Lost Coast Capital

[Lost Coast Capital @lostcoastcap]

1/ I continue to view Par Pacific ($PARR) as the most differentiated public refiner and expect a massive Q2 print (>15% of market cap in FCF) driven by historic system-wide crack spreads and contractual pricing lag that pushes Hawaii’s March strength into Q2.

[Lost Coast Capital @lostcoastcap]

@MiloshOffical @OilCoIntern @ericnuttall One pillar of the bull argument is that futures/ valuations are dislocated from fundamentals because the normal pricing mechanism has been degraded by induced volatility (from false headlines and maybe indirect intervention). Speculative longs forced out = less price signal

[Lost Coast Capital @lostcoastcap]

@PolyluminaMed @OilCoIntern Commercial inventories are drawing down now despite the massive SPR release. Not sure how that squares with “nowhere to store the stuff”.

[Lost Coast Capital @lostcoastcap]

@gbrew24 He doesn’t seem to be aware of underlying crack spreads since this is directed at retailers and state gas tax rather than refiners.

[Lost Coast Capital @lostcoastcap]

@CaptnForesight $62

[Lost Coast Capital @lostcoastcap]

@CaptnForesight $61 now

[Lost Coast Capital @lostcoastcap]

@UnintendedCons5 Now do distillates

[Lost Coast Capital @lostcoastcap]

@ThHappyHawaiian Expect cracks to be structurally higher for at least 1-2 years (will come down in an oil spike but still above pre-war due to tight inventory and damage to Russian refineries). Check out $PARR given the hawaii connection (owns only refinery in the state and Hele gas stations).

[Lost Coast Capital @lostcoastcap]

@TMTLongShort Iran is not going to escalate in the near term. Their recent strikes have been restrained, just enough to impair transits without giving US casus belli. Their best bet is to drag this out while oil inventories continue to draw and then escalate in the fall so Trump loses midterms

[Lost Coast Capital @lostcoastcap]

@punishedforest @ThHappyHawaiian Pretty solid ETF, but has some exposure to international conglomerates. I would just create a basket of a few US refiners. $parr (small refiner with monopoly in Hawaii) and $mpc (large cap compounder) would be my main picks

[Lost Coast Capital @lostcoastcap]

@DeepDishEnjoyer @DarioCpx I would argue that we didn’t see that much price-driven demand destruction. Product inventories drew aggressively, indicating robust end-user demand. “Destruction” was driven by supply disruptions which caused refiners to cut runs (and driving selective rationing in Asia)

[Lost Coast Capital @lostcoastcap]

@SBates8019 @DonMiami3 Cushing inventories drew down over 50% between April 13 and November 2, 2007 (28.0 -> 13.4mm). WTI increased roughly 50% over that period (~$64 -> $96).

Interestingly, the correlation flipped and prices continued rallying to $145 ATH while Cushing inventories built back to 22mm

[Lost Coast Capital @lostcoastcap]

@SigEStructure Also has the higher distillate mix of all public refiners

[Lost Coast Capital @lostcoastcap]

@SigEStructure $PARR is my pick. Differentiated small refiner with focus on isolated markets with limited competition (owns only refinery in Hawaii). Exposure to Singapore crack spreads which have been tight. Strong balance sheet and track record of using windfall to retire shares.

[HFI Research @HFI_Research]

3-2-1 crack spreads continue to move higher.

Timespreads have bottomed.

Note: divide 3-2-1 crack spread chart by 3

[Lost Coast Capital @lostcoastcap]

@Alyosha745 Not all of that oil is available for delivery. Recall that there was still plenty of storage available when oil went negative in 2020. There can be stress in the market without ever running into the operational limits.

[Lost Coast Capital @lostcoastcap]

@UndervaluedOnG $PARR

[Lost Coast Capital @lostcoastcap]

@tleilax___ @chinadecouple They can reach western Iranian sites (incl. much of their energy infrastructure) without tankers or with their own aging tanker fleet. If they wanted to go rogue to restart the war, they could strike without US support, just wouldn’t be able to sustain strikes deep in Iran.

[Lost Coast Capital @lostcoastcap]

@ThHappyHawaiian We're seeing the worst fears from 2022 actually play out on top of the disruption in the Strait of Hormuz and with lower product inventories to boot. Expect structurally higher crack spreads. US refiners are selling off despite crack spreads increasing which makes no sense.

[Lost Coast Capital @lostcoastcap]

@KEDM_COM $PARR

[Lost Coast Capital @lostcoastcap]

@calvinfroedge Refiners are going to print. Much harder to manipulate product prices given the thin inventories, so crack spreads should remain structurally higher. Sector is historically hated, so need to wait for Q2 results for market to fully grasp. $PARR should print 15-20% FCF in Q2 alone