Nov. 13, 2014, 5:37 PM
Jul. 11, 2014, 3:18 PM
- Citigroup analyst Faisal Khan says he is moving toward a more bullish view of the U.S. refining sector after a bout of selling amid low expectations.
- Khan points to continued growth in U.S. and Canadian oil production, "sticky" oil prices due to Middle East volatility, U.S. oil price differentials that are "somewhat contained" at $5-$10/bbl, and headway on refining closures in the Atlantic basin that is only a matter of time.
- As a result, the Citi team upgrades Marathon Petroleum (MPC +2.2%) to Buy from Neutral, as well as HollyFrontier (HFC +2%) to Neutral from Sell on valuation, but downgrades Alon USA Partners (ALDW -0.8%) to Neutral on the belief that Midland-Cushing differentials have peaked.
- Valero Energy (VLO +1.7%) and Western Refining (WNR +2%) remain the firm's favorites - VLO because it sees “crude-on-crude competition on the U.S. Gulf Coast resulting in greater feedstock discounts at Valero’s high conversion refineries," and WNR for its restructuring potential.
Jun. 25, 2014, 10:18 AM
- Refiners take a beating in early trading, as a lift of the ban on U.S. oil exports is expected to narrow the WTI-Brent spread, which could cause refiners' profits drop if they are forced to pay higher prices to compete with international buyers for U.S. crude.
- “We don’t think the current system needs to be changed,” Valero Energy tells Bloomberg.
- Yesterday's rulings gave Pioneer Natural Resources (PXD +2.6%) and Enterprise Products Partners (EPD +1.4%) permission to ship ultralight oil to foreign buyers - a narrow ruling, but one that is likely to spark similar requests from other companies, and increase lobbying for a full lifting of the 40-year-old ban on exporting crude oil.
- Refining stocks are broadly lower: VLO -7.4%, PBF -5.8%, MPC -5.7%, WNR -5.5%, DK -5.4%, HFC -4.6%, ALDW -4.6%, TSO -3.8%, NTI -3.5%, PSX -2.9%, ALJ -2.7%, CVI -2.3%.
Mar. 17, 2014, 3:59 PM
- Alon USA Partners (ALDW +3%) is upgraded to Buy from Neutral with a $19 price target, up from $16, at Citigroup.
- Expectations of faster growth from the Delaware and Midland basins in 2014 and slower ramp-up in the Permian pipeline projects have presented an opportunity for ALDW to capitalize over the near to intermediate term, the firm says.
- Combined with lower allocation for annual catalyst and turnaround reserves by $15M-$16M makes additional $0.25/share available for distribution, the firm says in expecting total distributions for 2015 to rise by $0.25-$0.45.
Nov. 14, 2013, 2:36 PM
- Refiners such as Marathon Petroleum (MPC +4.9%) and Valero (VLO +4%) are surging today, and Barron's Ben Levisohn says it’s all about the oil spread.
- While Brent crude has stayed steady for the last three months, trading at ~$109/bbl, WTI has dropped 12% to ~$94; the more expensive Brent is relative to WTI, the better it is for U.S. refiners.
- VLO, for example, has gained 17% during the past three months, and much of its price has followed the Brent-WTI spread.
- Also: PSX +2.1%, TSO +2.7%, HFC +3.2%, WNR +4.3%, ALJ +5.2%, ALDW +1.3%, CLMT +2.6%, CVI +1.3%.
Nov. 12, 2013, 12:45 PM
Nov. 11, 2013, 2:27 PM
- Alon USA Energy (ALJ +8.2%) and Alon Partners (ALDW +4.1%) are surging, despite weakness today in the broader refining sector, as Credit Suisse upgrades shares.
- ALJ could be worth up to $15/share, including the $2.25/share expected contribution from the Bakersfield start-up - delivery of this project is key; at current levels, the stock still provides ~20% upside in the scenario where Bakersfield does not proceed or ~40% if it does.
- On ALDW, for investors willing to overlook the possibility of no distribution payout in Q4 2013 and Q1 2014, the firm says the rolling 12-month potential forward yield starting in Q2 2014 is 15% and rises to ~20% by Q4.
Nov. 7, 2013, 7:59 AM
- Alon USA Partners (ALDW) -6.9% premarket after reporting a Q3 earnings loss of $0.26/share, which may not be comparable to the $0.04 consensus estimate; revenue rose 6.8% Y/Y to $882M.
- ALDW says no cash will be available for distribution this quarter, citing "a volatile and deteriorating margin environment resulting primarily from decreasing discounts for West Texas crude oil."
- Q3 also was affected by backwardation in the crude market and unplanned downtime at the Big Spring refinery in September which resulted in additional expenses and lost opportunity costs of $0.19/unit.
Jul. 24, 2013, 11:11 AMCredit Suisse downgrades Northern Tier Energy (NTI -2.2%) and Alon USA Partners (ALDW +0.9%) to Neutral as part of a review of refiners after Valero's (VLO) conference call, where management continued to position RINs as a major 2014 hurdle and seemed less optimistic about Gulf Coast crude discounts until 2015. The firm also expresses EPS caution for variable rate refiner MLPs and VLO, ALJ and PBF. | 8 Comments
Jul. 19, 2013, 2:07 PM"The spread is dead," Global Hunter proclaims, as WTI crude (USO) rises above Brent (BNO) for the first time in nearly three years two days after the EIA reported a third consecutive weekly supply decline. Some analysts say a WTI premium may be here to stay, supported by a relatively better outlook for the U.S. economy and falling stockpiles. Brent meanwhile, may struggle amid receding geopolitical risks and global macroeconomic weakness. Refiners: ALDW -0.34%, CVI -0.22%, TSO +1.64%, HFC + 3.29%, MPC +1.32%, NTI -0.41%, DK +3.36%. | 17 Comments
Jul. 12, 2013, 11:07 AMValero Energy (VLO +3.8%) has recouped early losses following a disappointing Q2 update and is making new highs for the day, as downside guidance apparently was priced in. Most refining peers also are higher: ALJ +3.7%, WNR +3.6%, HFC +3.5%, TSO +3.2%, CVI +2.9%, ALDW +2.6%, MPC +2.6%, PSX +2.5%, DK +1.8%, CVRR +1.7%, NTI +1.7%. | 9 Comments
Jul. 10, 2013, 2:49 PMIt's another rough day for the big refinery stocks, whose margins are getting squeezed in the collapse in WTI-Brent spreads. Alon USA Energy (ALJ -9.1%) is hit especially hard after Barclays warns of a possible downside surprise in its upcoming earnings. Also: ALDW -5.9%, CVI -5.4%, CVRR -5%, TSO -4.5%, HFC -3.6%, PSX -3.3%, WNR -2.6%, MPC -2.6%, NTI -2.5%, DK -2.5%, VLO -2%. | 4 Comments
Jul. 3, 2013, 11:15 AM
Feb. 5, 2013, 8:31 AMGoldman Sachs upgrades Alon USA Partners (ALDW) to Buy from Neutral while downgrading Alon USA Energy (ALJ) to Neutral from Buy. ALJ shares are up by more than one-third since late December, while ALDW is down slightly over the same period; given the divergence, the firm sees meaningfully more upside for ALDW. ALDW +3.2%, ALJ -0.3% premarket. | Comment!
Dec. 31, 2012, 11:15 AMAlon USA Energy (ALJ +10.2%) adds to its big Friday gains after Goldman starts coverage with a Buy and $21 PT. The firm notes ALJ, whose refining ops center around a Texas facility, benefits from spreads between Brent-WTI, WTI-Midland, and WTI-Cushing oil prices, and thinks the recent IPO of Alon USA Partners (ALDW +0.8%) which contains ALJ's interest in the refinery, will "help investors recognize the inherent value of the asset." ALDW has been launched at Neutral due to valuation concerns. | Comment!
Dec. 21, 2012, 3:50 PM
ALDW vs. ETF Alternatives
Alon USA Partners LP refines crude oil into finished products and markets them in West Texas, Central Texas, Oklahoma, New Mexico and Arizona. Its integrated downstream business operates mainly in South Central & Southwestern regions of the United States.
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