• 6 minutes Trump vs. MbS
  • 11 minutes Can the World Survive without Saudi Oil?
  • 15 minutes WTI @ $75.75, headed for $64 - 67
  • 3 hours Satellite Moons to Replace Streetlamps?!
  • 2 days US top CEO's are spending their own money on the midterm elections
  • 26 mins U.S. Shale Oil Debt: Deep the Denial
  • 20 hours EU to Splash Billions on Battery Factories
  • 7 mins The Dirt on Clean Electric Cars
  • 3 hours Owning stocks long-term low risk?
  • 4 hours Can “Renewables” Dent the World’s need for Electricity?
  • 2 days Uber IPO Proposals Value Company at $120 Billion
  • 2 days A $2 Trillion Saudi Aramco IPO Keeps Getting Less Realistic
  • 1 day 47 Oil & Gas Projects Expected to Start in SE Asia between 2018 & 2025
  • 2 days OPEC Is Struggling To Deliver On Increased Output Pledge
  • 1 day The Balkans Are Coming Apart at the Seams Again
  • 15 hours The end of "King Coal" in the Wales
Editorial Dept

Editorial Dept

More Info

Trending Discussions

A Deeply Undervalued Play in the Refining Sector

Two weeks ago before my vacation, my inbox filled with questions surrounding the refining space and CVRR in particular, an MLP that I recommended at its IPO price of $25.  In my columns in OilPrice.com, I've spoken recently about the refiners and the difficulty I thought they would continue to see in the coming months.  I even made the case that the mid-Continental refiners, of which CVRR's 'parent' company CVR Energy (CVI) is one, would in fact be in for the worst case of all the refiners, save for the refiners relying upon crude-by-rail.

So how can I still be favorable towards CVRR with the negative outlook I have towards the refiners and CVR Energy in particular?

The question goes a long way to understanding how fundamentals get translated into trading ideas and how there are often values to be had - even in sectors that are up against it fundamentally. 

Yes, it is true that the disintegrating WTI/Brent spread is putting tremendous pressure on the margins of refiners, particularly mid-con refiners -- it was this that forced the new and horrible guidance from Valero (VLO) in their recent quarterly report to shareholders on EPS -- and we imagine that other refiners are sure to follow with negative reports and outlooks.  CVRR is hardly immune to this; As the Brent/WTI spread goes to parity and beyond, as I think it will, their margins and revenue will also decline, putting their very generous distribution is some jeopardy.

So, am…

To read the full article

Please sign up and become a premium OilPrice.com member to gain access to read the full article.

RegisterLogin

Trending Discussions





Oilprice - The No. 1 Source for Oil & Energy News