Alon USA Energy, Inc.NYSE
Alon USA Energy Is No Longer Overvalued, But Downside Risks Remain
Tristan R. Brown
Tristan R. Brown
Alon USA Energy Faces Tough Conditions In 2016
Tristan R. Brown
Tristan R. Brown
Mon, Oct. 17, 9:05 AM
- Alon USA Energy (NYSE:ALJ) +12.4% premarket after confirming it received a buyout offer from Delek US Holdings (NYSE:DK) to acquire all ALJ's outstanding common shares at a fixed exchange ratio of 0.44 shares of DK stock for each outstanding share of ALJ.
- ALJ's Special Committee, which says it has reviewed a number of strategic alternatives, intends to consider DK's proposal and determine how to respond.
Fri, Oct. 14, 8:47 AM
- Delek U.S. Holdings (NYSE:DK) offers to buy the ~53% of Alon USA Energy (NYSE:ALJ) it does not already own, in a deal that values ALJ at $516M.
- DK proposes to acquire the remaining ALJ shares in an all-stock transaction at a fixed exchange ratio of 0.44 DK shares for each outstanding ALJ share.
- Based on DK's closing price of $16.42, the offer works out to $7.22/share, a 16% discount to ALJ's $8.60 closing price.
- ALJ -1.2% premarket.
Tue, Oct. 11, 3:25 PM
- Oil refiners have lagged to the point that “value signals are getting investors interested," Credit Suisse says while cautioning that it wants to see global product inventories drawn down before buying shares, and the process is only just getting started.
- Nevertheless, the firm upgrades Tesoro (TSO +0.8%) and Alon USA Energy (ALJ +2.4%) to Outperform from Neutral, joining Marathon Petroleum (MPC -1.1%) and Western Refining (WNR +0.5%) as its favorites names in the group, while stressing that November-January is the typical entry point.
- Meanwhile, Credit Suisse downgrades PBF Energy (PBF -4.3%) and Delek USA (DK -3.6%) to Neutral; PBF has the largest macro sensitivity to refining and RINs, which are depressing PBF earnings at a time when net debt has been elevated after the Torrance and Chalmette acquisition, the firm notes.
Wed, Sep. 14, 2:52 PM
- Delek US Holdings (DK -1.8%) and Alon USA Energy (ALJ -0.1%) are initiated with Buy ratings, with respective $23.50 and $10 price targets, at Citigroup, which says a potential merger of the two companies seems increasingly likely and could unlock value.
- DK already owns a 48% stake in ALJ and recently sold its retail assets to COPEC, raising sufficient funds to acquire the remaining 52% stake via cash, Citi says.
- Besides the synergies in procurement of crude and marketing of products, the firm says the clearest synergy is $71M that ALJ outlined in EBITDA that could be dropped into DK’s MLP, a value that alone represents 100% of ALJ’s market cap.
Mon, Aug. 29, 2:04 PM
Tue, Aug. 16, 4:42 AM
- Billionaire investor Carl Icahn has called on the EPA to make changes to the market for renewable fuel credits or else risk "the mother of all short squeezes" that could bankrupt refiners.
- "The RIN market is the quintessential example of a 'rigged' market where large gas station chains, big oil companies and large speculators are assured to make windfall profits at the expense of small and midsized independent refineries which have been designated the 'obligated parties' to deliver RINs."
- Related tickers: VLO, NTI, CLMT, MPC, TSO, ALDW, CVI, WNR, PBF, DK, HFC, CVRR, NTI, ALJ, TSO, WNR, PSX, XOM, PBF
Mon, Aug. 15, 2:19 PM
- Operations at several major refineries reportedly have not been affected by the recent deadly floods in Louisiana, even as oil markets were roiling from potential disruptions due to last week's fire at the Motiva Enterprises (RDS.A, RDS.B) refinery in Convent, La.
- The 235K bbl/day Convent refinery reportedly has not been affected by the flooding, but fire damage has caused the outage of the 45K bbl/day heavy oil hydrocracker, which Reuters says an initial damage assessment projects the unit will be shut for 1-4 months for repairs.
- However, Motiva's 237K bbl/day Norco, La., refinery, Exxon Mobil's (NYSE:XOM) 502K bbl/day Baton Rouge refinery, Alon USA Energy's (NYSE:ALJ) 80K bbl/day Krotz Springs refinery, and Citgo's 427K bbl/day Lake Charles refinery apparently have seen no impact to their operations.
Fri, Jul. 29, 4:57 PM
- Phillips 66 (NYSE:PSX) CEO Greg Garland predicts refiners will process less crude in H2 of this year as margins shrink due to a gasoline glut.
- "We've got a lot of inventory stacked up," but demand for refined products remains strong, Garland said on today earnings conference call.
- PSX says its refineries will function at a mid-90% capacity in the current quarter rather than 100% utilization in Q2, in which its reported profit was sliced in half as earnings from its refining business plunged 75% Y/Y.
- PSX's Q2 refining margin was $7.13/bbl, well below $8.22/bbl estimated by Wells Fargo analysts, and smaller rival Alon USA Energy (NYSE:ALJ) reported that its Q2 refinery operating margin fell by more than half to $3.96/bbl.
- Throughout the week, Valero Energy (NYSE:VLO), Marathon Petroleum (NYSE:MPC) and BP all reported a decline in refining margins for the period.
Thu, Jul. 28, 11:06 PM
Wed, Jul. 27, 5:35 PM
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Mon, Jul. 25, 12:56 PM
- Some U.S. refiners, stuck with the highest inventories of gasoline for this time of year in a quarter of a century, have started blending winter grade gasoline a month earlier than usual to sell later in the year, Reuters reports.
- Looking to cut costs, refiners and blenders reportedly are making an early move to mix cheap butane - a cheaper blending component than most other ingredients - to convert the summer barrels into winter barrels.
- Mixing more winter gasoline now threatens to worsen the glut later, but that's a risk willingly taken by an industry left with few other choices, the report says.
- Independent U.S. refiners are expected to post another quarter of weak earnings en route to possibly the worst year since the shale boom began in 2011.
- Refiners are broadly lower today as crude oil prices drop: PSX -1.6%, VLO -0.7%, MPC -2.3%, TSO -1.6%, HFC -0.7%, WNR -0.3%, PBF -1.5%, DK -0.6%, ALJ -1.7%.
Fri, Jul. 15, 5:56 PM
- California proposes a series of regulations aimed at strengthening workplace and environmental safety at the state’s 18 oil refineries, four years after a leaky pipe triggered a fire at Chevron’s (NYSE:CVX) Richmond plant and sent 15K people to the hospital.
- The new rules would require increased employer accountability for mechanical integrity of refinery equipment, adoption of inherently safer designs and systems, periodic workplace safety culture assessments, and more.
- CVX has acknowledged problems at Richmond and agreed to pay $2M in fines but rejected accusations of lax safety attitudes at the plant.
- Other relevant tickers include TSO, VLO, PSX, ALJ, RDS.A, RDS.B.
Wed, Jul. 13, 3:56 PM
- Phillips 66 (PSX -0.2%) is downgraded to Equal Weight from Overweight with an $86 price target, lowered from $93, at Barclays, which sees limited upside especially if refining margins rebound and offer greater valuation growth potential to its large-cap peers, including Tesoro (TSO -2.6%), Valero (VLO +0.4%) and Marathon Petroleum (MPC -1.6%).
- Barclays also downgrades Delek US Holdings (DK -4.7%) to Equal Weight from Overweight with a $15 price target, cut from $20, on valuation and continuously challenged margin capture at both DK refineries, neither of which show visibility toward material improvement.
- Meanwhile, the firm upgrades Alon USA (ALJ +0.1%) to Equal Weight from Underweight after the company has significantly underperformed since the end of 2012.
Tue, Jul. 12, 3:45 PM
- Alon USA Energy (ALJ +5.1%) is sharply higher after saying it has discussed a potential business combination with Delek U.S. Holdings (DK +3.8%) as part of a broader examination of strategic alternatives.
- ALJ says it has formed a special committee of independent board members to lead the review of strategic alternatives and has hired JPMorgan Chase as financial advisor.
- ALJ also says it has not established a timetable for completing its strategic review, and does not expect to issue further statements about the strategic process unless there is a material event.
Wed, Jun. 8, 6:39 PM
- Gasoline profit margins have fallen to their narrowest seasonal levels since 2010, dropping by $5/bbl in slightly more than two weeks, as high imports have kept U.S. inventories elevated even as gasoline demand rises.
- The decline was not stemmed by yesterday’s EIA projection that summer gasoline demand will rise to a record 9.5M bbl/day, as gasoline imports into the U.S. east coast, which primarily come from refineries in eastern Canada and Europe, have kept U.S. inventories at the highest levels in at least 20 years.
- "We’re seeing the economics change to the point that many refiners along the coast are looking at maximizing jet fuel and diesel at the expense of gasoline," analyst Andy Lipow tells Bloomberg.
- The falling margins are hurting refiners, with Bloomberg's North America Refining & Marketing index down 28% Y/Y; in today's trade, WNR -3.1%, HFC -2.7%, CVRR -2.2%, VLO -2.2%, TSO -2%, NTI -0.8%, ALJ -0.8%.
Wed, May 4, 6:49 PM