emes, hclp
emes, hclp
Your email regarding the sand companies implied that it is time to buy; at least that was my take. What do you think the chances are of them cutting the distributions again? I guess emes has a variable distribution, so technically it wouldn't be a cut, but you get my point.
Re: emes, hclp
I think 3rd quarter will be the low point for frac sand demand. There is a chance that EMES and to a lessor extent HCLP may need to reduce their distributions for Q3.
I think a lot of investors think MLP cash distributions are "dividends". They are not. The distributions are just the payout of excess cash flows from operations to the partners. Preferred stocks are much closer to debt and the dividends are like interest payments.
From the research I did before writing the reports, EMES and HCLP are both gaining market share. The major oilfield service companies trust the quality of their sand and their ability to deliver it when needed. They both have strong distribution networks. They also both have strong balance sheets (focus on their current ratios at 6/30).
If oil prices move higher in 2016, which is extremely likely if you read the IEA's last Oil Market Report, EMES and HCLP are going to be in great shape next year. It is going to take a massive effort for the U.S. to reverse the declining oil production that is happening today. Upstream companies will need to complete A LOT MORE HORIZONTAL WELLS to reverse the declines. The capital necessary to do it will not be available if oil prices stay below $70/bbl.
This should help oil prices tomorrow:
After the market's closed "The American Petroleum Institute late Tuesday reported that crude supplies dropped 3.7 million barrels for the week ended Sept. 18, according to sources. Analysts polled by Platts forecast a decline of 700,000 barrels. November crude CLX5, -0.19% was at $46.60 a barrel on Globex, up from the contract’s settlement of $46.36 on the New York Mercantile Exchange. The more closely watched Energy Information Administration report is due Wednesday."
November becomes the front month NYMEX contract for WTI on 9/23. If EIA confirms another big drop in U.S. crude oil inventories, look for a lot of green in the morning.
For more just Google "API Petroleum Inventory"
I think a lot of investors think MLP cash distributions are "dividends". They are not. The distributions are just the payout of excess cash flows from operations to the partners. Preferred stocks are much closer to debt and the dividends are like interest payments.
From the research I did before writing the reports, EMES and HCLP are both gaining market share. The major oilfield service companies trust the quality of their sand and their ability to deliver it when needed. They both have strong distribution networks. They also both have strong balance sheets (focus on their current ratios at 6/30).
If oil prices move higher in 2016, which is extremely likely if you read the IEA's last Oil Market Report, EMES and HCLP are going to be in great shape next year. It is going to take a massive effort for the U.S. to reverse the declining oil production that is happening today. Upstream companies will need to complete A LOT MORE HORIZONTAL WELLS to reverse the declines. The capital necessary to do it will not be available if oil prices stay below $70/bbl.
This should help oil prices tomorrow:
After the market's closed "The American Petroleum Institute late Tuesday reported that crude supplies dropped 3.7 million barrels for the week ended Sept. 18, according to sources. Analysts polled by Platts forecast a decline of 700,000 barrels. November crude CLX5, -0.19% was at $46.60 a barrel on Globex, up from the contract’s settlement of $46.36 on the New York Mercantile Exchange. The more closely watched Energy Information Administration report is due Wednesday."
November becomes the front month NYMEX contract for WTI on 9/23. If EIA confirms another big drop in U.S. crude oil inventories, look for a lot of green in the morning.
For more just Google "API Petroleum Inventory"
Dan Steffens
Energy Prospectus Group
Energy Prospectus Group