January 11, 2010 at 1:30 am #2811
Early Edge: Valero Energy, Baidu Inc., AOL Inc., and Beazer Homes USA
The oil refiner is in talks to unload its shuttered Aruban refinery
by Elizabeth Harrow (email@example.com) 1/6/2010 9:29 AM
Today’s column includes a potential refinery sale for Valero Energy Corporation (VLO), a new online video endeavor from Baidu, Inc. (BIDU), a lukewarm analyst note for AOL, Inc. (AOL), and a major stock and debt offering from Beazer Homes USA, Inc. (BZH). Each day, Early Edge focuses on the hot stocks in the news and gives you a unique insight into each stock’s sentiment backdrop. Our time-tested contrarian approach centers on options, and gives you the trading tools to approach the day with a much-needed edge over the investing herd.
Valero Energy Corporation
A spokesman for Valero Energy Corporation has announced that the oil refiner is in talks to potentially sell its shuttered refinery in Aruba, confirming a Reuters report on Tuesday. The newswire names PetroChina (PTR) as one of several interested parties looking to acquire the refinery. The facility, which was closed down in July, has the capacity to process 235,000 barrels per day of oil. Valero has been looking to sell the refinery for roughly a year.
Lisand Besselink, a spokesman for Aruban Prime Minister Mike Eman, also confirmed that the two companies “are still in negotiations.” He added that Aruba is eager to see the refinery back up and running, explaining, “It provides 30 to 35 percent of our GDP and keeps many Arubans employed.”
VLO is up 1.2% in pre-market trading, with the stock extending its recent journey above resistance from its 20-week moving average. If the shares can maintain their foothold above this trendline through Friday’s close, it would mark the first weekly breach of this resistance level since late October.
During the short term, heavy out-of-the-money put open interest could help to keep VLO afloat. The stock is trading north of nearly 49,000 contracts spread across the January 2010 15, 16, and 17.50 strikes, and the unwinding of hedges related to these puts could provide a tailwind as expiration draws closer.
January 11, 2010 at 1:08 pm #5856
Humberto De CastroParticipant
Radio Stations in Aruba are reporting that Baidu + AOL are interested in purchasing the Valero Aruba Refinery based on this article. A gentleman by the name Tjong Ayong is claiming to have spoken to you about this news posting and is backing his claim that a Chinese Search Engine is interested in the Aruba Refinery. Clearly a misinterpretation of information
January 11, 2010 at 4:37 pm #5854
Yes you are right it is a complete misinterpertation of the information. Clearly Edge was listing several (and completely separate) investment opportunities the full article reported on.
My focus was on the PetroChina & “several other” offers interest in the Aruba refinery and at the time I only remembered that the lead in article had also mentioned the Baidu viedo endeavor. I said if Baidu was one interested parties it would not be creditable because they have no integrated interest or overlaping products.
Both Petrobras & PetroChina had been mentioned in the past as creditable interest for a refining purchase but Petrobras had walked away due to Valero asking price + need for substantial investment for a FCC+Alky unit. Aruba refinery is like donught refinery lot front end capability + back end capability with coker but no middle units to make any gasoline and that is significant problem. I also mentioned that I see Aruba being sold or restarted in the future but the short term is going to hurt due to problems with lack cheap heavy crude discount (both Maya & Venezuelan) that is due to more miss-management/re-investment and not lack reserves to develop. Once crude margins & cost discount return the the purchase interest Aruba will too. Both Mexico & Venezuela cannot stay on thier current course since the Crude provides both countries base revenue and tax base and they were arlready in critical condition before the financial crisis due to large decrease in annual sales volume of heavy crude.
I believe the Aruba folks believe PetroChina is more likely to use Aruba as transhipment base and were hoping for any new or creditable name to encourage thier folks and the government since the refinery provides 35% of their tax base & provides over 750 folks with jobs.
I declined to be used as source on this article and that I only posted the article from public sector and had no inside information on any of the deals being discussed by Valero.
Communication is tricky at best & I am very sorry for my part in the miscommunication. But I dont think having the wrong name on the right eventual conclusion that also gives folks in Aruba a little hope now, warrents a lot of self flagulation for the error at this point.
I do thank you for helping us correct the info in timely fashion however.
January 11, 2010 at 6:01 pm #5852
Humberto De CastroParticipant
The people of Aruba and the Government are getting desperate in my opinion as the refinery has been “shutdown” since September 11 2009 and still no deal has been reached, also due to the lack of information us “locals” have. A lot of political promises were made by the current party in power and the party before in terms of reaching an agreement before last years election.
Up until now, the only information us “locals” have received is that Petrochina is in talks to purchase the operations from Valero and that there are some other interested parties that want to remain unidentified. A couple of months back a company by the name of “Arevenca” was rumored to be interested in purchasing the refinery in Aruba and Curacao and there were also rumors of a local investment group interested in the operations.
The refinery in Aruba is going into it’s 5 month of inactivity in terms of any projects being awarded to contractors, excluding the Power House #3 Project which will be completed in the coming months.
Valero has not laid off any employees from their workforce in Aruba, but has “shutdown” any refining activity. Obviously this means that operational costs are higher then the revenues and for a company wanting to sell its assets to get a stronger cash position, this move is a bit confusing. In my opinion, Valero is either waiting for the market to balance itself out again until the desirable discounts on the Maya &Venezuela Crude can be obtained and restart operations or they believe that it is more attractable to maintain the refinery with its workforce in order to reach an agreement. The only current source of income Valero Aruba has is its marketing and distribution of jet fuel, diesel and gasoline products on the island which is controlled by the company.
In regards to the misinformation giving by the local “reporter”, I want to inform you that it was done on a local radio station claiming to have spoken to you via telephone and even had a recording of the conversation. That is how I was able to find this thread as he publicly stated your name and referenced this website in his claim. I have strong ties to the refinery and to me it is irresponsible that an individual is making false statements using other people’s information and especially misinterpreting them and giving the local population false hope.
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