The Trust pays a quarterly distribution based on it’s entitlement to 16% of Hilcorp’s (Formerly BP’s) Prudhoe Bay properties’ production volumes, which currently nets out at close to 1m barrels/Q.
1/n⬇️
The costs to the trust aren’t tied to Hilcorp’s actual quarterly OpEx @ those properties; they’re a calculation based on a chargeable cost which increases at a fixed $ amount annually (currently at $32.00/bbl for ’22, and will rise by $2.75 in every subsequent year).
People are making the case that Russian #Oil and #Coal are fungible, and will make their way into global supply via eastern markets or huge discounts no matter where the war in Ukraine heads.
They will, but that’s missing the point.
Thread Time 1/n⬇️
First, a lot of those barrels and tons don’t have easy 1:1 alternative markets. For instance, Europe’s thermal plants and steel mills are tailored to Russian Kuzbass, Donets, Pechora coals - buyers can adjust mixes to an extent, but…
2/n ⬇️
Feb 15, 2022 • 6 tweets • 2 min read
Thoughts on $ARCH earnings:
Already basically net cash, expects ARO 80% paid down this year.
Capital Returns Plan is to split discretionary FCF (ex Capex & ARO funding) 50/50 between:
1) Quarterly div
2) buybacks/spec divs/ dealing with convertible in some fashion.
⬇️ 1/N
- Say CapEx comes in around ~$130m for the year, contribution to Mine Retirement fund @ $100m...
not unreasonable at all to guess at ~$300m in returns coming to shareholders through Q2-Q4
Ordinarily, steel px leads coking coal indexes, and I’d run as far as I could from the ferrous supply chain while HRC/EHR fall of a cliff (which they are).
However… 1/n
FOB AUS coking coal is trading above $430/tn (ATH’s) in the middle of china’s seasonal crude steel slump. 2/n
