Nothing has changed since then? Yes, WDC has been making new highs...and it's doing so because its fundamentals, earnings and market share are strong. I would agree that IBM has less risk. But I also think IBM has less potential reward.
    Jul 22 08:03 AM | Likes Like |Link to Comment
  • International Business Machines Corp.: The Best Investment In Metadata Storage Solutions? [View article]
    You bring up some very good points wrt WDC. I would counter that the market for HDDs is not as dependent on the PC market these days and the growth rate going forward for data storage requirements is as high as ever - and likely to stay that way for the foreseeable future. As for IBM, I don't share your enthusiasm - the company is challenged on a number of fronts. I think the yearly chart comparison shown in the article - well, a picture is worth 1000 words. But the past isn't the future, and I appreciate your comment and concerns about investing in WDC.
    Jul 21 09:11 PM | Likes Like |Link to Comment
  • Forget LNG - Exporting Gasoline Is Where The Action Is Now [View article]
    Just going by the OMB tax receipt numbers ailnyckyj.
    Jul 21 04:33 PM | Likes Like |Link to Comment
  • Forget LNG - Exporting Gasoline Is Where The Action Is Now [View article]
    Hello ailnyckyj: I am wondering where you got the 24% number for gasoline exports. According to this article:

    http://1.usa.gov/1aBnW0V

    The US exported a high of about 600,000 barrels of gasoline/day, which is roughly 24 million gallons/day. But the US consumes on the order of 366 million gallons/day, which would equate to about ~6.5%.

    I think TnT answered alot of your other questions. No one said energy companies are getting screwed. In fact, the article recommended Phillips 66 as an investment and as a way to protect yourself against higher oil and gasoline prices going forward.
    Jul 21 08:20 AM | 1 Like Like |Link to Comment
COMMENTS STATS
7,416 Comments
9,455 Likes