Delta Airlines’ deal to buy the Trainer Refinery owned by Phillips66 was formally announced yesterday. The 8K filing is available here and includes the press release and slide show. Until yesterday the deal was being talked about as a way to hedge the fluctuating price of jet fuel oil. But the announcement makes clear that [...]
Over the last few years, natural gas prices in the U.S. have been pounded by a variety of factors. Front and center are the continuing breakthroughs in horizontal drilling and hydraulic fracturing. On top of this, the winter of 2011-2012 was the fourth warmest on record, according to the National Oceanic Atmospheric Administration (NOAA), and [...]
January 18, 2012 – 8:35 am
Monday’s post discussed a proposal by Vikram Pandit, the CEO of Citigroup, calling for a comparison of the results produced by risk models across different banks when evaluating a standardized “hypothetical” portfolio of assets. Exercises like this are standard fare in many research fields where modeling encompasses a broad array of complicated issues, and there [...]
October 11, 2011 – 3:46 am
Hecla Mining Co. is copying Newmont’s strategy. It announced last month that its dividend will be linked to the price of silver: All dividends, including those in the third quarter, would increase or decrease by $0.01 per share for each $5.00 per ounce incremental increase or decrease in the average realized silver price in the [...]
October 4, 2011 – 2:50 am
Earlier this year, the Newmont Mining Corporation announced that future dividend payouts would be linked to the price of gold. For every $100 increase in the average price received on its sales of gold, the annual dividend would be increased by 20¢ a share. From the Newmont deck: What does the promise of a gold-linked [...]
August 17, 2011 – 1:26 pm
I’ve just returned from Europe where I spent part of the summer talking to companies in different European nations. Everywhere I went, the signals are flashing yellow. In Europe, the recovery seems to be coming to a standstill. A poisonous mix of sluggish output, sovereign debt crisis, fragile banks and lack of political will has [...]
The four reactors at Fukushima Daiichi damaged in the March 11 earthquake and tsunami belong to the Tokyo Electric Power Co. (TEPCO). Not surprisingly, TEPCO’s financial situation has become perilous. In announcing its annual results, the company recorded a direct loss of more than ¥1 trillion ($12 billion). This does not include several significant additional [...]
Carolyn Cui and Liam Pleven at the Wall Street Journal have a nice piece today on the competition between gold ETFs and gold mining companies for the investment dollars of gold bugs. Share prices of gold-producing companies have lagged the huge run-up in the price of gold, as well as the broad stock market, for [...]
Commodities markets have been quite agitated in May. The tremors felt on May 5 have not dissipated and recent data on the US economy, the risks of inflation in China’s and the protracted debt crisis in the EU left many traders wary. Prices of precious metals, industrial metals and oil have all dropped. So far, [...]
February 3, 2011 – 8:15 am
Bloomberg had a news article earlier this week that highlights the practical problem of implementing a hedging strategy even in one of the largest commodity markets, jet fuel. Many airlines attempt to hedge some portion of the anticipated cost of jet fuel purchases over the coming year. In large part, they do this by purchasing [...]
