“One trader in the states keeps making huge money every year on pipeline deals, without him the story of oil liquids as a whole would be completely different.”*
- Oil liquids had an EBIT of $646M in 2015, thanks specifically to three deals on Colonial, Magellan and Explorer pipelines.
- In the past because they had just to sit and were making money.
- Now the majority of these deals are the red, some are losing -1c/gal/cycle, the trader has to keep losing money only to conserve its priority on the lines and fill its contracts until an arbitrage arise.
- It is publicly known that the value of the lines have dipped into negative values for the shippers like Noble (implying no price arbitrage) –
the Positive MTM Fair Value MTM that the trader has on these commodity contracts has also to be marked down.
- The trader has no refineries and unlike BP and Shell cannot afford to lose money each day in transportation to regain everything in cracking margins and volume % market share.
- It is well-known that Noble is Asia’s largest commodity trader but its role in America has remained largely ignored in the public.
- FYI Noble Oil liquids is shipping in excess of 1 million barrels per day, it is the largest gasoline blender in North America.
- Noble Oil Liquids operates in the [1 – 1.8] % sub-margin band and accounts for more than 70% of the operating income of the supply chains at Noble.
- Several traders have cut their bilateral opened-credit lines with the “big swinging dick”.
How the “core assets” (contracts) are now performing ?