Resembling a few of the Congressional races from the recently completed election, in this Fool's opinion, the future of this specialty refiner remains too close to call.
Calumet Specialty Products Partners
The good
After a series of difficult quarters, gross profit from the specialty products segment more than doubled to $66.1 million. Thanks to the completion of the long-awaited Shreveport refinery expansion in May and the Penreco acquisition in January, sales volume for the segment increased 25% despite challenges relating to Hurricanes Ike and Gustav.
The good news didn't stop there. The Shreveport expansion increased Calumet's capacity to process cheaper sour crude, which rendered refiners like Valero
The bad
Continued uncertainty surrounding Calumet's ability to comply with the covenants of its debt obligations represented the big red flag that gave me pause last quarter. The tone of the company's latest discussion on the topic struck this Fool as somewhat less foreboding, indicating that improved operational conditions had "significantly enhanced" the company's ability to maintain compliance. Still, the conservative Fool may well decide that any stated risk of default in the midst of an historic global credit crisis is too large a red flag.
And the ugly
But wait, the flag grows larger. We're all familiar with the role that derivative instruments have played in our present financial crisis, even as they buoyed recent results from energy producers like Chesapeake Energy
Further Foolishness:
- Derivatives paid off for Anadarko.
- Valero's looking to refine its balance sheet.
- At least Holly has a pretty balance sheet.
