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Private-equity sale could signal trouble ahead for some refiners

  • "The real problem for small inland North American oil refiners is that the improvements to continental oil distribution networks are cutting away their advantage on feedstock prices," Reuters says, in an attempt to explain ACON and TPG's partial sale of their controlling stake in the general partner of Northern Tier Energy (NTI -2.2%).
  • Because NTI is "well-positioned to profit from anticipated dislocations in North American oil prices," speculation is that the private-equity divestiture says something about how likely such dislocations are to return and how tough the fight will be going forward for small, inland oil refineries if they do not.
  • Other inland refiners: CVI -2.3%, WNR -0.4%, HFC -1.1%
  • More on inland refiners and the Brent-WTI spread here.
Comments (4)
  • taxman100
    , contributor
    Comments (247) | Send Message
     
    Read the linked articles. Whether by "easy money" they mean a 100% total return in one year, then they are right. If they do not consider easy money to be a flat stock price with a 15% distribution yield to be "easy money", then time to sell.

     

    At the current price of $22.50 a 15% yield is $3.38 distribution, vs. expected total of $4.43 for 2013. ($1.17+1.23+.68+1.25). That is a 23% dividend cut, and still getting 15% yield.
    15 Aug 2013, 01:41 PM Reply Like
  • CallCalendar
    , contributor
    Comments (17) | Send Message
     
    The mistake there is expecting a rebound to $1.25 next quarter. Listen to the call. They will pay about 60-65 cents.
    19 Aug 2013, 02:56 PM Reply Like
  • taxman100
    , contributor
    Comments (247) | Send Message
     
    I'll read the transcript and see what was said.
    19 Aug 2013, 10:10 PM Reply Like
  • taxman100
    , contributor
    Comments (247) | Send Message
     
    Read the transcript - I didn't see anything to base an assumption that the distribution next quarter will be similar to this quarter. Most of what they said is this quarter was unusual, and next quarter should be more normal.

     

    What is normal under current market conditions is the key to determine.
    20 Aug 2013, 09:53 AM Reply Like
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