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CorEnergy: Crimson Ride


  • We exited CORR common and preferred shares after the last acquisition.
  • Both sets of equities are lower, despite oil having moved up.
  • We examine the recent update from the company and give investors our take.
  • I do much more than just articles at Conservative Income Portfolio: Members get access to model portfolios, regular updates, a chat room, and more. Learn More »

When we last covered CorEnergy Infrastructure Trust, Inc. (NYSE:CORR), we went for the exit as the bullish thesis was decimated in our view. Our logic was based partly on the new transaction that they announced. But the 180-degree turn was mainly driven by an absolute write down of the company's Grand Isle Gathering System (GIGS) assets. In our mind these assets were rather bulletproof and we assumed they were worth far in excess of the market capitalization of the company when we initiated a purchase. This was even after disregarding the past-due rent. Of course, we were wrong on that and CORR offloaded the asset base at $50 million or less than 20% of what we thought they should get for it. As CORR rallied over $10.00 in the after-hours, we hit the bid as this was a rather favorable development for us. We were wrong on the thesis, but got to exit at a fantastic price (up 70% since our article). The company has since then updated the transaction information. The stock has also meaningfully retraced and has now lost almost 30% since the acquisition hype drove this higher. We look at the recently provided data and give you our thoughts.

The Update

CORR mentioned its balance sheet resiliency and the fact that it exited its troubled tenants.

Source: CORR Presentation

Little attention was given to the fact that the two troubled tenant assets were purchased for around $470 million (see here and here) and sold for about $68 million. CORR then gave more information on the recent transaction with Crimson Midstream.

Source: CORR Presentation

The assets consist of pipelines, storage facilities and right of way linking in California.

Source: CORR Presentation

CORR did address the elephant in the room, which here was the logic behind going into a state

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