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Posts from August 2015

Deal means growth for Sugar Land fertilizer company

Posted on August 11, 2015 in

fertilizer

Sugar Land-based CVR Partners said Monday it will buy Rentech Nitrogen Partners for $533 million, becoming one of the nation’s largest producers of nitrogen fertilizer.

The deal excludes Los Angeles-based Rentech’s plant in the Houston suburb of Pasadena, which the companies said in a news release is the largest producer of synthetic granulated ammonium sulfate fertilizer in North America. CVR Partners said Rentech investors will retain the plant, or it will be sold separately.

Rentech unit-holders will get 1.04 units of CVR Partners and $2.57 in cash for each unit of Rentech. CVR Partners said that represents a 20.3 percent premium to Rentech’s value in mid-February shortly before it announced it was exploring strategic options.

CVR Energy formed CVR Partners to own and expand its nitrogen fertilizer business.

“The merger of CVR Partners and Rentech Nitrogen Partners creates a new leader in the growing nitrogen fertilizer industry,” CVR Partners Executive Chairman Jack Lipinski said in the announcement.

CVR Partners CEO Mark Pytosh added that the acquisition of Rentech’s East Dubuque fertilizer facility in Illinois increases its size and raw material feedstock, as well as its geographical diversity. He said the deal expands CVR’s footprint into an area known as the upper Corn Belt region, which has the nation’s largest concentration of users for the direct application of nitrogen fertilizer products.

In a note, analyst Jeff Dietert of Simmons & Company International said the deal looks like a positive move for CVR because of the gains in geography and assets, as well as the potential synergies and the expectation for double-digit distribution growth.

Rentech CEO Keith Forman praised the deal and added that he will return to a focused process to sell the Pasadena facility, before the closing of the sale to CVR Partners.

Oil prices rise, but prospects stay low

Posted on August 11, 2015 in

oil sunset

By Robert GrattanAugust 10, 2015 Updated: August 10, 2015 11:30pm

Oil prices rallied Monday after nearing 2015 lows last week, as traders took advantage of lower prices to fill up portfolios despite fresh warnings that the oil glut could last well into next year.

U.S. benchmark West Texas Intermediate crude futures rose by $1.09 to $44.96 per barrel, ending a four-day losing streak and accompanying a sharp rise in U.S. equity markets. The Dow Jones industrial average was up 242 points to 17,615.17, and the Standard & Poor’s 500 index gained 27 to 2,104.18. International benchmark Brent crude added $1.80 to $50.41 per barrel.

But a return to substantially higher oil prices looked far off Monday, as financial services firm Raymond James joined a growing chorus of market watchers forecasting that it will be 2017 before oil returns to the $60 level it hit as recently as June. And job cuts continued as drilling equipment maker National Oilwell Varco told Texas officials it plans to shutter a plant and cut 110 jobs.

“Thing have gotten ugly in the past six weeks,” said Marshall Adkins, director of energy research at Raymond James. “The drivers of oil prices have gotten meaningfully worse.”

Raymond James analysts said Monday they had lowered their forecast 2016 oil price from $65 to $55 per barrel. The firm expects crude to average about $50 per barrel this year.

The bleaker prediction is about in line with the falling forecasts other firms have put out since oil began to slide from $60 highs earlier this summer. Last week, Moody’s Investors Service said it’s expecting $52 per barrel U.S. oil in 2016, and financial firm Goldman Sachs warned that the market could take longer to rebalance a global oversupply.

The reports are another blow to an oil and gas industry that has been hoping for higher prices since the collapse began last year.

According to the Raymond James analysis, instead of lower prices and less production clearing the glut, U.S. companies have managed to pump more oil on slimmer budgets and international production has surged. Global demand has stagnated as worries about Greece have sapped European growth and a stock market collapse has exposed cracks in China’s economy.

“The bottom line is that even a second straight year of ‘austerity on steroids’ would not result in a balanced market in 2016, but it would set the foundation for a balanced picture in 2017 and beyond,” Raymond James analysts wrote.

Saudi Arabia boosted its oil production to a record 10.24 million barrels per day in the second quarter of 2015, up about 740,000 barrels per day from the second quarter of 2014, according to the firm’s figures.

Iraq also has boosted its oil production and Iran is gearing up to sell its crude oil once again on the global market as part of a deal that would lift international sanctions in exchange for restraints on its nuclear program.

Raymond James estimated that Iraq is producing about 4 million barrels per day, up from an average of about 3.33 million barrels in the second quarter of last year.The pain of sub-$50 oil has once again tightened the screws on U.S. oil companies.

Houston-based National Oilwell Varco will cut 110 jobs in North Texas as it closes a fiberglass system facility in Mineral Wells, west of Fort Worth. It told the Texas Workforce Commission that it will complete the closing in December and will have an initial round of layoffs in early October.

“Due to economic reasons, NOV was not able to provide as much advance notice to some affected employees as it would have liked,” the company said in a letter to the commission. “NOV will make those employees whole by providing additional pay and benefits.”

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