Delek USA

“You’ll get a kick out of Uzi” they told me as I headed to Memphis to meet the CEO of an unlisted company called Delek USA, that Wall Street banks were circling to launch an initial public offering (IPO) in around 2006. As I came out of the elevator of a modest Memphis suburban office building, mildly disorientated, the CEO Uzi – for it was clearly Uzi – flew up in my face and started …

“This job is easy, all you have to do is forecast the oil price right.” In this note we argue that the most expensive group among the oils will run here, based on the recent market “Quantquake” that we outline in this note. What was the Quantquake? Last week saw an extraordinary move in markets. And from this we derive a trading recommendation into year end. There is more to short- and medium-term investing than […]

Last call for the Sankey Research Party at the Hard Rock Penthouse tonight. If you are in NYC and around Times Square, we have a glittering panoply of oil market experts, CEOs, investors, and some hangers on, all welcome. Kathleen Kelley “OPEC whisperer” will comment on the symbolic cut, and we are highlighting the new CEO of refiner Delek USA Avigal Soreq. RSVP if you want to join, there is plenty of space and we […]

We have spoken about the structural shortage of US refining capacity repeatedly. We have warned that the US refining system has been running very hard, but has been unable to keep inventories from all time lows relative to demand, particularly for distillate. And we have underlined that distillate (think diesel for my newbie readers) is the default “convenience premium” fuel when natgas and coal get short. It is easier to transport, and generally directly substitutable. […]

The two weeks, mid-earnings, when we pull together company results transcript comments, are not a science, they are an impressionistic art; a colour to our themes. Basically these are comments that caught our eye over the past week. Like sellside analysts, the companies tend to all present the same more-or-less generic message, but occasionally, as we strive with Sankey Research, a comment stands out, is differentiated, or so wild that it is worthy of note. […]

Good to see oil holding, we have broken the bottom of our $110/bbl-$150/bbl range for Brent this summer, but news out of China is positive both in terms of higher oil demand and re-iterated low oil product export quotas. These product export quotas are some 40% below last year levels and underline that Beijing is moving away from energy-intense processing and exports, prioritizing its own air quality and environmental issues. Quotas are cut from 37Mt […]

Briefly noted: Gazprom shares plummet -25% as shareholders reject record dividend plan Uniper, largest German buyer of Russian gas, shares plummet -18% as it says it is receiving just 40% of volumes ordered from Gazprom After two weeks in the dark, with no weekly oil data published, the US Department of Energy released the backlog yesterday. The DOE was keen to stress the “systems outage” was not a hack. Better not be, DOE manages emergency […]

Just as I was muttering that there is not much happening, it all kicks off. Notably the fire and outage at Freeport LNG yesterday caused a sudden sell-off in natgas prices. “If it is burning live on TV, it moves the market”. Over/under on the outage is 3 weeks, which is very minor in the grand scheme of things, but a big deal at the margin when natgas prices are screaming at $9.50/mmbtu. Freeport LNG […]

Tomorrow Zoom Strategy Session: Rich Voliva, CFO HollyFrontier. Thursday Jun 9, 2022 05:00 PM ET Register in advance for this meeting: https://us02web.zoom.us/meeting/register/tZ0kduyprj4uHNTcVO53YRKHbhYSRWHUiIX1 Tonight, quick meeting with Uzi, and Blake, CEO and IR of Delek. I had texted about the story in Tradewinds that they were getting into Jones Act shipping. Apparently they bought a couple of barges that are “not material, especially not in the context of today’s margins”. Lucked into a quick catch up […]

June, A beautiful day here in Brooklyn Heights, I wish you a wonderful Sunday. I always maintain that if you ignored the media, you would think it’s a wonderful world. And it is! That said, I am enjoying the mass media coverage of the Jubilee. BREAKING NEWS: QUEEN WAVES FROM BALCONY. Headline on my screen here. And we are kicking ourselves for not being in London, given my mother lives right on Hyde Park, in […]

Re-iterate Price Target: Valero $150/share by June 30th. Re-iterate Overweight all US refiners. Illustrating Valero $190/share argument. This is a time of year when the weekly Department of Energy US oil data is crucial: it will be released at 10:30am today. We see an emerging crisis in US oil product markets, depending on how much of that crisis we export to Atlantic Basin markets. It will be a battle of demand destruction: who blinks first […]

Sankey Strategy Session tomorrow evening: Bob Jonke, Oil trader for Engelhart CTP and Kathleen Kelley, Oil Market Expert aka “the OPEC Whisperer”. When: May 5, 2022 05:00 PM ET, Register in advance for this meeting: https://us02web.zoom.us/meeting/register/tZcofuqprzMuHd0CDoGbkzN6CiapFAdCg6k2 The Strategy Session this week will be in the context of what will be an extremely low-key OPEC meeting tomorrow with no press conference. Why no press conference? No comment on Russia. Simple as that. Bloomberg 5/4/22 The European […]

With the company reporting tomorrow, a client asked if it was time to sell Valero with the stock over $100/share. Our first target was $120 prior to the Ukraine invasion. We now think that $150/share is a stretch target. For your consideration: Using VLO’s reported indicators as a starting point, we see momentum established in late 1Q has carried through to 2Q so far.  These are straight off the VLO website: We’re in uncharted territory […]

This LNG round up with Gordon Shearer (Poten & Partners guru) from Thursday night took longer to write and I got tangled in the SLB results, which came in okay – readers will know I am not pushing service companies but love oils… “to 10% of S&P500!” Chatting to a client with Midstream expertise before Gordon Shearer, LNG expert, came on Strategy Session Thursday evening, the view was that Kinder Morgan results were decent owing […]

China rant PBF – Q1 likely half messy, but finishes running strong into incredible margins as Q2 starts Sankey Recommends: Liverpool vs Man City Premiership decider tomorrow – two of the best club football teams ever to play, at their peak. PBF CEO Tom Nimbley, President Matt Lucey, CFO Erik Young, and IR Colin Murray were on good form on Strategy Session yesterday evening. Nimbley started his career in refining in the 1973 oil price […]

Tonight PBF management on Strategy Session, 5pm for a tight hour. RSVP. I was at the Knicks vs Nets game last night with a global oil executive; combined with conversations with ConocoPhillips management Tuesday, some brief points. First, Shell profit warning this morning. Break it up. We would like to see a global LNG & gas and power trading powerhouse, a downstream “high carbon” operation with refining, chemicals and retail, a deepwater company. We don’t […]

This Thursday 7th April, Strategy Session with PBF Senior Management 5pm – RSVP Tonight – ConocoPhillips senior management in town for informal sellside drinks Tomorrow, DC hearing, House Energy and Commerce “Gouged at the Gas Station: Big Oil and America’s Pain at the Pump.” In oil, the excitement this morning is New York jet fuel prices going off the scale, part of the theme we talked about over the past couple of weeks, especially after […]

Well, that was quite the Q1 2022! But we got it in the books. I think the low point of Q1 for me was the evening of Thursday 3rd March, shortly after the 24th February Russia-Ukraine invasion, when the largest nuclear plant in Europe, Zaporizhzhia, appeared to be under direct attack and burning, right as I had a one-hour briefing with the State Dept, and my contact told me that surviving a nuclear attack is […]

This week, a three page thematic overview, followed by supporting charts. First the text, then the charts. ~ Noted refinery explosion last evening, no deaths reported, at ExxonMobil’s small (“only” 60kb/d) Billings Montana niche refinery that is important for local balances. Would drive margins higher for Midcon players such as HollyFrontier, Coffeyville, Delek, and West Coast PBF, and might accelerate ExxonMobil’s long standing attempts to sell the plant (price always said to be too high). […]

Kathleen Kelley, “OPEC Whisperer” tonight on Happy Hour. Additionally in the following weeks we have two major refining CEOs ready to talk about oil markets. 3/24, 5:00PM EST – Kathleen Kelley 3/31, 5:00PM EST – Delek CEO | Uzi Yemin 4/7, 5:00PM EST – PBF CEO & CFO | Tom Nimbley and Erik Young You can participate on application, but if you don’t pay Sankey Research, why would you ask? If you want a charity, […]

Friday joke in serious times: yesterday a “Stop Oil” pitch invader interrupted the Everton-Newcastle (Saudi-owned) Premier League soccer game by attaching himself to a goalpost mid-game. An additional 17 minutes of extra time played. The joke? What does he think the zip tie that he used to attach himself with, is made of? Yep, he used an oil product. While wearing plastic glasses. He should have used rope? So much more inconvenient. Client question of […]

“Only the dead have seen the end of war” – Plato (Attributed). The Quote is writ large at the entrance of the Imperial War Museum in London, one of London’s great museums, if lesser known. Recommended. Thoughts & prayers with the suffering in Ukraine. Peace in Brooklyn, the weather our worst direct concern. The hard yards, I always say from my First World Wall St perch, are January 1st through to March Madness. And today, […]

Executive Summary With decades of experience covering oil & gas, from a US and global perspective, the authors have sufferedtwenty years of government renewables fuels “strategy” as brutally as any analysts in the market. In this notewe conclude there is a major problem with the current hottest theme in global oil & gas investment:renewable diesel. We walk you through from “what is it?” to “what is the problem?” The answer is:feedstock. This note is the […]

Wildcard 2022 year starter: Kazakhstan declares state of emergency amid unrest. A member of OPEC+ that has failed to meet its quota increases, at times in 2020. Yesterday’s OPEC meeting was a rubber stamp. The question is when they meet in person to re-set quotas more sensibly. June is the best guess. Kazkahstan is a major concern for Chevron, although their massive Kazakh operations are totally remote in what is the lowest population density country […]

Our refining conference opened yesterday with an entertaining and informative conversation with the senior management of PBF: Tom Nimbley, Chairman and CEO, Matt Lucey, President, and Erik Young, CFO, and Colin Murray, IR. Noted in passing: OPEC meeting today, huge bull story over the past week was Russia’s December production numbers that once again failed to meet quota and remained flat with November at 10.93mb/d. Russian gas flows are also again very low to Europe […]

Happy New Year! Dan Loeb was complaining on Twitter that we hardly got any time off here: “Even prize fighters get 6 months off between fights, NFL players a week. Only 2 days off between years makes me want to join a union”. He was also welcoming New York’s new mayor; I am completely with Dan on both these matters. By the same token it feels as if neither of us will be joining Gettr.com […]

Not talking about COVID, just to say I am feeling 100% fine. This Omicron will hopefully be the largest and fast mass vaccination programme in history, whether by God or Government. Nice chart this morning from Greg Wachsteter, who kindly said I could publish. No more comment on COVID, I think the conclusion here is pretty obvious; this chart is therefore bullish S&P Energy. Sankey-Laffer curves. The presentation attached today, made me think what a […]

Of the many fine analysts I have had the privilege to know over the years, Greg Bordelon is clearly in the pantheon. A true oil guy, son of a Mobil Oil man, he graduated in 2000 from Tulane, cut his teeth at Exxon, and moved on to finance at FBR Capital Markets and Millennium, and before spending many years as an oil long-short portfolio manager for Citadel, subsequently running his own firm. I extend deep […]

Quick note today as I have two events. One of my favourite parties, this morning an NY Marathon party in Carroll Gardens adjacent to the running route, which starts at 9am. It is the only party I know of that starts at 9am on a Sunday. And then to the NY Giants game playing the Raiders at Meadowlands 1pm. You can get there easily, getting out involves multiple trains. It is a family tradition to […]

Ezra’s first quarter as EOG CEO and he lofts it out of the park – massive increase in regular dividend, big special, buyback, he is in NYC next week, take a victory lap Pioneer wanes yesterday after weak buyback guidance Apache on fire We like Denbury on CO2 negative oil, and encourage Oxy carbon ventures Sunrun – we expected either a crashing miss or wild beat and massive stock reaction; we got neutral Delek beats; […]

Good day! Happy Hour tonight if you fancy a chat. No special guest, but I am in an extremely good mood as tomorrow I head back to Mexico to go fishing offshore Ixtapa on the Pacific Coast. I hope you are getting some time in August, and the market gods give us quiet volumes and a gentle drift higher. Happy hour registration Link: https://us02web.zoom.us/meeting/register/tZIocuuprTooG9SqNZxj9rgUjl9KZxTOEHAJ The Vix looks more and more tempting, but making money from […]

Tonight Happy Hour 5pm we are delighted to host Steve LeVine, world battery expert and author of “Powerhouse, America, China and the Great Battery War”, editor at large, Medium, “covering the turbulence all around us, electric vehicles, batteries, social trends”. He writes for The Mobilist, and is ex-Axios, Quartz, WSJ, NYT. 5pm ET tonight, https://us02web.zoom.us/meeting/register/tZEtc-2vqz8jGtxwSq3R416BOuVoJD9v1vnE Steve and the debate that follows will allow me to finish my thematic “Electric Vehicles, not so fast”. The fact […]

The note today is delayed by England vs Croatia, thankfully the currently ongoing Austria vs North Macedonia game is not imperative for me to watch.  There are some great slides in today’s presentation. For example on how solar projects do not deliver their IRR, on worrying Indian oil demand, on the global petchem balance by company, and our new mega-theme, of new young CEOs following through on our “Renaissance” theme of US E&Ps. This new […]

What’s Sisyphus’ least favorite band? The Rolling Stones We visited Japan for two weeks and did not see a single ninja. It was really impressive. “Officer, you can’t give me a ticket. I have to go run the marathon tomorrow.” Cop: “That’s not how you play the race card.” The Ketchup shortage this year was so predictable. Heinz sight is 2020. Happy Hour yesterday evening, we had a player whose firm had done a deep […]

Covering global oil markets, you can be sailing along peacefully and from nowhere, a new major event leaves you scrambling. And so a vast container ship blocks the Suez canal. Around 10% of world oil trade and 8% of world LNG trade move through the canal. Quite how the captain managed to hit the side of the canal and wedge the ship remains an open question, but we do know that the Suez is a […]

Morning! Iran and China. Mr. Biden has his hands full with Putin asking for a live debate further to Biden being asked “is Putin a killer?”, that caused Russia to immediately withdraw its US ambassador. Big week for global geopolitics. There is no question that China is becoming ever-more diplomatically, geopolitically, aggressive on a sustained rising basis, and buying oil from Iran through smuggling is clearly at the top of the defiant self-interest list. Official […]

Yesterday’s DOE data was brutal for US refiners and particularly PBF. We had been hoping for a much more bullish picture – we got increases in crude AND product inventories. Imports surged particularly into New York Harbor – hence the PBF reference – as European refiners, desperate for market, scramble to attack the surge in gasoline prices caused by the Texas Crisis. This should be a brutal month for refiners, as the quarter ends and […]

The current energy crisis is much bigger than most people realize. This is a global crisis. The largest energy outage in US history. In the middle of a brutal winter, globally. Stay tuned, this crisis is just starting. An outage of this scale in Texas is world scale. The entire US and Atlantic Basin energy market is based on a core of Texas/US Gulf Coast. A lot of the debate currently is, as so often […]

Trying to get up this morning, I was pondering whether the US military could split and part go renegade. However we continue to believe the US constitution will prevail. Rather a negative start to the day, but I moved on to put together the Sunday Sankey for you, with energy, be it alternative, or regular oil and gas, starting the year very well. We continue to be obsessive about the US$ impact on oil prices, […]

Yesterday was one of those thematic days. “You don’t buy a cheap oil stocks, you buy good management.” We started with an activist getting aggressive on Ovintiv, had a great conversation with the CEO of Northern Oil & Gas, had another activist letter to Delek USA from Carl Icahn’s CVI Refining, and rounded out with Happy Hour. But first, it’s Friday, and that means we start with… What do you call a mythical beast that […]

Well Happy New Year! This week in the Sunday Sankey we run through slides with attention on our refining conference starting tomorrow. It is not too late to register, dear clients… welcome to the slimmed down distribution list that like me, will be on a strict diet. At the same time, tomorrow OPEC meets, believe or not, as they shift to a monthly meeting. JMMC is meeting today, word is Russia is keen to increase […]

We continue to focus on refiners as we move towards our Monday January 4th refining conference. Register interest above. Before moving on to the subject of Valero and renewable diesel, it is worth noting that while the Dakota Access Pipeline situation is a known negative for PSX, as covered yesterday, the company is clearly, alongside Valero, the premium US refiner. In both cases, highly capable and credible managements led by well-established CEOs – Greg Garland […]

Good morning! Back from a week in Springs, out in the Hamptons. In retrospect I should have not only logged off, as I did,  but also deleted Twitter, where the tag of the week was “ATH” All-Time High, and an upsetting drivel of “I told you so” posting on Bitcoin and Tesla, among others. Most interesting Twitter post came from Lightshed, a fellow AnalystHub platform (which hosts Sankey Research for compliance etc) covering media, with […]

Gyms should be allowed to stay open during COVID. The constitution guarantees freedom of the press. Who is Irish and stays out all night? Patty O’Furniture What is Beethoven’s favorite fruit? Ba-na-na-naaaa Further to our bullish refining commentary yesterday on net operating losses (NOLs) carry-forward for refiners, and E&Ps for that matter, meaning that companies will pay little or no income tax through 2021 and beyond, a client notes that “the CARES Act allow refiners […]

Invitation to our all-C-Level conference below. 4th January. In this note we continue our series on refining, which we started yesterday. Two key detail points that are very important, that we will cover during this series: Super bullish: Net operating losses (NOLs) for refiners from 2020 will mean they pay effectively no taxes through 2021 and beyond. On the bear side, renewable identification number (RIN) prices that prove that refiners have met their blending requirements […]

It is a delight to confirm that our 11th annual refining conference is on this year, as tradition dictates, on the first working day of the year, January 4th. Thanks indeed to the loyal CEOs of a heavily consolidated sector who find time at a difficult time of year – board meetings, strategy planning etc – to find time to join us. We will be running six fireside chats, back-to-back, with US independent refiner CEOs […]

*** This note is election commentary-free. We got definitive results last night. From Pioneer $PXD, Marathon Oil $MRO, Apache $APA, Energy Transfer $ET, and Delek $DK, boom, boom! Really notable sell-off on solar stocks which came into the past month flaming hot, and have seen major corrections led by Sunrun $RUN – 31% past month, SolarEdge -22% which compounded $RUN’s weakness with a guidance warning this week, and First Solar $FSLR down -15% this past […]

Three analyst meetings in two weeks: BP, Apple, Tesla. Confirmed by Tesla Battery Day: the Big Oils need to pursue a strategy of “orderly liquidation” in line with our “Renaissance of US E&P” thesis. Cut capex, reduce growth, return cash to shareholders. Orderly liquidation. Shrink to grow value. We are advising a refiner to go private, we have been for years, arguably we have been for all refiners. No growth capex, buy back stock until […]