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KaeJS, just curious to know how ended your TLM swing trades?
I ended up selling everything at an ACB of about $8.60. The trade ended up costing me about a $2k loss, but these things happen. I booked $920 in profits last week alone, so I don't let the TLM trade bother me. I am, and always will be, fully transparents in my wins and losses. :)
 

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PPL took a beating in its midstream in its 4Q results with $61M revenue vs $183M in same period in 2013 despite increased sales volumes, and 4Q14 does not yet reflect the full impact of lower crude prices. Me thinks 1Q15 results in this business could be brutal. Management spent a lot of time describing their capital projects in this sector without commenting at all on what they might do to avoid near term losses in this sector. The market seems to like their results though.
 

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Discussion Starter · #63 ·
PPL took a beating in its midstream in its 4Q results with $61M revenue vs $183M in same period in 2013 despite increased sales volumes, and 4Q14 does not yet reflect the full impact of lower crude prices. Me thinks 1Q15 results in this business could be brutal. Management spent a lot of time describing their capital projects in this sector without commenting at all on what they might do to avoid near term losses in this sector. The market seems to like their results though.
Alta Red, I think we will learn alot more on March 10th during the Pembina investor day.. Do you think some of the investments theyve been making into ethane and butane will help offset any near term losses in midstream?
 

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Alta Red, I think we will learn alot more on March 10th during the Pembina investor day.. Do you think some of the investments theyve been making into ethane and butane will help offset any near term losses in midstream?
They should take the time to clear this up then but if they don't, it is because they don't want to tell shareholders about (potential) bad stuff. I doubt their new investments will do anything to offset near term losses in the midstream but I imagine it depends on how they construct their processing contracts and how they intend to run their 'increased' midstream business.

It is clear they were exposed to commodity prices on NGLs and they specifically mentioned the collapse in propane prices. I doubt they can do anything about any commodity (such as ethane and propane) that is not directly part of their diluent business because heavier liquids must be stripped from rich gas streams to make natural gas saleable and if they cannot get sufficient price for the products, they will have to eat the losses. Heavy oil/oil sands oil producers still need diluent so I suspect butane and pentanes+ will have a clearing price high enough that operators like Pembina and AltaGas can at least breakeven.

I personally recall a dilemma I had back in 1986 with the collapse of oil prices. Gas plants in the US mid-continent I was responsible for had turboexpanders to extract as much NGLs as possible from the gas stream, i.e ethane, propane and butane to take advantage of commodity margins between low(er) priced natural gas and high(er) priced NGLs. The collapse in oil price also collapsed NGL prices (priced off oil) and we cut back as much as possible to NOT extract ethane, propane and butane. But we had to extract some to meet natural gas specifications and had to eat losses in NGLs. It was a bad time.
 

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PPL took a beating in its midstream in its 4Q results with $61M revenue vs $183M in same period in 2013 despite increased sales volumes, and 4Q14 does not yet reflect the full impact of lower crude prices. Me thinks 1Q15 results in this business could be brutal. Management spent a lot of time describing their capital projects in this sector without commenting at all on what they might do to avoid near term losses in this sector. The market seems to like their results though.
Canadian investors are in love with pipelines, the results hardly matter.
 

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it seems as though the recent (i.e. the last 6-8 weeks, not the last year) oil price slump and general economic jitters is having an impact on PPL's stock price. It is getting into the price range again where it looks attractive to me here in the mid-high $38's. I would really like to see it closer to the low 37's like it was briefly back at the end of last year/early this year.

Anyone have any opinions on whether this might be a good price to add to an existing position?
 

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Pembina Pipeline Corp has signed a deal to buy Kinder Morgan Canada Ltd. and the U.S. portion of the Cochin pipeline system in an agreement it valued at a total of about $4.35 billion. Source BNN

https://www.bnnbloomberg.ca/pembina-buying-kinder-morgan-canada-u-s-portion-of-cochin-pipeline-1.1304632
Interesting! In Feb, they announced a go-ahead for the Canada Kuwait Petrochemical polypropylene project. Not much news since. According to this news article, construction was to start this Fall, Pembina's share is another $2.5 Bilion. They must have deep pockets!
 

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They are all in freefall this morning, including KEY, GEI and IPL. Maybe their commodity related portions of their business could result in zero margin (revenue). Remember that their feed stock price has not changed much, but the price of the liquid products has dropped massively with the oil price drop.
 

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Definitely not pretty. I assume investors do know that when it comes to pipelines, they are not allowing any new competitors. You would think that their scarcity would mean something. If you owned the only house on the street and everyone wanted one, I would think the price of that house would rise in value, even if your electricity and gas rates were going up.
 

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Sounds like the take or pay side of the buisness and concerns over the suppliers going bankrupt therefore no one to pay the contracts ?
 

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Sounds like the take or pay side of the buisness and concerns over the suppliers going bankrupt therefore no one to pay the contracts ?
That is part of it as I have already written in a few threads. Some of the shippers on pipelines don't have the best credit ratings and in a low commodity price world, some of those shippers will fail to pay their bills and actually cease operations altogether. But it is also the commodity side of the business where sustained lower prices for the liquid products will compress margins dramatically. Midstream can be feast or famine....been there, done that in my career.
 

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Well, if petrochemical production is going to plummet with a cease in activity, certainly their growth is gone; therefore, the stock needs to be priced appropriately. The difference in valuation between a company growing 5-10% a year and one growing none or maybe even -2% is quite striking. PPL like many others may be pricing in a zero growth environment for a couple of years at least.
 

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Well, if petrochemical production is going to plummet with a cease in activity, certainly their growth is gone; therefore, the stock needs to be priced appropriately. The difference in valuation between a company growing 5-10% a year and one growing none or maybe even -2% is quite striking. PPL like many others may be pricing in a zero growth environment for a couple of years at least.
Why would petrochemical production plummet? There is both market and propane feedstock. The issue/risk may be on the oil pipeline side, not the processing side if this is indeed the area of risk.
 

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Why would petrochemical production plummet? There is both market and propane feedstock. The issue/risk may be on the oil pipeline side, not the processing side if this is indeed the area of risk.
I think the market is just thinking that drilling in Canada is just going to come to a stop, due to the current oil price. It is just fear overcoming common sense.

I was watching the Pembina fall in real time, yesterday. I started posting about it on various sites around 10:30 am when it was down about $2.50, in an upward rebounding market. I kept refreshing the quote, every 20 seconds or so and then refreshing my question about it on the various sites. I watched the price falling, more and more, each time I refreshed, with higher and higher volumes, and no one seeming to know why. Google searches came up with nothing. As she went below $30, I started to believe that perhaps there was something going on, specifically with PPL, but that the sellers I was starting to see now were basically "shooting first and asking questions later". They were selling simply because others were selling. The decline appeared to me, to be feeding on itself.

It turned out that what I was seeing was correct, since there really was no new news. Just speculation and a lot of fear, and because of that the bargain hunters swooped in quickly before the end of the day.
 

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Why would petrochemical production plummet? There is both market and propane feedstock. The issue/risk may be on the oil pipeline side, not the processing side if this is indeed the area of risk.
Why would the market for NGL/petrochemicals NOT be affected by a downturn in global markets?
 
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