We will be rewarded here.
This is a solid company, in a cash generating business. Good place to be in a high interest rate environment.
Thanks for the update. Still holding.
When you look at the long term chart of the crack spread, it's obvious that before 2022, the crack spread was consistently below $20/barrel. After Russia invaded Ukraine, it spiked to over $60, then fluctuated between $40-$60 the rest of the year and into 2023. It dipped dramatically in March-April 2023 to below $20, but has been steadily climbing since late May to the current over $40. BDCO is clearly proftiable at this level, and given the recent Saudi and Russian cuts, as well as the U.S. adminsitration's decision this week to curtail Alaskan drilling, the supply situation will continue to be tight. I see a very strong Q3 for BDCO, and continued good results. Q2 appears to be a one time aberration in the trend line. Also, the declining crude price is especially bad for a pure refiner like BDCO, since it is essentially buying it's input at a higher price, and forced to sell output at the lower price in a declining price environment, the worst situation for a pure refiner.
A rising crude price is just the opposite, best for a pure refiner.
Buying more today.
The big difference between 2016-2019 and the current environement is the political environment. 2016-19 we had a US administration that encouraged oil& gas production, refining and energy self-sufficiency in the U. S., leading to more supply and lower prices. Since 2021 we have an administration that discourages energy production, and any investment in fossil fuel related infrastructure, and heavily subsidizes "green" and any energy source that competes with oil/gas. That has diminished supply, which leads to incresing prices. This means that the regression to the mean, which you suggest will happen, will either not happen, or will be significantly delayed.
Solid oil/gas businesses will continue to outperform, in this market.
down There is some very interesting information here, especially in the long term perspective. I get the impression that the crack spread for jet fuel is now a bit more than twice the average crack spread for the period 2016 - 2019. This could indicate that the current crack spread is likely to come down substantially. But the numbers for the third quarter seem likely to be quite good.
Crack spread and jet fuel price increasing steadily. After dipping below $20 in April and May, it's been rising steadily since end of Q2. Now at a healthy 41.35/bbl.....
See IATA chart here:
down With the benefit of hindsight one normally regrets selling shares at a certain price when the pps rises fast afterwards. I sold my shares in BDCO largely to invest in TIO/TMNA instead. It turned out that I chose the wrong horse. So did you. If I had chosen the right horse I could have roughly quadrupled my money in a few weeks.
I think the following is so much nonsense: "The only thing holding the shares back at this point is the uncertainty around its debt." I assume there is still some uncertainty about the debt, but it is much reduced compared with the past situation. If the creditors share your rosy view about the future there is not much reason for being worried about the current. Net assets are now significant.
The crucial point is that the whole business has gloomy prospects in the view of the stock market. Of course you may be right but I trust the stock market more than your rosy assessment. The gloom prospects for the business is reflected in a very low p/e for companies in the business BDCO operates. But of course BDCO is more attractive as an investment at below 4 dollars than above 6 dollars. I think there is a good chance that the pps will recover some more. Right now the crack spread for jet fuel than the futures price some weeks ago suggested. Looking ahead several months the price is much lower.
Sounds like someone is trying to justify selling under $3, when the CEO (who likely knows a little more about the company than non-shareholders) buys more at $4.
The fact is, the supply/demand situation for refined petroleum products looks very positive for a good long time, as the government highly disfavors incremental investment in oil production or refining as do ESG pressures Both of these factors are creating an under-investment in the sector that will produce nice profits for those with patience.
I'm always happy to have my interests aligned with inside buyers, and even more so when the buyer is the CEO and majority shareholder.
The only thing holding the shares back at this point is the uncertainty around its debt. I believe the CEo knows this, and is working to resolve it.
gosox "Seems to me he's making some important PUBLIC STATEMENTS here about his confidence in the next few quarters." What is the use of enerating paper profits during the next few quarters? Do you think he will sell the shares if the crack spread evolved in a negative way after a few quarters?
Wow. At about $4.00 per pop, that's almost another $100,000 he just plunked down; added to the previous 45,000 shares at about $170,000, that comes to about $270,000 for 70,000 shares.
Seems to me he's making some important PUBLIC STATEMENTS here about his confidence in the next few quarters.
"How about this: He knows every detail of what is happening with the company and feels that this is a chance easily to make considerable money given a share price of less than $4.00. He sees how this quarter (now almost 2/3 through) is progressing, so he knows what's to come."
He seems to have the attitude not to sell shares when it would be financially rewarding for him to do so. If that is the case any purchase of shares by him is a very long-term speculation. He will not make any money before the 45,000 shares he bought are sold at some date in the probably quite distant future. He is even quite unsure how the crack spread will evolve in the coming monhs. He refers to unclear prospects for this period. He does not know what is to come. I find your line of reasoning in this paragraph totally unconvincing.
"He already owns 12 million shares so why plunk down an additional $170,000 to buy 45,000 more shares when he clearly has more than enough? . $170,000 is a lot of money by anyone's standards." I have provided one or more possible explanations before. You have yourself provided that explanation in the next paragraph - a no-cost PR
One other point: This company issues practically no PRs, so maybe his Form 4 filings are also a way of announcing to would-be investors that the company is seriously under-valued. In other words, a no-cost PR. Even though the financial status of the company has been substantially improved the company is not fully out of the woods yet. As far as I remember there is still debt that should have been paid already. When he purchases sharesthe market responds with a higher pps and some creditors may have their nerves calmed if they are jittery that the debt the company has to them may not be paid. I regard this line of reasoning as stronger than your reasoning about making money in a situation where the CEO does not trade his shares like the rest of us.
The CEO has clearly announced his optimism with his recent $170,000 worth of share purchases!!!
How about this: He knows every detail of what is happening with the company and feels that this is a chance easily to make considerable money given a share price of less than $4.00. He sees how this quarter (now almost 2/3 through) is progressing, so he knows what's to come.
He already owns 12 million shares so why plunk down an additional $170,000 to buy 45,000 more shares when he clearly has more than enough? . $170,000 is a lot of money by anyone's standards.
One other point: This company issues practically no PRs, so maybe his Form 4 filings are also a way of announcing to would-be investors that the company is seriously under-valued. In other words, a no-cost PR.
Just speculating of course.
down I am not an American mindset that people only express their opinions to promote their own financial interests. I often present negative comments on stocks where I am a shareholder. I did so today. Check TMNA. Regarding BEDO I am not a shareholder right now after I sold 2,000 shares at about $ 3.14. I don't intend to buy back in the months to come. I am still interested in the reasons for the CEO buying shares where he own the bulk of the outstanding shares already. I also have an intellectual interest in the future stock price of BDCO to see how right or wrong my assessments have been.
"does not mean anything" that the CEO bought 30,000 shares at/near $4/share.
This from the guy that sold his BDCO shares between $2.50 - $3.00 back in May.
Not sure why you even keep commenting at this point, unless you bought back in at some point.
gosox "Quite a purchase for a guy who already owns 12 million shares." My viewuld is that because he owns so many shares already it means next to no difference to his stake. It would have been more positive if he had owned for instance 100 k shares before the purchase. But of course you may understand this better than I do.
down To me it is neither positive or negative. It probably does not mean anything in my view.
More on CEO Carroll's Form 4 Purchases:
In addition to the 30,000 shares for about $120,000 purchased recently, he also bought 15,000 shares for about $50,000 in May-- so that comes to 45,000 shares for about $170,000 recently. For someone already owning 12 million shares that's very impressive.
One would have to conclude that, at the least, he's very optimistic about earnings for Q3. And I would guess the next few quarters as well.
JUST OUT--CARROLL FILE NEW FORM 4--He bought about 30,000 shares @ around $4.00. Quite a purchase for a guy who already owns 12 million shares. Feelin real good.
Form 4 BLUE DOLPHIN ENERGY CO For: Aug 17 Filed by: CARROLL JONATHAN P
US Securities and Exchange Commission 7:15 AM ET
down First I iwould like to make a general comment. Investors whether insiders or not normally buy a stock ahen they expect the pps to rise as a way to make money. There is not much difference between insiders and others in this respect. The stock market things that insiders are more knowledgeable than others when it comes to assessing the future prospects than others. Therefore it is generally seen as an indication that the pps will rise in the near-term when insiders buy shares.
In practice insiders too make mistakes in their assessment. It comes to mind a stock in my country. It related to a smart watch for children. The pps had fallen a good deal and one or more insiders bought shares for 3 dollars. The slide continued and the pps dropped as low as about 8 dollars.
40 years ago I visited companies in the UK, the USA and Canada and talked to managements. That turned out to be no good idea. The reason is that manatements need to be excessively optimistic to do their best the way I see it. They view the future of their companies with rosy-colored glasses.
BDCO has been in a precarious financial positiion and in this situation it is beneficial in relation to creditors that the market cap is as high as possible. This reduces their financial risk. It makes it easier for the company to sell shares to pay some of the debt. Whyen a CEO owns almost all the shares it therefore makes good sense to buy a few more shares to support the stock price. The bigger stake such a CEO has the more this reasoning applies. I viery much doubt that the CEO of this company thinks that increasing his stake a bit more is the best way he can spend his money. Generally it is a very good idea not to have all one's net worth in one single stock.
...so name another reason the CEO would buy more shares?
down Im am not convinced that this statement holds true in all cases.
down I think that yours is a reasonably fair assessment. But I wonder who is interested in a buy-out. I know that some attach much importance to the CEO increasing his stake marginally even if he owns almost the whole company. I don't share that view as I have stated before.
I think the bottom line here is that BDCO weathered the pandemic, which was brutal for energy producers/refiners. It had some bonues quarters due to the Russian invasion of Ukraine. BDCO now is looking at making a respectable return while reducing debt. And there is always the possibility of a buyout.
With the low multiple in oil these days, even at 4x earnings, it is still a $6-8 stock.
And I still think we could see a Form 4 from the CEO, showing he is buying more shares.
modes What is current? Based on the latest quarter BDCO has no p/e ratio because there was a loss. Both companies had extraordinary profits during the last 4 quarters as far as I can see. What is of most interest is what earnings per share can be expected to be the next couple of years. My guess is 1.5 dollars. If that is realistic the current pps is low. But a very low p/e ratio can be expected because long-term prospects are not rosy in this business.
snow That 1.81 number is not current and it was based on some extraordinary numbers in the last few quarters.Current P/E is much nearer to 5 or 6 for both PBF and VLO.
At current price BDCO based on its erratic earnings is about 3 times cheaper.Being 3 times cheaper than some of the lowest P/E stocks in the world says a lot.
modes You mention PBF which is a much bigger company than BDCO. The trailing price/earnings ratio of PBF says a lot regarding the future pberospects in this business. "PE Ratio (TTM) 1.81". I think every shareholder in BDCO should pay a good deal of attention to this number. Assuming BDCO generates one dollar of earnings per share in the second quarter and the same p/e ratio applies the current pps of BDCO seems to be about right.
down "and as they continue to whittle down debt, should be able to generate more consistent earnings." I turehink you are exaggerating the influence the interest charge has on earnings per share. I tried to make a calculation in my head not so long ago and published my number some time ago. Nobody commented on that number. Earnings per share are not likely to be consistent in this business. The price of crude and refined products are likely to fluctuate a good deal in the future too.
down "Bottom line, demand for refined petroleum will remain high for a long time." I agree. But before the total xonsumption of refined petroleum will begin to fall in a few years. Even if no new refineries are built in the USA this is not the case at all in other parts of the world. Refined petroluem is shipped from one country to another.
I will not be many years before battery-driven aircraft are taken into use but that will only be fairly short-distance aircraft. I assume that the demand for jet fuel will do better than the demand for for instance fuel oil.
A very important factor is the climate. The very high temperatures we have seen in various parts of the world during recent years will probably accelerate the move away from products based on petroleum.
Let´s see what they will say in the PR.Because revenue was disappointing but also the margin here was just around 7% compared to around 14% for PBF and VLO.They even paid more for interest than last quarter.
However margins for refiners have been rising a lot in Q3 and with the unsold stock of $31M should produce surprising Net Income in the other direction.
The CEO, Jonathan Carroll, bought more shares after the last two quarterly reports.
Let's see if he buys more in the next few weeks.
I'm obviously disappointed with the results here, with a loss instead of an expected profit.
RD was right in his prediction of lower profit, and I give him credit for his accurate assesment of the fundamentals.
But even RD did not predict a loss.
It looks like, as in a previous quarter I recall, they ended the quarter sitting on some inventory. ($31 million as of 6/30/2023 vs. 19 million at 12/31/22)
The price of crude was also dropping throughout the quarter, which is not good for a pure refiner.
But the quarterly results have often been a bit erratic here, due to how much inventory is being held, when it is sold, etc. .
I'm comfortable that the company is continuing to generate good revenue, and as they continue to whittle down debt, should be able to generate more consistent earnings. I was also pleased to see a helathy increase in the stockholders equity, going from 10.5 million year end 2022 to 25.7 million at the end of the last quarter.
I bought back some today with cash from my sells over $6, and I'm happy to continue to hold.
Of course, there are many alternatives.
The point is, many of the current "projections" are based on a conversion of ICE engines to alternatives, and the current U.S. fleet of all on-road vehicles is still about 99.4% internal combustion as of the end of 2022.
Even if the optimisitc projections of achieving sales of 60% non-ICE vehicles by 2050, the population of on-road vehicles will still be OVER 50% ICE. Hydrogen are a wonderful concept, but none are actually being sold commercially at present. (OK, mea culpa, 2 are available in CA, and so far total sales are about 16,000- TOTAL since 2020)
And we have not even begun talking about fuel for other transportation uses, such as air travel, where I am not aware of any viable susbstitutes for aircraft powered by jet or aviation fuel.
Bottom line, demand for refined petroleum will remain high for a long time.
I don't know about you, but I doubt very much I will be around in 2050 or beyond.
down Electric cars don't represent the only alrernative.Burning hydrogen is another,
Concerning the "long-term"
Regarding lithium-ion batteries, in just New York City there has been a considerable increase in the number of fires, injuries and deaths.
That's what makes for a good "market"
Different perspectives on near-term, long term, etc.
I'm not saying you are right or wrong. I'm just saying I have a differnt perspective. I happen to like the near and foreseeable long term prospects for U.S. refiners.
In the long term, we are all going to be dead.
down I have checked an assessment of prospects for refiners. Near-term prospects are regarded as fairly good but long-term prospects less rosy.
"Various drivers will affect refining margins in the near term, but the greatest uncertainty is demand outlook and significant volatility. By focusing on the two levers mentioned above, players can use this as an opportunity to reposition to become more resilient in a potentially challenging long-term environment."
A little profit taking and buying op's . ::)
LMAO, Amazon lost a billion dollars in 12 weeks a few quarters ago, and the stock price did not crash 50%
I have never seen Market Maker ASCM shorting a stock that dropped 50% on the day shorts need to cover.
This going to be fun...
I am on the bid .21
Oh, by the way, BDCO has record short interest ever 2 weeks for a year now.