This May Be The BEST Energy Shipper Story Of The ALL
Hey Subscriber,
NEW SHIPPING PLAY $LPG is the LPG shipper Dorian LPG Ltd. buy under $20 TODAY! Target $30
#1 reason I just love $LPG is it has joined many other energy world companies and has gone to variable amount dividends based purely on net cash flow per quarter (and not special dividend where the dividend is immediately taken out of the trading and option price).
Key Point: BUT YOU HAVE TO OWN $LPG stock TODAY to get the $2.50 dividend!
FYI it has already paid a $1 dividend in January--and if you do that 2022 dividend math at its current price of $18 ish (with at least 2 quarterly dividends to go) $3.50 of dividends is at least 19% of dividends in 2022--but every $1.80 dividend more is another 10%.
Beats working!
BTW: This is a NORMAL dividend...some of the $2.50 will come out on the pay date but the good news on the regular $1 dividend pay date slippage was a few cents.
Again, you HAVE to buy the stock by TODAY to get the $2.50 ok?
As I said in today's update (the 36th of the year--OY!) there are many reasons why $LPG is now my fave shipper ever--but the big reason is they ship LPG aka Butane and Propane to China and Japan via the recently opened extension to the Panama Canal and they are one of the few Liquid PROPANE Gas LPG shippers to China.
Why does that matter? Because Butane and Propane are Natural Gas Liquids (NGLs) and they are the primary input to making PLASTICS of all kinds--and China literally has very little native oil or natural gas from which these NGLs are produced.
How is it that China became the largest fabricator of plastics in the world without reserves of natural gas and oil from which all plastics are created?
How did China become the biggest maker of steel without iron ore?
THEY BECOME the biggest importer!
Here is a little primer on LPG (and the whole story here for our engineer subscribers and you KNOW who you are!)
Natural gas liquids (NGLs) are a group of hydrocarbons that includes ethane, propane, butane, isobutane, and natural gasoline. NGLs are differentiated from one another by the number of carbon atoms in their molecular chain. They have a wide variety of applications from specialized fuels (e.g., propane, butane) to petrochemical feedstocks for making products like plastic and fertilizers.
NGLs are extracted as byproducts in the production of natural gas and oil. Of these two sources, natural gas processing is by far the most significant, contributing over 90% of NGL production in 2016. When extracted from a well, natural gas is mixed with other hydrocarbons—many of them NGLs—and various impurities. In order for the natural gas to be marketable, the NGLs and impurities must then be removed. The separated NGLs may then be discarded or undergo further processing in order to be sold.
The relatively high value of NGLs combined with the rise in natural gas production has led to a rapid rise in NGL production as it has become more economical for processors to sell the separated NGLs.
The United States is by far the largest producer of NGLs in the world, accounting for more than a third of global production. Domestic NGL production has more than doubled in the 10 years since 2010, reaching 1,381 million barrels in 2020. Ethane and propane are the two most prevalent NGLs, and together they account for more than 70% of all domestic production.
As NGL production has risen, it has increasingly outstripped domestic consumption, which has remained relatively flat since 2010 (when EIA began to collect data). Consequently, 37% of U.S. NGL production was exported in 2017. Canada, Japan, and China are currently the largest importers of U.S. NGLs.
The rapid growth of NGL production has also outpaced the development of supporting infrastructure. NGLs are expensive to transport and handle—requiring high pressures and low temperatures to keep them in a liquid state for shipment. A network of processing plants and distribution methods is necessary to move NGLs from well to market.
The other key point? LPG shipping day rates are at historic highs...and with the new Panama Canal extension now open, LPG super-sized ships take far fewer days to get to China.
And who owns and leases the most LPG super-sized tankers ships in the world?
Dorian LPG.
All shipping sectors are at or near historic highs (The "DeRussification" of Western Energy is the primary cause--longer trips and not enough ships) but bulk shippers and LPG shippers at records since 2008. This from the bibles of shipping rates Clarkson:
"Shipping’s bountiful start to 2022 is reaping big profits across the main sectors for the first time in years.
The ClarkSea Index is a useful barometer of shipping fortunes. Created by Clarkson Research Services in 1990, the weighted index of the tanker, bulk carrier, containership, and gas/LPG carrier earnings recorded its highest annual average last year since the boom period of 2008.
The good times have rolled comfortably into 2022, with the one element missing from the party – tankers – now firmly getting in on the act too.
However, it is in the tanker and LNG/LPG sector that earnings see the most pronounced turnaround, helping propel the overall index higher. In the first half of April average tanker earnings have jumped to around $40,000 a day, in the top 10% of all values since 1990, and are a dramatic improvement compared to an average of around $8,000 a day between mid-2020 and February 2022."
Thus why do we own tankers, bulk shippers, LNG, and now LPG shippers--with the new East/West Cold War 2.0, happy days are here for basically all shippers since
1) More ships are hitting their legal life limits and being taken apart for steel than new ones (ex-LNG--there is a race to build new LNG ships for US/Europe routes)
2) Hundreds of maritime transport ships that do not meet new environmental rules are either scrapped or have to travel 20-30% slower to meet high regulated and measured emission standards.
2) The supply/demand imbalance aka "S-Curve" of positive demand velocity will last years given it takes 2.5 years to build a new LPG or LNG ship
3) We have a 3-year runway of firm rates in the new Cold War 2.0 DeRussiafied weaponized energy world. *|FNAME|*
AT THIS DIVIDEND rate, LPG could easily be a $30 stock with a $6 dividend!
In shippers we trust!
Toby
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