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Gold/Mining/Energy NGL to da moon (well, maybe to $10?)!!

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From: Elroy	4/9/2024 9:35:56 PM
	1 Recommendation of 109

Lets see, the first press release said they're paying 54% of the arrearage, and the second press release said they're paying the rest. So...... NGL-B gets $3.022 first and then $2.475 second, for a total of $5.50, all earned by April 19th. NGL-C gets $2.679 first and then $2.186 second, for a total of $4.87, all earned by April 19th. After that I guess these guys pay regular dividends each quarter, with a yield about 12.8% on a $25 face value, that's $0.80 per quarter. We gonna be rich!

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From: Elroy	4/18/2024 7:03:42 AM
	of 109

The preferred dividends hit my account. The second part of the second arrearage was earned yesterday, and will be paid in a week. I wonder where the B's and C's will trade today.

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To: Elroy who wrote (72)	4/19/2024 1:39:53 AM
From: FIFO_kid2	of 109

In FRMO's 2024 3rd quarter conference call had some very interesting commentary about the water disposal business especially if you own land in the region. One is the current massive inflation rate involved zero costs to the owner and the current trend of rising rates well above inflation continuing to be very positive. I wonder what size land position the partnership holds or has rights to for water disposal.

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To: FIFO_kid2 who wrote (73)	4/19/2024 7:38:04 AM
From: Elroy	of 109

the current massive inflation rate involved zero costs to the owner and the current trend of rising rates well above inflation continuing to be very positive. I wonder what size land position the partnership holds or has rights to for water disposal. What do you mean? "Rising rates" of what? Interest rates? Rates per barrel to transport water? What rates? NGL just sold some land for $70 million. I don't really know what other land items they have on their balance sheet. What is the relationship to land and land rights to what you are discussing?

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To: Elroy who wrote (74)	4/19/2024 7:58:44 AM
From: Elroy	of 109

This is the bit from the call he was talking about. I can't make heads or tails of what it means.... --- The addition to oil and gas, what comes out of ground for every barrel of water you pump down there, it’s roughly 5 barrels of oil, which is called, I mean, 5 barrels of water, which is called produced water comes up. What are you going to do with it? You got to put it somewhere. You can’t transport it very far. It’s too expensive because water is heavy. You can make some efforts to recycle it, and it’s done in some cases, but it’s a lot of water and it’s very expensive. So what they do with this is they dispose of it by pumping it back into the ground. Now to give you an idea of the magnitude of the problem, I say a barrel of oil, very few people know what a barrel oil is, a barrel of oil or a barrel itself a barrel of water. It’s 42 gallons. No one knows what a barrel looks like, if we do gallons, everyone knows what gallon looks like. So you take 8 million barrels times 42 million — 42 barrels per each barrel of oil, multiplied by doing this right, yes. So it’s 8 million barrels of oil, 42 gallons in a barrel. So now that’s 336 million per day times five. That’s 1.68 billion to be gallons of water had to be disposed of each and every day. So the value to land is what’s under the land. And the — there’s only a finite amount of land that can be used for that purpose, and we’re going to run out of land one day. So the price for injection in produced water keeps going up. It used to be, a couple of years ago, $0.01 a barrel. Now it might be $0.06 a barrel and $0.50 or even $1 a barrel on day is readily conceivable. So if you start figuring in how much, let’s say, let’s say, an acre of land. And let’s say, for a year, I’m making up numbers, just to give you — show you how huge these aren’t real numbers. So let’s say you could pump 60,000 barrels of water into the ground every day for a finite period of time. Well, 60,000 barrels of water is in terms of gallons, 2.5 million gallons a day. So if you’re getting, let’s say, $0.01, well, let’s say you’re getting $0.10. So that’d be $6,000 a day. So you could do it for 365 days. Maybe they’ll do longer. So that’s $2,190,000 with no expense associated with just giving somebody right to put water on your property, underground. So let’s do it again. It’s 60,000 barrels a day, if that’s what the number was. It’s $0.10 a barrel. $6,000 a day, times 365 days at $2,190,000. They can only do it for a year. The acre of land this has no meaningful assets on it, that acre of land, maybe you could buy it for $500. That’s what they valued at. But if only for a year, you get $2,190,000 and you still have the acre surface land is still there. Next thing, easements. Eventually you’re going to run out land and go further out? Well, you can’t put any more water in that acre, but you got to bring the water somewhere else and somebody has to have a pipeline that traverses your land and you get a lease on that. So the acres you save worth $500 an acre. Well, what do you think they’re going to charge somebody for right away. I think it’s $500 a year. Even it was that’s 100% return on capital. What if it was $10,000 a year? What if have you had 400,000 acres and all you got was an easement, $10,000 a year. Well, it’s 400,000 acres of Class B land, $10,000 a year. That’s probably even $1,000 a month. See what that is, that’s $4 billion would it be cash flow with no expenses against it. This is the after the produced water. So I think those figures I can do other kind of things. I think those figures speak for themselves. People that know about them because the produced water problem only became a big deal a couple of years ago. And numbers have not gotten to the size and the price to dispose the barrels have not gotten to a level where it’s a problem. But it’s rapidly going in that direction. So that’s the value proposition among other things, I would say.

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To: Elroy who wrote (74)	4/19/2024 9:28:32 AM
From: FIFO_kid2	of 109

It would be much easier if you look at the FRMO's 3rd quarter transcript but basically what it said is the renumeration for those who store produced water from oil and gas operations has gone from 40 cents a bbl to $2.50 with no costs to do so that is a 500% increase as it is injected into the land and that water in a dry region is an asset. Perhaps that is the main reason why the company has become a money machine with its very high free cash flow. I wish this company would just ditch the MLP structure.

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To: FIFO_kid2 who wrote (76)	4/19/2024 10:34:39 AM
From: Elroy	of 109

I did look at the transcript. I posted what I thought was the relevant commentary in the next post, although it was a bit hard to follow. renumeration for those who store produced water from oil and gas operations has gone from 40 cents a bbl to $2.50 I don't think that is correct. NGL's profit per transported barrel is around 23-26 cents, depending on the quarter.

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To: Elroy who wrote (77)	4/19/2024 10:47:04 AM
From: FIFO_kid2	of 109

I am sorry I didn't read your second comment. Personally I think Murray Stahl is an interesting person to follow especially for those invested in commodities/bitcoin. If that is the case with regard to margins then their water operations is likely related to processing and not storage. According to that post it seems the storage end currently seems to be the very high ROIC endeavor though. Irregardless the high inflation in that niche of oil production appears to have greatly benefited the company seeing the speed of their balance sheet improvements.

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To: FIFO_kid2 who wrote (78)	4/19/2024 11:51:30 AM
From: Elroy	of 109

No worries, thanks for bring the conference call to my attention. Yes, that CEO was a very interesting read. I enjoyed the conference call discussion and crypto discussion. NGL's water business is doing well, and growing, but I can't claim any deep level of understanding. I know they do transport, but what happens to the water at the end of the transportation pipeline I do not know......whether NGL processes it or some other entity processes it is unknown to me.

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To: Elroy who wrote (79)	4/19/2024 1:24:03 PM
From: FIFO_kid2	1 Recommendation of 109

You would think they would perform some reverse osmosis process before disposing of the fluids as it appears for disposal they reinject it into non crude bearing land at $2.50 /bbl. Something I did not know beforehand. With regard to Stahl I learned his view to the best approach of operating a crypto miner (which I feel would be a huge challenge given the halving events every 4 years and the challenge for obtaining nearly free energy and the proper timing of renewing obsolete equipment. In addition his view that land is the best commodity to hold long term and in hindsight he is totally right as NVR (a 1300+ bagger) is really a land bank that happened to allocate capital much better than its competitors by shrinking its float from 17 million to 3 million. Anyway I enjoy your commentary given your views are the closest to mine of any other poster.

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