Delta is trying to buy an oil refinery
04-05-2012 | 10:44 AM
#61
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From: A-320A
There is no revenue increase. It's a spending decrease on fuel. A way to reduce the adverse financial impact of volatile fuel prices.
If I were RA, I'd go one step further and look at non-petroleum fuel, but that's an even bigger risk/reward type proposition, especially considering the potential for profiting of the European ETS...
Cheers
George
If I were RA, I'd go one step further and look at non-petroleum fuel, but that's an even bigger risk/reward type proposition, especially considering the potential for profiting of the European ETS...
Cheers
George
If you do want to look at it that way though, it is about a 2.2 billion a year savings in fuel costs by zeroing out the markup we pay elsewhere. This factory would produce about 2.8 bln gallons of gas a year.
04-05-2012 | 10:59 AM
#62
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It may be, but I figured if it produces 185,000 barrels a day at current jet A prices.
Lets see: Public math warning.
@ 140 a BBL * 185,000 bbl of fuel, most of it Jet A, so 25,900,000 dollars in revenue a day.
25,000,000 * 365 = 9.5 billion in revenue a year. Its about a 25% increase in our current projected revenue for fy12, which is 36 bln based on street estimates.
Projections are showing a 160-170 per bbl of jet A so that would be 31.45 million a day or 11.5 bln a year. Aprox 32% of our current revenue. Thanks for maxing me do public math and not a SWAG
Now the average markup is 7% or about 2.170 bln in profit a year from this refinery.
Lets see: Public math warning.
@ 140 a BBL * 185,000 bbl of fuel, most of it Jet A, so 25,900,000 dollars in revenue a day.
25,000,000 * 365 = 9.5 billion in revenue a year. Its about a 25% increase in our current projected revenue for fy12, which is 36 bln based on street estimates.
Projections are showing a 160-170 per bbl of jet A so that would be 31.45 million a day or 11.5 bln a year. Aprox 32% of our current revenue. Thanks for maxing me do public math and not a SWAG
Now the average markup is 7% or about 2.170 bln in profit a year from this refinery.
Public math sucks. I hate doing it as 3:1 is hard enough. But knowing a tiny bit about refineries, I do know that they close fairly often for scheduled maintenance. Usually 4-8 weeks over a year.
If it makes Delta more profitable, great. On that profit note though, I'd rather have a revenue sharing agreement now instead of profit sharing, particularly if this venture pans out.
04-05-2012 | 11:21 AM
#63
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From: A-320A
Public math sucks. I hate doing it as 3:1 is hard enough. But knowing a tiny bit about refineries, I do know that they close fairly often for scheduled maintenance. Usually 4-8 weeks over a year.
If it makes Delta more profitable, great. On that profit note though, I'd rather have a revenue sharing agreement now instead of profit sharing, particularly if this venture pans out.
If it makes Delta more profitable, great. On that profit note though, I'd rather have a revenue sharing agreement now instead of profit sharing, particularly if this venture pans out.
This is generally done when they have to change over from summer blend to winter et al for automotive gasoline. I do not believe this needs to be done for jet A.
Anywho, that is about 5.5 million less bbl's of Jet A per month of maintenance.
04-05-2012 | 11:40 AM
#64
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Joined: Apr 2008
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From: Light Chop
It may be, but I figured if it produces 185,000 barrels a day at current jet A prices.
Lets see: Public math warning.
@ 140 a BBL * 185,000 bbl of fuel, most of it Jet A, so 25,900,000 dollars in revenue a day.
25,000,000 * 365 = 9.5 billion in revenue a year. Its about a 25% increase in our current projected revenue for fy12, which is 36 bln based on street estimates.
Projections are showing a 160-170 per bbl of jet A so that would be 31.45 million a day or 11.5 bln a year. Aprox 32% of our current revenue. Thanks for maxing me do public math and not a SWAG
Now the average markup is 7% or about 2.170 bln in profit a year from this refinery.
Lets see: Public math warning.
@ 140 a BBL * 185,000 bbl of fuel, most of it Jet A, so 25,900,000 dollars in revenue a day.
25,000,000 * 365 = 9.5 billion in revenue a year. Its about a 25% increase in our current projected revenue for fy12, which is 36 bln based on street estimates.
Projections are showing a 160-170 per bbl of jet A so that would be 31.45 million a day or 11.5 bln a year. Aprox 32% of our current revenue. Thanks for maxing me do public math and not a SWAG
Now the average markup is 7% or about 2.170 bln in profit a year from this refinery.
The way I read it, only 4 gal of the 42-44 gallons of oil in a barrel can be made into jet-a. Or can you make 100% of a barrel into jet a?
====
The editorials and news articles are particularly nasty to this whole idea, especially Reuters. So it must be a home run. I mean how seriously should we take a news source that posts pics of our airplanes from 3 paint schemes ago?
04-05-2012 | 11:41 AM
#65
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Joined: Apr 2008
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It may be, but I figured if it produces 185,000 barrels a day at current jet A prices.
Lets see: Public math warning.
@ 140 a BBL * 185,000 bbl of fuel, most of it Jet A, so 25,900,000 dollars in revenue a day.
25,000,000 * 365 = 9.5 billion in revenue a year. Its about a 25% increase in our current projected revenue for fy12, which is 36 bln based on street estimates.
Projections are showing a 160-170 per bbl of jet A so that would be 31.45 million a day or 11.5 bln a year. Aprox 32% of our current revenue. Thanks for maxing me do public math and not a SWAG
Now the average markup is 7% or about 2.170 bln in profit a year from this refinery.
Lets see: Public math warning.
@ 140 a BBL * 185,000 bbl of fuel, most of it Jet A, so 25,900,000 dollars in revenue a day.
25,000,000 * 365 = 9.5 billion in revenue a year. Its about a 25% increase in our current projected revenue for fy12, which is 36 bln based on street estimates.
Projections are showing a 160-170 per bbl of jet A so that would be 31.45 million a day or 11.5 bln a year. Aprox 32% of our current revenue. Thanks for maxing me do public math and not a SWAG
Now the average markup is 7% or about 2.170 bln in profit a year from this refinery.
Some of your assumptions are faulty. A barrel of crude oil is 42 gallons. After refining it actually produces 44 gallons of petroleum products.
One can probably tweak the mix of petroleum products a bit, but typically that barrel of crude produces 19.65 gallons of gasoline, distillate fuel oil is next at 10.03 gallons, and jet fuel is third at 4.07 gallons.
This can also change depending on the source of the crude oil.
So the 185,000 barrels per day of crude equates to about 753,000 gallons of jet fuel per day.
04-05-2012 | 11:41 AM
#66
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Ahhh. Makes sense now.
I am all for it if they have seriously done their due dilligence. Just as long as this does not become some Dick Ferris and Allegis blunder.
And if it does, don't come asking us to bail them out
04-05-2012 | 11:57 AM
#68
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From: A-320A
Does the Trainer facility make 185,000 bpd of Jet A or does it process and produce 185,000 bpd of petroleum products?
The way I read it, only 4 gal of the 42-44 gallons of oil in a barrel can be made into jet-a. Or can you make 100% of a barrel into jet a?
====
The editorials and news articles are particularly nasty to this whole idea, especially Reuters. So it must be a home run. I mean how seriously should we take a news source that posts pics of our airplanes from 3 paint schemes ago?
The way I read it, only 4 gal of the 42-44 gallons of oil in a barrel can be made into jet-a. Or can you make 100% of a barrel into jet a?
====
The editorials and news articles are particularly nasty to this whole idea, especially Reuters. So it must be a home run. I mean how seriously should we take a news source that posts pics of our airplanes from 3 paint schemes ago?
Like I said, public math, and math made easy. It effectively will add 7-12 bln to the revenue, or as George puts it, reduce our Jet A viability by about 2 bln dollars a year. That is about a 10 fold increase in savings based off of what they have touted in investor calls.
04-05-2012 | 12:49 PM
#69
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From: LAX ERA
I understand Bar's wine analogy but what happens when you drop off wine at your favorite NYC restaurant but you want to drink some of it in SFO? Or AMS?
Overall, I agree with what they are trying to do. I'm just having a hard time understanding the world wide logistics.
Overall, I agree with what they are trying to do. I'm just having a hard time understanding the world wide logistics.
04-05-2012 | 01:13 PM
#70
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From: A-320A
When we go and buy jet A in AMR et al, and pay market there, we are offsetting that price by what we are selling with a built in margin. It effectively negates the price bump in AMS et al.
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