At 4p its like buying something for its value, anything else will be a bonus, So when you look at other companies on 5 or 10 times earning etc, go buy them, because this is at or around par value, which is why its holding here until news.
With G&S buying into Hydrodec in 3 phases, we obviously lose 49.9%* of the business but then presumably, G&S take responsibility for debt equal to their ownership position.
* There's no question for me, whether this is a good idea or not. The JV is the reason that Hydrodec managed utilisation at rates of 90%+, just before the fire knocked us back 18 month. Ultimately 50.1% of a much larger pie is a pretty good trade off.
To highlight the incentive for G&S to take up the last 12.5% (phase 3) to trigger the expansion to 10 trains. If and I say if, Hydrodec can show in 2016 a steadily improving bottomline, the UK plant gets permission/financing etc etc... so still plenty of execution risks, then G&S have the option to buy 12.5% @ $1.7 million, for a company with a book value approaching $90 million. With a healthy discount from the $10+ million a 12.5% would normally cost, I'd imagine they would be actively pushing the project... not withstanding the fact that it would also mean increased volumes of their feedstock being processed into higher value product.
2) Demand has indeed shrunk for fuel oil but the key driver for OSS is not being able to process enough to keep utilisation rates high. The narrowing in competition for feedstock, that could result from the new legislation, would mean this problem going in reverse.
When I mentioned in a previous post that legislation needed to catch up, I had completely missed what was coming in April 2016. The UK will be a drag factor for a while as any changes will always take time to show up in the numbers.
It's off topic and I've already said that oil price per se isn't the story but as I find the whole subject interesting I'll add a small comment.
We might be finally reaching levels that have a longer lasting impact on the industry. Although some of the previous price drop can be attributed to the power of the US dollar, the only cure for these persistently low prices, is rapid falls to the point that drillers stop drilling, with years of future investment curtailed. That said, too high prices come with their own problems, choking off world economies and increasing competition for feedstock... so it's swings and roundabouts.
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