CHI - Channel Infrastructure Ltd (NZR)

[SailorRob]

Quick read through of the presentation and looks like I am going to be the proud co-owner of a import terminal in a few years. Thanks for the bang on foreshadowing Sailor Rob.

Conversion costs of $200 million, decommissioning of $60 million.

Seems like the footprint of an import terminal is a lot smaller than a refinery so frees up quite a lot of tank storage and land.

So many moving parts but ill keep on holding through.

I wonder who will pay for the unneeded extra storage on site, MBIE say it is pretty critical to domestic oil security.

https://www.mbie.govt.nz/assets/c3a1...ember-2017.pdf

It wont be in a few years, it will be next year. No way they have the money to spend on the massive shutdown next year and carry out the conversion. The caveat to that is a huge uplift in margins before then....

If, and it's a big if... the numbers they spat out were realistic then the current market cap is justified and I expected it to jump around 10% this morning at least.

[Sharp737]

Yes SailorRob, I actually agree with some of your points. You say 'if' and it's a big 'if' and this is what I am expecting and have been expecting.
If you have a look at RNZ's margin graph on neste.com you will notice a trend in the margins and of course it has been shocking BUT have a look at the trend! Its going up

I am still optimistic and I like the idea of new idea's being brought forth like the solar project, hydrogen and biofuels. Yes, long shots but NZR have got to have the guts to go for it.
Now I heard that James Shaw popped in for a visit some weeks ago on his way up north. That's the opportunity to lobby like mad and for someone who has the 'nouse' to go after him.
I did hear that Naomi did have a good talk with him but this has got to be sustained and some real research and ideas presented. This I believe is the way forward and then....

We still need oil and gas and look at the mess Biden has made just in his first few months on USA's energy policy, the Canadian pipeline being stopped (how stupid just to please the left) and banning oil and gas work on federal land etc losing now over 100,000 jobs with millions more on the horizon and Texas in a huge mess with the cold spell that has spelt disaster with there reliance on renewable energy with wind turbines freezing up and solar panels useless in this type of weather. We cannot rely on renewables, just a joke. Oh wait, we can have all our electric cars and our Huntley coal station will supply the extra energy....Lol, what a joke

There is still I believe good potential with NZR

GO you good thing, you beauty!

S

[Antipodean]

... and Texas in a huge mess with the cold spell that has spelt disaster with there reliance on renewable energy with wind turbines freezing up and solar panels useless in this type of weather. We cannot rely on renewables, just a joke. Oh wait, we can have all our electric cars and our Huntley coal station will supply the extra energy....Lol, what a joke

Texas mostly relies on non-renewable energy, and even more proportionally than that it is the non-renewables have failed during the recent events. Oil, Gas and Nuclear power failures/reductions are the proximate cause, when combined with an isolated grid that cannot share load cross state lines.

[SailorRob]

Yes SailorRob, I actually agree with some of your points. You say 'if' and it's a big 'if' and this is what I am expecting and have been expecting.
If you have a look at RNZ's margin graph on neste.com you will notice a trend in the margins and of course it has been shocking BUT have a look at the trend! Its going up

I am still optimistic and I like the idea of new idea's being brought forth like the solar project, hydrogen and biofuels. Yes, long shots but NZR have got to have the guts to go for it.
Now I heard that James Shaw popped in for a visit some weeks ago on his way up north. That's the opportunity to lobby like mad and for someone who has the 'nouse' to go after him.
I did hear that Naomi did have a good talk with him but this has got to be sustained and some real research and ideas presented. This I believe is the way forward and then....

We still need oil and gas and look at the mess Biden has made just in his first few months on USA's energy policy, the Canadian pipeline being stopped (how stupid just to please the left) and banning oil and gas work on federal land etc losing now over 100,000 jobs with millions more on the horizon and Texas in a huge mess with the cold spell that has spelt disaster with there reliance on renewable energy with wind turbines freezing up and solar panels useless in this type of weather. We cannot rely on renewables, just a joke. Oh wait, we can have all our electric cars and our Huntley coal station will supply the extra energy....Lol, what a joke

There is still I believe good potential with NZR

GO you good thing, you beauty!

S

A company with such great potential on a massive sale, you must be buying shares hand over fist at these give away prices.

[Sharp737]

It might go down a bit further SailorRob even into the 30's and that might be tempting to really jump in Lol.
And I see for the first time in some 8 months that refining margins took a big jump into the positive....nearly $2.30. Now if that holds and increases, we are in the money Honey!
Is it time to BACK UP THE TRUCK??
Some people think so
Either way whether RNZ go down the Terminal road or whatever, when the margins go up, and they are, they can make BIG BUCKS $$$$$
Time will tell and word is that the current shutdown is going very well

Check out the refining margins trend:

https://www.neste.com/investors/mark...fining-margins

It's going up

S

[SailorRob]

It might go down a bit further SailorRob even into the 30's and that might be tempting to really jump in Lol.
And I see for the first time in some 8 months that refining margins took a big jump into the positive....nearly $2.30. Now if that holds and increases, we are in the money Honey!
Is it time to BACK UP THE TRUCK??
Some people think so
Either way whether RNZ go down the Terminal road or whatever, when the margins go up, and they are, they can make BIG BUCKS $$$$$
Time will tell and word is that the current shutdown is going very well

Check out the refining margins trend:

https://www.neste.com/investors/mark...fining-margins

It's going up

S

I do enjoy this.

What to deal with first. Let's begin with the Shutdown. A full 3 days behind by the 4th day and best estimates currently will be lucky to make the P80% which if they do means many days behind. Massively reduced work scope to allow limping along until the end, inspections granting the bare minimum run time from damaged equipment, main tower lift broken as well as the 100k replacement one, total operating time for both combined about 1 day, which means massive productivity losses and huge extra costs for the specialist crews. Things can always be worse but they are definitely not going very well. Budget will have blown out for sure too, after all when has it not?

Multiple resignations of key staff, currently having to try recruit Process Engineering staff and specialist control room, process control as well as many other critical positions, also many critical staff being needed immediately on the Terminal project. Many more resignations coming soon, this much is obvious to all but management.

No matter what margins do we are not in the money... remember when we start back up, it's with a much reduced simplified Refinery, far lower production and efficiency - just meant to satisfy legal contractual requirements while we transition to the Terminal. That aside, the entire point of the Terminal is that we cannot make ANY money over the full cycle. The good periods don't even cover the bad ones. Any free cash we generate will just be going to the conversion. The CAPEX maintenance is falling behind so far that it would be virtually impossible to catch up and the CAPEX on the quickly aging '86 expansion plant is accelerating all the time.

There is no whether RNZ go down the Terminal road. We are becoming a Terminal, that is set in stone, no recovery in margins will change that. It will be faster than anyone realises.

Don't ever invest money into a company that insiders, management or board have had zero stake in for over 20 years (aside from a few token shares). It's not rocket science.

Even at a share price of 1 cent you don't buy, after all what's the difference between 137 mil and zero? You're just buying the debt and the obligations. No thanks, you literally could not give this dog away. Maybe all the spinning balls land ok and you make money buying here. Maybe not. That's not investing.

I'm not predicting the shares up or down from here, always said they could double very quickly based on some stupid news or other, Mr Market is alive and well. I'm just saying that is not investing, it's speculating on what none of have enough information to speculate on.

You'd think everyone could see the margin trend rising and bid the shares but they obviously can't.

Look if it's not crystal clear that these assets as they are cannot generate ANY money at all then I don't know what else I can do. The cash flow statements are there for all to see going back 15 years at least. The rest is just addition and subtraction.

It can seem like the cash is pouring in from time to time but a closer look will tell you that is an illusion. Maybe you're smart enough to trade the stock up and down as the outlook appears to improve and decline but I think that would be very difficult.

[Sharp737]

SailorRob, I am amazed that you still work at the Refinery with how you feel. Surely with your views you must have thought of jumping ship also? For me to work for a company, loyalty to that company is important but if you feel that you cannot be loyal, well that's another matter. But of course, that is each person's business.

Thanks for your comments, they are interesting and challenging. But for about 8 months RNZ have been operating at the bottom ceiling payout and a cash neutral position and now suddenly the margins start surging upwards.
Whatever happens, that is extra money albeit at reduced throughput but still significant and is extra money that RNZ were not going to get. Substantially extra when you compare it to the floor ceiling.

It will be very interesting to see what happens over the next year

S

[SailorRob]

SailorRob, I am amazed that you still work at the Refinery with how you feel. Surely with your views you must have thought of jumping ship also? For me to work for a company, loyalty to that company is important but if you feel that you cannot be loyal, well that's another matter. But of course, that is each person's business.

Thanks for your comments, they are interesting and challenging. But for about 8 months RNZ have been operating at the bottom ceiling payout and a cash neutral position and now suddenly the margins start surging upwards.
Whatever happens, that is extra money albeit at reduced throughput but still significant and is extra money that RNZ were not going to get. Substantially extra when you compare it to the floor ceiling.

It will be very interesting to see what happens over the next year

S

I just report facts I wouldn't call them my views.

My loyalty to the company is absolute and always has been. I am not however loyal to the long string of management who have destroyed a Northland institution, many shareholders life savings and probably the Northland economy and will get away with it with zero consequences. I would say that most of the workers are the same, absolutely love the company but saddened immensely at its demise. Jumping ship would just put more pressure on those remaining and I'm picking significant resource will go to retaining key staff until the final Shutdown, probably unsuccessfully.

As for Cash neutral operations, nothing could be further from the truth. I've been over this before. Firstly we have only been 'cash neutral' by selling land and cutting back maintenance so far that the future costs would be far higher then the cash we've saved by cutting back, this is also only possible in a non shutdown year. If you stop eating you can reduce your grocery bill for some period of time... They have also run long periods shut down completely or idling to save costs by not actually producing while the customers are still forced to pay the floor, this has resulted in all 3 customers lodging disputes, which have only been paused while the Terminal deal is worked out and of course the disputes will provide leverage. So Cash neutral is a complete joke on many different levels and completely unsustainable.

Margins are surging upwards? For the first time in over a year possibly much longer the Singapore complex margin has been positive for ONE WEEK. Personally I would not call this surging upwards, the excess refining capacity in Asia is phenomenal and any increase in margins will bring on capacity. Now I have no ability to predict future margins and maybe they will rise? Maybe they won't. If the company had any ability to predict future margins then all is saved, we shut down the plant and just become a cracked spreads trading company, just need a few PC's and handful of staff and then We're in the money baby.

As you say if margins do improve this is extra money that they didn't have before and will go towards the Terminal conversion but the company will absolutely not want higher margins as that could put an spanner in the works of the plan that is set in stone, could but won't.

It's not going to be interesting to see what happens over the next year as we know whats going to happen. It's set in stone. It will however be interesting to watch and it's going to be a slow moving train wreck which does look like it's turning into a medium paced train wreck actually.

Nobody at all is talking about ongoing Refinery operations and very significant staffing and cash flow is going into the Terminal conversion effective immediately after the shutdown. One agreement has been made and the others will be signed before the end of the Month (my view not fact). Announcement made soon after and then the shareholder approval process pushed through very quickly and basically they will have no choice, death by a thousand cuts or give the terminal a go. As discussed previously way too many moving balls to determine whether it will be acceptable investment at current levels.

Again NEVER EVER invest your money where management and the board do not have and never have had ANY of theirs. Number one rule.

[SailorRob]

Now I must add when I criticise management, I'm not talking about current management who are doing a fine job of what they have been hired to do. Terminal as quickly as possible with as little fuss as possible. I'm talking more about the Directors and CEO'S over the years and not all of them but almost all. With a situation like this the CFO cannot dodge blame either but you never know how much they were or were not pushing back behind the scenes.

[Getty]

Your last sentence in particular, is sufficiently sensitive, to further validate your earlier posts.