Refiner Oil is Cracked Up!

Mid week update from new COT contributor Chris Damas.....

Oil refining is getting more lucrative in the USA..... good for stocks, bad for consumers. Alternatively, most Canadian oil stocks were down today, with below expectations results from Encana and Cenovus.

The theoretical April oil refining crack spreads (assuming all one product produced) right now (WTI over NY Harbor) are:

$37.18 for RBOB
$41.54 for Heating Oil

All the regional cracks we cover are up too –

WTI Cushing over Gulf Coast 211 is $33.40 up $2.05
WTI Midland over 532 ULSD Mid-Con is $36.74 up $2.00
Brent over 321 NYH at $20.10 up $1.49 versus single digits a month ago
ANS (Alaskan North Slope) 321 over West Coast at $25.68 up $1.59

This is a seasonal strengthening with cracks rebounding due to maintenance at several refineries and strong distillate export demand. Closing prices for our stock universe are all up after being up 35% or so since recommending them Jan 10.

MPC $83.30 up $1.63 goes ex 35 cents tomorrow)
VLO $47.29 up $1.05
HFC $56.53 up 40 cents
NTI $30.40 up $1.36 (goes ex Tuesday)
PSX $64.81 up $0.70
TSO $55.37 up $1.30

The P/E multiples on these stocks remain low in the 8-9 range.

Note: US Holiday (Presidents Day) will close markets on Monday. You might want to lighten up on these names tomorrow towards the close. We will have a lot of media attention regarding the anti KXL/climate change rally Sunday in front of the White House.

Check out Chris Damas at BCMI Research


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Occidental Petroleum Announces Dividend Increase [OXY]

Occidental Petroleum Corporation (NYSE:OXY) announced today that its Board of Directors has increased the company’s dividend 18.5 percent to an annual rate of $2.56 per share, from the previous annual rate of $2.16 per share. This increase brings the company’s compound annual dividend growth rate over the last 11 years to 16 percent.

President and Chief Executive Officer Stephen I. Chazen said, “We have now increased our dividend every year for 11 consecutive years, and a total of 12 times during that period. This 18.5-percent increase brings the 11 year compounded dividend growth rate to 16 percent per year. The total increase in the annual dividend rate from 2002 is 412 percent.

“This increase reflects our confidence in the company’s financial strength and future performance. Consistent dividend growth, together with growing oil and gas production and well-above-average returns on capital, are the primary elements of Oxy’s long-term business strategy.”

The $0.64 per share quarterly dividend will be payable on April 15, 2013, to stockholders of record as of March 8, 2013.

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A Better Method to Choose Stocks.....in 15 Seconds

When a big time fund manager makes it a daily practice to sit down with his staff to review the trading techniques from these guys....you have to wonder why.

But I've gotta say, after watching this presentation on how to select the highest probability stocks for the strongest expansion moves, now I know why these guys have been the "go to" people behind several Wall Street Pros and huge dollar market makers.

But you want to know the best part? They've just created a free video giving away their entire stock selection strategy. Trust me, this is really good stuff.

Watch it today since this presentation won't be up for about 48 hours. Stop everything you're doing and watch it before you miss out.

Inside this rare presentation, you not only get their proprietary stock selection strategy for narrowing down over 7,000 candidates to just under a dozen of the highest probability stocks in 15 seconds, they're also blowing the whistle on a dirty Wall Street secret that's intentionally designed to keep you in the dark.

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Total [TOT] Reports Fourth Quarter and Full Year 2012 Results

On Wednesday Total [TOT] reported a 4th quarter net profit, excluding changes inventories, of +13% to €3.08B vs consensus of €3B, EPS +3% to €1.05 and revenue +5% to €49.89B, with earnings boosted by higher refining margins and crude prices.

Production -4%to 2.29M barrels of oil equivalent a day, due to a shutdown at the Elgin platform in the North Sea and flooding in Nigeria. Expects output to rise 2-3% in 2013, to sell $9B worth of assets. Proposes 2012 dividend of 2.34/share.

Read the entire Total earnings report

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Northern Tier Energy Announces Fourth Quarter 2012 Dividend

Northern Tier Energy (NYSE: NTI) announced on Tuesday the declaration of a cash distribution of $1.27 per common unit for the fourth quarter of 2012. The distribution will be paid on February 28, 2013 to holders of record as of February 21, 2013.

This will be the second cash distribution paid by Northern Tier Energy since it's initial public offering in July 2012 and will result in cumulative cash distributions since the initial public offering of $2.75 per common unit. Northern Tier Energy LP is a variable distribution master limited partnership. As a result, its quarterly distributions, if any, will vary from quarter to quarter as a result of variations in, among other factors....

1. It's operating performance
2. Cash flows caused by fluctuations in the prices it pays for crude oil and other feedstocks and the prices it receives for finished products
3. Working capital fluctuations
4. Capital expenditures
5. Cash reserves deemed necessary or appropriate by the board of directors of its general partner

Read the entire NTI distribution report


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Are you prepared for the pain..... This may be a double top in the market

 I won't lie, our COT Fund is a buy and hold fund in the spirit of great long term investors like Graham and Buffett. But when it comes to trading, we aren't naive. This market is now set to move one way or the other, is this just a double top in the market?


Whether you think this market is moving higher or falling apart and heading south you need to listen to one of the best educators in our industry. Todd Mitchell. Here's what he is saying......

If you have stock investments then grab hold of your jaw because it is about to drop.....

A widely recognized pioneer in the trading world recently stated that not only has "buy and hold" stock investing stopped working since the year 2000, but it probably won’t work again for a decade or more!

Answer these questions to see what impact this could have on YOU:

*     Do you have an IRA invested in mutual funds?
*     Do you have a stock portfolio that holds positions longer than a month?
*     Did you lose wealth in the 2008 credit crisis?

If you answered YES to any of these questions then you may be in serious trouble for the next several years.

The pioneering trader is none other than Todd Mitchell and today he just released a video that breaks down the current crisis for investors and tells you step by step how to start making money by reinvigorating an over 100 year old trading methodology that optimizes today's unusual market activity.

Instantly opt-in with your email and access Todd's video here. And don't worry, we respect your privacy 

Also as a nice bonus famous trader Doc Severson makes an appearance in the video as well. This video will only be available for the next few days so be sure to check it out.

Automatically opt-in to view the video by following this link >  "Trading through the pain....a trading method that's worked for 100 years"

SeaDrill - Completion of the $2.9 billion sale agreement with SapuraKencana SDRL

Seadrill (SDRL) is set to seal a proposed $2.9B deal to sell its tender rig business to Malaysian JV partner SapuraKencana Petroleum after finalizing details of the cash and shares transaction. An earlier agreement on a merger of the two companies’ existing tender rig business now has SapuraKencana taking on capital commitments plus outstanding debt of $780M as part of the acquisition price.

From SeaDril.com......

Seadrill and SapuraKencana have today entered into a conditional sale and purchase agreement in relation to the proposed transaction. SapuraKencana will acquire all the tender rigs in Seadrill's fleet except for the West Vencedor, T15, and T16. These three rigs are either owned or planned to be owned by Seadrill Partners LLC. Seadrill will in a transition period in co-operation with SapuraKencana retain the management of all tender rigs that are in operation outside Asia.

The agreed acquisition price is for an enterprise value of US$2.9 billion and includes future capital commitments for newbuildings T17, T18, and West Esperanza. Seadrill will furthermore continue to manage and supervise the construction of the current new building program on behalf of SapuraKencana. In addition, the enterprise value includes all the debt in the tender rig business which is estimated at US$780 million as of February 6, 2013. Seadrill has agreed to pay US$75 million to SapuraKencana at closing to compensate for cash flow from the tender rig business from February 8, 2013 to closing, netted off for lost interest income.

The transaction is expected to close by the end of April 2013.

John Fredriksen, Chairman, President and Director of Seadrill says in a comment, "We are pleased to have reached an agreement with our long term partner, SapuraKencana, regarding the sale of our tender rig fleet. We look forward to support the integration of the tender rig fleet and are excited to start a new phase of our long and profitable relationship. Seadrill is as a large shareholder of SapuraKencana and is excited to contribute building SapuraKencana into the leading offshore service provider in South East Asia. Seadrill will as stated before use the net proceeds from the transaction to continue to aggressively grow our modern ultra deep water and jack up exposure."

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The Anatomy of an XOM Earnings Trade

If you have been following our trading partner J.W. Jones on his Apple options trades you'll want to take a minute to see how he uses the same methods to trade COT favorite ExxonMobil [XOM].........

One of the most interesting aspects of options is the myriad opportunities presented for high probability trades for those who understand the details of option behavior.

For example, I have recently discussed the routinely observed collapse of implied volatility immediately following an earnings release. We have looked at several examples of profitable trades constructed to benefit from this expected decline in implied volatility.

Today I would like to review another group of trades based on a fundamental characteristic of option pricing. In order to understand this phenomenon, we need to review briefly the anatomy of the price of an option.

Remember that an option’s price, while quoted as a pair of bid / ask values, is in reality the sum of two components. The current market price is the combination of the extrinsic and intrinsic components of the individual option contract.

The extrinsic component can comprise the entirety or only a variable portion of the market price of an option. All options contain at least a small amount of extrinsic component.

The intrinsic component of an option may comprise the majority of the value of an option, as for example a "deep in the money" option. Conversely, an individual "out of the money" option routinely contains no intrinsic value whatsoever.

Here is an example of the trades and the charts to go with them.



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Marathon Oil Corporation Reports Fourth Quarter and Full Year 2012 Results

Marathon Oil Corporation (NYSE:MRO) today reported fourth quarter 2012 net income of $322 million, or $0.45 per diluted share, compared to net income in the third quarter of 2012 of $450 million, or $0.63 per diluted share. For the fourth quarter of 2012, adjusted net income was $388 million, or $0.55 per diluted share, compared to adjusted net income of $454 million, or $0.64 per diluted share, for the third quarter of 2012.

Marathon Oil reported full-year 2012 net income of $1.582 billion, or $2.23 per diluted share. Net income in 2011 was $2.946 billion, or $4.13 per diluted share. Net income for 2011 included income of $1.239 billion from the Company's former Refining, Marketing and Transportation business, which was spun off on June 30, 2011 and reported as discontinued operations in 2011, so income from continuing operations is better suited for year over year comparison. For full year 2012, adjusted income from continuing operations was $1.736 billion, or $2.45 per diluted share, compared to adjusted income from continuing operations of $2.293 billion, or $3.21 per diluted share, for full year 2011.

Read the entire earnings report

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Baker Hughes to Retain Process and Pipeline Services Business

Baker Hughes Incorporated (NYSE: BHI) announced today that it will retain its Process and Pipeline Services business. Going forward, this business will be reclassified as continuing operations within the Industrial Services segment.

Baker Hughes is a leading supplier of oilfield services, products, technology and systems to the worldwide oil and natural gas industry. The company's 58,000 plus employees today work in more than 80 countries helping customers find, evaluate, drill, produce, transport and process hydrocarbon resources. For more information on Baker Hughes' century long history, visit Baker Hughes.com
 

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