Mon, Apr. 13, 5:35 PM
Mon, Apr. 6, 6:51 PM
- The exploding growth in oil train shipments fueled by the U.S. energy boom has sputtered in recent months, hurt by safety problems and low crude oil prices, WSJ reports.
- Railroads have been a major beneficiary of the U.S. energy boom, as some oil companies turned to trains to move crude to refineries from North Dakota and other areas underserved by pipelines, but WSJ says ~1.38M bbl/day of oil and fuels such as gasoline rode the rails in March vs. an average of 1.5M bbl/day in the same period a year ago.
- BNSF Railway (BRK.A, BRK.B), which is responsible for ~70% of U.S. oil train traffic, operated as many as 10 trains a day last year but now is averaging nine a day.
- Shipping oil across the U.S. by train can cost $6-$12/bbl, which makes sense only when the price of U.S. crude is significantly cheaper than oil pumped overseas; in recent weeks, the price gap between U.S. and Brent has narrowed to ~$7/bb, making some oil train shipments too costly at this time, but Barclays thinks U.S. crude may sell for $13/bbl less than Brent, which would boost oil train shipments later this year.
- Other relevant tickers: CSX, UNP, NSC, KSU, GWR, CNI, CP
Tue, Mar. 31, 2:16 PM
- MKM Partners thinks the smart move is to sell railroad stocks and buy airlines.
- Chief Market Technician Jonathan Krinsky leans on technical analysis (video) in making the transportation call.
- Avondale Partners is also out with a bearish take on railroads.
- The investment firm lowers Canadian Pacific (NYSE:CP), Norfolk Southern (NYSE:NSC), CSX (NYSE:CSX), Canadian National Railway (NYSE:CNI), and Union Pacific (NYSE:UNP) to Market Underperform on earnings growth concerns.
Mon, Mar. 23, 10:02 AM
- Weak guidance from Kansas City Southern is taking down some peers on fears of a drop in energy segment revenue.
- There is also concern in the sector on tighter regulations after an increase in accidents.
- Previously: Kansas City Southern lowers 2015 revenue outlook (Mar. 23 2015)
- Decliners: Union Pacific (NYSE:UNP) -2.0%, Norfolk Southern (NYSE:NSC) -1.1%, Genesee & Wyoming (NYSE:GWR) -1.0%, CSX (NYSE:CSX) -1.2%, Canadian Pacific (NYSE:CP) -1.4%, Canadian National Railway (NYSE:CRI) -1.0%.
Thu, Mar. 12, 8:10 AM
- Canada proposes tough new oil tank car standards and says even improved tank cars coming into service now would have to be off the rails by 2025 at the latest.
- New cars would need thicker tank car walls and an outer cover for thermal protection.
- The announcement comes after a recent series of fiery derailments in Canada and the U.S., including some that involved the newer, improved rail cars, and as more oil increasingly travels by rail due to rising production and a shortage of pipelines.
- The move signals that the U.S. may adopt similar regulations and will increase pressure on the rail car industry to produce enough new cars on a tighter deadline.
- Relevant tickers: CNI, CP, CSX, UNP, KSU, NSC, GWR, BRK.A, BRK.B, GBX, TRN, ARII, RAIL, WAB
Tue, Mar. 10, 7:25 PM
- Canada and the U.S. are "very close" to announcing stronger new oil tanker rail car standards, intended to limit fires and pollution when oil trains derail, Canadian Transport Minister Lisa Raitt says.
- A recent spate of fiery oil tanker accidents, including three derailments in just the past month from Canadian National Railway (NYSE:CNI), has ratcheted up the pressure on both governments to take action.
- Raitt is recommending that Canada's House of Commons transport committee summon CNI to explain its recent accidents.
- Meanwhile, officials from large rail operators met with White House staff last week to argue against the need for electronically controlled pneumatic brakes, saying they would be costly and not add significant safety benefits.
- Other relevant tickers: CP, CSX, UNP, KSU, NSC, GWR, BRK.A, BRK.B, GBX, TRN, ARII, RAIL, WAB
Wed, Mar. 4, 12:57 PM
- CSX (CSX -0.3%) says it expects its domestic coal shipments will decline at least 5% this year, though it still expects to record strong Q1 earnings growth and double-digit earnings growth for 2015.
- Coal shipments are a major part of the business of railroad operators; for CSX, coal represented ~18% of the company's total freight volume and ~22% of its revenue for 2014.
- CSX also sees more moderate growth in shipments of crude oil than expected previously; crude shipments are a smaller portion of rail shipments - less than 2% at CSX - but have been one of the fastest growing parts of the rail industry.
- CSX estimates that last month's crude oil train derailment in West Virginia will knock a penny or two off Q1 EPS; it also estimates overall freight volume will increase 3% for the quarter.
Mon, Mar. 2, 7:35 PM
- The crude oil aboard the train that derailed and exploded two weeks ago in West Virginia contained so much combustible gas that it would have been barred from rail transport under safety regulations set to go into effect next month, WSJ reports.
- The oil’s vapor pressure was 13.9 psi, which exceeds the limit of 13.7 psi that North Dakota is set to impose in April on oil moving by truck or rail from the Bakken Shale.
- Plains All American Pipeline (NYSE:PAA), which shipped the oil, says it follows regulations governing the shipping and testing of crude; CSX, the railroad that carried the oil, says it had stepped up its inspections of the track along the route.
- The new information about the West Virginia accident likely will increase regulators’ focus on the makeup of oil being shipped by train; oil from sahle formations is known to contain far more combustible gas than traditional crude oil, which has a vapor pressure of ~6 psi.
- Top Bakken producers: CLR, EOG, WLL, HES, XOM, OAS, NOG, EOX, MRO
Mon, Feb. 23, 5:57 PM
- The Canadian National Railway (NYSE:CNI) train that recently derailed in Ontario, igniting and spilling more than 6K barrels of oil, was traveling at a restricted speed and carrying oil in structurally enhanced tank cars, Canadian investigators say.
- The initial findings suggest strong similarities to a CSX oil train derailment that occurred days later in West Virginia, and likely will add to concerns that recent regulatory steps to make the transport of oil by rail do not go far enough.
- Both trains derailed while traveling well below speed limits recently imposed on trains carrying crude oil, and both were pulling CPC-1232 tanker cars introduced in 2011 to be a safer replacement for an older generation that had been criticized as inadequate.
Mon, Feb. 23, 6:50 AM
Tue, Feb. 17, 12:59 PM
- Fires from a CSX (CSX -1%) train carrying crude oil that derailed along a river in West Virginia continue to burn, as state officials attempt to determine whether downstream drinking water systems have been affected.
- A CSX spokesman says the fires are being allowed to burn out on their own; the cause of the cause of the accident, which occurred during a winter storm and amid frigid temperatures, is under investigation.
- State officials initially said at least one tanker car had fallen into the Kanawha River, but that no longer appears to be the case.
- It was the second significant oil train incident in three days following a Canadian National Railways (CNI +0.7%) train from Alberta's oil sands that derailed in Ontario on Saturday; the accident blocked the main railway between Montreal and Winnipeg.
Mon, Feb. 16, 10:21 PM
- A CSX train carrying more than 100 tankers of crude oil has derailed and burst into a huge fireball in West Virginia, igniting at least 14 tankers.
- At least one tanker car and perhaps more fell into the Kanawha River, prompting concerns about potential contamination of water treatment facilities that serve area communities; residents within a half mile of the scene, in Mount Carbon, were told to evacuate until further notice.
- One person was being treated for potential inhalation issues, but no other injuries were reported, according to CSX.
Wed, Feb. 11, 11:33 AM
Mon, Feb. 2, 9:54 AM
- Demand on railroads to transport crude oil on long trains is on the decline as an oversupply of tank cars and lower production in the energy industry both play a factor.
- Data highlighted by Reuters suggests lease rates for oil rail cars declined to $1,300 near the end of last month after being as high as $2,450 close to a year ago.
- The number of long trains specializing in crude that are sidelined due to inactivity has increased, according to market watchers.
- Railroad stocks: UNP, NSC, CSX, CNI, ARII, GBX, CP, KSU, CNI, WAB, TRN.
Thu, Jan. 15, 6:50 PM
- Shipments of crude oil by rail may be on the decline, but Credit Suisse analysts say that does not hurt the bull case for railroads as the best way to play industrial stocks amid plunging crude prices.
- For all the hype about shipping crude by rail, railroads can still rely on other lines of business, such as transporting general merchandise, the firm says; what's more, capacity is tight, with or without oil.
- Credit Suisse says its three top picks in the group - Canadian Pacific Railway (NYSE:CP), CSX and Union Pacific (NYSE:UNP) - offer an averager 20% upside for their stock prices in the next 12 months.
- CP and UNP are the railroads with the highest exposure to shale oil, with a respective 9.5% and 7.5% of revenues from crude and related products, the firm says; Kansas City Southern (NYSE:KSU) has the least exposure to shale oil, with 3.6% of its revenue tied to oil transport.
Wed, Jan. 14, 7:35 PM
- Crude oil could fall as low as $35/bbl before it might affect the amount of oil flowing out of the Bakken Shale to the east coast, CSX executives said during today's earnings conference call.
- CEO Michael Ward says crude-by-rail represents less than 2% of CSX's total business, but the ~3.5 trains/day used in the transport of crude should stay steady and grow a bit through 2015; he says CSX's business of transporting fracking sand to natural gas drilling areas also should be unaffected.
- Despite falling diesel prices falling, which has made road transport pricing more competitive with rail, CSX execs expect this year it will again gain market share from its highway-bound competition, adding that customers had not expressed any interest in switching.
- In its 2015 outlook, CSX said it expects double-digit EPS growth as merchandise and intermodal volumes grow at a faster pace than the economy and as it increases prices for its services.
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