The Market And Energy Page, T+332 -- December 19, 2017

Anticipating today, API crude oil inventories. Pending

Trucking. There have been several posts regarding the robust truck manufacturing industry in the US. Now we have 4Q17 earnings from Navistar: a net income of $1.36/share. I believe the forecasts were for 64 cents. Navistar shares have climbed 34 percent since the beginning of the year. The stock has climbed 44 percent in the last 12 months.

Oil services: McDermott to acquire CB&I in $6 billion all-stock deal. McDermott plans to announce a three-to-one reverse stock split.

Darden: beats estimates, 73 cents vs 70 cents forecast.

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RBN Energy: Mexican market liberalization, refinery setbacks open door to US companies.

Falling production of motor gasoline, diesel and other refined products at Mexico’s aging refineries has created a south-of-the-border supply void that U.S. refiners and refined-products marketers and shippers are all too eager to fill. At the same time, the ongoing liberalization of Mexican energy markets is finally allowing players other than state-owned Petróleos Mexicános (Pemex) to become involved in motor-fuel distribution and retailing. The results of all this? U.S. exports of gasoline and diesel to Mexico are up 60% from two years ago, and U.S. companies are scrambling to develop or acquire the infrastructure needed to deliver refined products to Mexican consumers. Today, we begin a new series on the increasing role of U.S. companies in supplying, distributing and retailing motor fuels in Mexico, and on the new transportation and terminalling infrastructure being built to support that growth.

More long-term access to Pemex’s distribution system is promised. Until that happens, companies seeking to move increasing volumes of their imported motor fuels to Mexican storage terminals and retail stations are using a variety of approaches. These include: 1) using tankers to move refined products from Corpus Christi, Houston and other U.S. ports to Mexican ports and transporting the fuel inland via Pemex-owned pipes; 2) using U.S. and cross-border railroads — especially Kansas City Southern de Mexico, a unit of Kansas City Southern — to transport gasoline and diesel in tank cars to storage and distribution terminals within Mexico; 3) piping fuel south on the still limited number of refined-product pipelines between the U.S. and Mexico; and 4) trucking gasoline and diesel from the U.S. to terminals south of the border.

The focus of this series will be on plans to develop new refined-product pipelines, new rail-transloading facilities and new storage capacity in Mexico, as well as complementary projects in Texas and other U.S. border states. These projects would supplement the gasoline and diesel distribution assets already in place in Mexico (many of them owned — and still controlled — by Pemex) and would be expected to help ease the delivery of more refined products from U.S. refineries.