Elliott's blusterMy sense is that investors have been rattled a bit by Elliott's defiant pronouncement that their bid is the best the court can hope for, that if they don't get everything they want then they'll walk and that will be a disaster for the creditors, etc.
Some of Elliott's points (or implied points) have some merit. The market for oil refineries (and their outputs) has definitely deteriorated over the past six months or so. You can see that in the decline in the 3-2-1 crack spread.
For graph plus explanation see:
https://rbnenergy.com/data-flow/404514#:~:text=The%203%2D2%2D1%20Crack%20spread%20approximates%20a%20theoretical%20refinery,is%20calculated%20in%20%24%2Fbbl. Note that the spread peaked in mid-March 2024, hit bottom on September 16, and has recovered somewhat since then.
You can see this also reflected in the prices of publicly-traded refinery stocks. PBF Energy, for example, hit a high of $62 in April and is now trading a little over $32. That's quite a drop--though PBF looks to be more of a pure play refinery story (than Citgo) and, hence, might be expected to be more volatile than Citgo in its market value.
So, yeah, if Citgo was worth $11 to $14 billion early in 2024 then it's surely worth less than that now.
So Elliott has a point. And they ARE experts at valuing downstream energy assets.
But, that said, we should keep in mind that the people at Elliott are also experts at buying assets as cheaply as possible. And, of course, they are experts at playing hardball. Have no doubt their bluster was designed to frighten any potential partners to any competing bid.
And what perfect timing for Elliott that September 16, the day the 3-2-1 crack spread hit rock bottom, would have been just about the moment Elliott and the Special Master were finalizing the terms of this "great" deal that they now both love so much. As I say, the people at Elliott are really good at scraping the bottom.
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Note, the list of creditors that expressed dislike of the Elliott bid includes . . . get ready . . . ConocoPhillips. And they know every part of the oil business just as well as Elliott. If they thought it was a great deal then presumably they would have had no objections. Not only that, as #2 in line they would (I think) get paid in full even under the terms of the Elliott bid.
Makes me wonder if ConocoPhillips is thinking of themselves as part of a multi-creditor credit bid which would give them first dibs on some pieces of Citgo. Pure speculation on my part.