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June 2018

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Changing of the Guard at Wynn

June 13, 2018 – Comments (0) | RELATED TICKERS: WYNN

Steve Wynn has sold his 12 million shares; 4.1 million on the open market @ $180 per share and 8 million shares to two current long-term institutional investors @ $175 per share.    This mostly clears the company from the scrutiny of gaming regulators as Steve no longer has any association with the company.

Ex-Mrs. Steve Wynn is holding 10 million shares, but has not shown any interest in returning to management of the company.    She was forced off of the board of directors in 2015 after raising questions about Steve's antics with a female employee, but now has regained her voting rights and is back with a vengeance.    She has been actively working to shake up the board of directors and redirecting the future of the company.    Wynn Resorts has had five incumbent board members resign since the start of the year.

The long-time or "legacy" members of the board of directors might be viewed as incompetent and/or "yes-men" to whatever vision Steve was pursuing.    When Steve resigned, the board promoted the company's president, Matt Maddox, to the CEO position.    Currently, Elaine Wynn will not talk with Matt, and her spokesperson says, "Elaine's not making a request of management. She's making requests of the board.    Everything is a board issue.    Matt's not on the board.    He has nothing to do with this."    Since Maddox has claimed that as president of the company he had no prior knowledge of sexual misconduct complaints against Steve Wynn, even though so many of the other employees of Wynn were aware of the misconduct, Maddox may eventually find himself in Elaine's crosshairs.

With three mega-resorts in operation and another under construction in Boston Harbor and recently renamed Encore instead of Wynn, the next question is whether the company has the competent leadership to continue move forward.    Steve had aggressive plans for the company to push into Japan and Indonesia.  

Possibilities seem to be to clean house and move forward as originally planned, pull back from some of the plans and perhaps even sell some assets, or possibly another gaming developer will make a take-over offer for the whole company.    For now, Elaine Wynn seems to be at the wheel and the company will follow her vision.  [more]

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Summary US Crude Oil Industry

June 10, 2018 – Comments (0) | RELATED TICKERS: XOM , CVX , BP

The Organization of Petroleum Exporting Countries (OPEC) and its allies started cutting crude oil output in Jan 2017 in an effort to end a global oil glut.  The thirteen members of OPEC and ten other countries reached an agreement with a goal of reducing their consolidated output by almost 1.8 million barrels a day (bbl/d).  This agreement targeted a cut of about 4.6 percent for each OPEC member signing up, with exceptions for two countries facing other difficulties.

Global crude oil demand increases each year by about roughly 1.5 million bbl/d, and total demand is expected to average 99.2 million bbl/d in 2018.  According to International Energy Agency (IEA) data, global crude supply has fallen to about 98 million bbl/d.  This shortfall has helped drawdown the global crude oil stockpiles, which are now reported to be 2.81 billion barrels, or about a 28 day supply.  This drawdown of the crude oil stockpiles is the driving force behind the recovery of oil prices to their 2010 levels.

Signatories to the OPEC agreement have shown varying degrees of compliance.  The largest OPEC member, Saudi Arabia, has cut production more than required.  The largest OPEC ally, Russia, has not met its cut-back goals.  The OPEC members as a whole have cut back production quite a bit more than the agreement required, with only Iraq not meeting its goal.

OPEC and their non-OPEC allies will meet in Vienna on June 22, 2018 to evaluate the current supply and demand situation, and most members will support increasing the output levels.  With oil prices rising above $60, Russia has expressed concerns that an extension of the agreement till the end of 2018 could prompt a spike in crude production in the United States.

Unplanned declines in oil production and major risks to oil exports exist in Iraq’s Kurdistan because of tensions with Baghdad, in Libya where militias are still fighting, in Nigeria the risks of disruptions are significant, Venezuela is on the verge of default and total collapse, Iran is facing U.S. financial sanctions again, and even in Saudi Arabia political risk is on the rise.  At the same time plans are in place to increase production capability in Nigeria, Iraq, and Angola.

Saudi Arabia is preparing for the initial public offering (IPO) of their state-owned oil giant Saudi Aramco and wants crude oil pricing relatively high to support the stock offering.  They're hoping to raise $100 billion through a 5% stake sale later this year.

President Donald Trump said in April oil prices were artificially high because of OPEC and requested that OPEC production levels be increased, especially in light of the US withdraw from the Iran Nuclear Deal.  The resumption of sanctions against Iran does not have the support of the EU at this time, but many European companies are already severing ties with Iran for fear of facing secondary sanctions from the US, which could mean losing access to the US dollar clearing system.  The US sanctions on Iran’s petroleum industry will take effect when a 180-day wind-down period ends on Nov. 4.  When sanctions were imposed on Iran in previous years, their production levels fell by about 1 million bbl/d.

In the US, the shale oil producers have become more active as the price of crude recovered.  The Jan 2017 US production level of 8.9 million bbl/d has increased to 10.8 million bbl/d in Jun 2018.  The EIA forecasts that US crude oil production will average 11.9 million bbl/d in 2019, with West Texas Intermediate (WTI) crude oil prices that are expected to average $64/bbl during the second half of 2018 and first half of 2019.

The quoted WTI pricing is for delivered oil at the major trading hub of Cushing, Oklahoma.  Actual realized prices are affected by the transport costs to get it to where it is needed and those transport costs have recently been increasing due to pipelines reaching full capacity, requiring supplemental rail and tanker truck transport.

Individual Oil & Gas companies also tend to have hedging strategies in place, which limit their profits as oil prices rise.  

An infrastructure buildout is required to effectively handle the increased US oil production, including new pipelines and increased refinery capacity.  First completions of the ongoing expansion projects are expected in mid-2019.

*Production numbers can vary widely between sources.  Numbers used here come from OPEC secondary source estimates and the IEA.  [more]

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It's "Go Away in May" at Rockwell Medical, Inc.

June 02, 2018 – Comments (0) | RELATED TICKERS: RMTI

Recent events at Rockwell Medical signal a possibility of relief for long-suffering shareholders.

May 22    CEO Robert Chioini calls a Board of Directors meeting in response to a shareholder demand letter that alleges breaches of fiduciary duties by various Board members, and to inform the Board that independent counsel had been hired to investigate the charges.

May 22    The accused members of Board of Directors vote to fire CEO Robert Chioini, effective immediately.

May 22    The Company issues a press statement announcing the termination of Mr. Chioini.

May 23    Chioini with the help of VP & CFO Thomas Klema files an 8-K with the SEC claiming the firing was not legal and he was still CEO and board member.

May 23    Board of Directors files an 8-K with the SEC with notification that Chioini had been fired, and now they were going to fire Klema for helping Chioini file an unauthorized 8-K.  [more]

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