Monday, August 7, 2023

Earnings Season Links

  • Overall, this is a big win for shareholders. Kudos to TPL Blog and Gabi Gliksberg from ATG Capital for keeping the spotlight on the board. Kudos as well to Murray and Eric leading the fight from the inside and dealing with a painful lawsuit. This agreement is not perfect, but it shows that change is coming. In that light, an outstanding question is why hasn’t management ceased prosecuting the lawsuit? They have to know that the tides are shifting and if there is any hope in remaining in their positions, or leaving with dignity, they should cease wasting shareholders’ money on this ridiculous lawsuit. [310 Value]
  • Lost in all the (justifiable) weeping and gnashing of teeth over the billions wiped out when the company was hijacked by crooks is the opportunity this has created. A patient and rational investor would step in today and capitalize on the fall out, knowing they would have never been given a 50% markdown if the company was being run by ethical and competent leadership. I’ve been nibbling on the expectation that this matter gets settled in HK/SV favor. Now that the fog has lifted and we have line of sight to the end-game, it’s time to load up, IMO. [The Texas Pacific Land Trust Investor]
  • In July, Enterprise crude oil exports will exceed a record 30 million barrels. Oil and gas has faced commodity price headwinds, especially compared to the premiums of last year when crude averaged over $100 a barrel during the first six months of 2022. We see no reason that crude should have been trading at the low levels of the last few months. In early June, OPEC+ announced they were extending their reductions into 2024. On top of that, the Saudis announced that they would unilaterally cut an additional 1.1 million barrels a day of production in July and August, with the option to extend these cuts as needed. Meanwhile, waterborne data confirms that Russia's exports are coming down. Inventories of crude and refined products, both in the U.S. and globally, remain very low, while OPEC+ continues to demonstrate they are committed to price stability. Even though industrial demand continues to lag, consumer demand is strong, especially in developed nations. Crude oil supply demand fundamentals continue to indicate that we're in store for much tighter balances for the remainder of the year and in 2024. [Enterprise Products Partners]
  •  "As we moved into the third quarter, we observed a slowdown in business activity," Lamar chief executive Sean Reilly said. "Although we still feel positive about our efforts to control expenses, revenue for the second half of 2023 is not shaping up as we anticipated it would. As a result, we are revising our guidance for full-year diluted AFFO to a range of $7.13 to $7.28 per share."
    [Lamar Advertising Company]
  • Refined products operating profit was $234 million, an increase of $67 million. Transportation and terminals revenue increased $41 million primarily due to higher average transportation rates. The higher rates were largely a result of our 6% average mid-year 2022 tariff increase as well as a higher proportion of long-haul shipments, which move at higher rates, as customers continued to take advantage of the extensive connectivity of our pipeline system to overcome various supply disruptions in the regions we serve. [Magellan Midstream Partners]
  • In addition to executing on our safety and operational performance expectations, our share buyback program remains a high priority and an area where we have delivered significant progress. As of the end of July, we have cumulatively repurchased over $850 million dollars' worth of our common stock since the buyback program's inception, which represents approximately 30% of shares outstanding at the start of the program. Building on the success of our share repurchase program, the board has decided to cease our fixed dividend program after the next quarterly dividend declaration and payment, both of which we expect to occur before year end. This move consolidates our focus, bolstering the already-robust share repurchase program by allowing all available capital return dollars to flow into our buyback program, subject, as always, to market conditions, the trading price of our stock, and our evaluation of the expected return on investment of future share purchases. [Alpha Metallurgical Resources, Inc.]
  • Enbridge's resilient, low risk business model is supported by our scale, diversification and high quality cash flows which positions us to withstand market volatility and deliver predictable results. Looking forward, financial discipline, execution of our secured capital program, and deployment of our discretionary investment capacity gives us confidence that we'll generate 4-6% EBITDA growth per year through 2025 and approximately 5% thereafter. We believe natural gas and oil will remain critical components of our energy supply mix across a paced energy transition. [Enbridge Inc.
  • Canadian oil-sands producers including Canadian Natural Resources Ltd. and Cenovus Energy Inc. are rushing to expand production to fill the biggest new pipeline project in more than a decade. [Bloomberg]
  • While metallurgical and thermal coal prices have decreased from the beginning of the year and decreased significantly from the record highs seen in 2022, they both remain strong relative to historical norms. Transportation and logistics challenges, limited access to capital, and labor shortages limit operators' ability to increase production and sales which should provide continued price support. NRP continues to explore opportunities for carbon neutral revenue across its large portfolio of land, mineral, and timber assets, including the sequestration of carbon dioxide underground and in standing forests, and the generation of electricity using geothermal, solar, and wind energy. [Natural Resource Partners]

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