You're very welcome. It seems Saudi Arabia maybe be tailoring output for crude to be around these levels. To me this should be fine as economic output benefits a fair amount. The US also remains on track for growth, so not withstanding the recent sp drop and market volatility, Hydrodec can kick up a gear as reactors come on stream. Recap We've heard that the pre-planned US expansion is progressing as originally planned, that is to say, the strategy for doubling capacity has not been delayed by the fire. Without more details or indeed greater knowledge in the business, insurance can be said to act as if the old reactors were running. What we lose is any potential to expand from that amount set last year. That was why gaining a positive EBITDA from Sept was pretty important, I don't know how they worked out coverage, but those months must've helped a lot. Although physically they couldn't have expanded I'm sure the board are still pursuing new customers/business as we near start-up, as well as reengaging with existing clients. Co-location in Australia is on schedule, but not sure if this still eventually includes up-scaling the business. We can't have that until the first part is complete, so unless told otherwise, I assume that forms part of the plan. The other milestones, including further news concerning UK growth, i.e lube/industrial and transformer oils, will hopefully come in due course. I made some far out passing comment about Japan, since the US/GB is historically strong against the yen, I wonder if the CEP design could be used in Japan. I'm pretty sure that although all scenarios must form part of board discussions, that isn't likely. It certainly helps to have a working plant design if your seeking partners, as this widens the scope of potential third parties.
Oil price relationship
Mastic msny thanks,Very helpful
Dame Mary Archer
In my opinion I think this is a very good development. I imagine Lord Moynihan had some influence in this latest signing. For a country like the UK with declining oil production and poor energy security, and of course ruinous green policies*, companies like Hydrodec should get much better attention and financial incentives... as do certain industries that have no track record of viability, unlike Hydrodec. Contacts within governmental circles are always helpful, if you haven't connected the name Archer yet, I'm pretty sure she is the wife of another famous Archer... I've seen her make her own TV appearances and with her Husband. *to be clear, I'm not against 'green', which is actually better served with words like sustainable, but the implementation of said green policies.
RE: Not good maths
Hi Ups1de, I will try to answer, in a general sense rather than with specific calculations, which I used to do a lot some years ago, but without reliable inhouse data, leaves too much room for error. Firstly, if the crude price heads north, it doesn't automatically mean that the Superfine sale price increases and therefore margins. It doesn't work like that, at least with respect to the rerefining industry. A very crude (no pun intended) measure is WTI benchmark vs No2 Diesel oil for price performance. Over the years HYR have fought the battle to improve the resale perception of their product, which was hampered by the industry discount for 'recycled' goods... which Superfine is not, it's a different process producing a superior (over virgin) product. The evidence is that this battle was being won, added to additional production improvements, scale etc, margins were improving slowly, even through periods of unfavorable feedstock costs. Your right that margins are small, that's why the rerefining industry has been consolidating, i.e. between collectors and refineries. e.g the deal with G&S. The deal is key for both parties to gain market share, improved margins and more stable costs. The calcs aren't quite right and you can't compare the two in that manor. The cost to produce 1 barrel of oil varies wildly, anything from $40 > $100. Many newer plays will be under water with prices around $80, hence why Saudi Arabia is allowing the price fall. (hits Russia and specifically the US) In Hydrodec's case, as long as the feedstock channel can on average cope with the fluctuating price, and as the move to higher quality oils continues, margins should 'on average' be no worse than they are. Again, I point to the G&S deal, in the past it wasn't margins per se that were the problem, but getting enough feedstock to ramp up production. Lastly, before the fire, from around Sept moving into Dec, the company achieved an important and historic milestone, a positive EBITDA run rate. Now this doesn't tell you the whole story, but is a good indicator as to the current business model.
19 Oct '14
Not good maths
Did a bit of digging: are my maths correct: 1US oil barrel=159l; so fresh oil production cost per litre:50cents($80/US brl);HYR revenue per litre>$1 /Gross margin :30cents.Surely the recycled oil 'premium' would have to close the gap vs new oil..Cannot see how HYR can make real money if this oil price holds& if production cost for recycled remains around 70 c a litre.YesBusiness model gearing works if oil price heads North but with declining global demand/US shake supply/current Saudi lassez faire attitude to new norm then it doesn't look good for when HYR bring production back in stream. One to watch closely
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