Sorry to say...a real 'hyena' wrote this. His analysis is completely wrong.
I am chemical engineer and his derivations completely wrong...he had masked his derivation....to use fear tactic to grab as much possible before the results are out.
One can understand why..he needs to go into such great lengths...
anyone who needs the details in a legible format...please let me know your e-mail address here..i will send you the excel sheets and will answer your questions.
PureBull, GreatStock...appreciate to you have your e-mail address so that I can post it to you guys and you guys can a make a blog out of it...so that everyone can understand. ( I don't know how to make Blogs !).
Mystockdeck, I can see that you are assuming refinery margin same for all the quarter and try to extrapolate the result for coming quarter. Trust me, those thing only true in Mathematic classroom and never in financial world. What you should or can do is estimate the gross profit (you know the production capacity, refinery margin - can get from Bloomberg) and minus out the expenses (refinery will have quite fix expenses except Q3 2015 due to MTA of 44 days), finance cost (very high too due to high debt for shell) and depreciation. The tricky part is to estimate is loss/gain from derivative and stock holding gain / loss. You pointed out correctly that Y2014 refinery are very depress at only 2~3 USD per barrel. Margin have improved significantly in Y2015 around 6 ~ 8 USD per barrel in Q2 and Q3 2015. Try to guest how much is the refinery margin in Q4? I cant remember the exact value, I think should be 14~18 USD per barrel. Comparing to just than USD 3 per barrel a year a ago, that is why whole world is talking about refinery party.
Yuefei01, spot on! According to Singapore benchmark GRM, refinery margin was $5.8 in Q1, $4.8 in Q2, $6.3 in Q3 and average at $8.6 in Q4. The wild card is still on the stock holding gain/loss in Q4 as crude price has been fallen 18%.
In 3Q2015, even though the GRM is $6.3, still $138 million of stock holding loss due 23% drop in crude price overshadowed previous 1H2015 stock holding gain of $101 million. Anyway, let's wait for the figure in one month time then.
This book is the result of the author's many years of experience and observation throughout his 26 years in the stockbroking industry. It was written for general public to learn to invest based on facts and not on fantasies or hearsay....
Probability
14,490 posts
Posted by Probability > 2016-01-16 20:52 | Report Abuse
Sorry to say...a real 'hyena' wrote this.
His analysis is completely wrong.
I am chemical engineer and his derivations completely wrong...he had masked his derivation....to use fear tactic to grab as much possible before the results are out.
One can understand why..he needs to go into such great lengths...