Diversified mineral company Intrepid Potash Inc. (IPI:NYSE) yesterday announced its business and market outlook for 2021 along with updates regarding pricing for its potash and Trio® products.
The company reported on several recent developments in the commodity markets for its products. The firm indicated that potash targeted to agricultural markets has recently increased by $90 per ton, or 31%, above 2020 summer-fill pricing after a $40 per ton increase was just announced this month. Intrepid noted additionally that the present potash price into agricultural markets is now $65 per ton higher than the January 2020 winter-fill price.
The firm highlighted that the price for its Trio product supplied to agricultural markets increased by $60 per ton, or 27% above the 2020 summer-fill pricing after the latest $20 per ton increase in December of this year. The company pointed out that the price of Trio for agricultural customers at present is $50 per ton above the January 2020 winter-fill price.
In addition to the rise in prices in the agricultural markets, the firm stated that "the oilfield outlook continues to improve in the Northern Delaware Basin driven by an increase in drilling and fracking activity." The company advised that Q1/21 and FY/21 forecasts for water volumes exceed those of the same time last year in its energy related business with NGL Energy Partners in the three-ranch area of mutual interest. Water demand seems to be growing in excess of the available supply and Intrepid hopes to benefit by exploiting the optionality in its water portfolio.
Intrepid Potash's Executive Chairman, President and CEO Bob Jornayvaz remarked, "Good weather and compelling fertilizer economics have spurred strong early season demand for potash and Trio® in our domestic markets...A strong agricultural commodity environment across a wide range of crops that includes corn, soybeans, wheat, cotton, coffee and sugar, combined with a reduced potash supply has driven the improvements in the fertilizer market in recent weeks. After announcing the price increases in December, we quickly filled the rest of our Q1/21 order book before the higher price took effect and expect the benefits of higher pricing will be seen in the second quarter of next year. We continue to see good value across the fertilizer supply chain and have already sold select spot tons at the higher price levels."
"We see strong growth in our oilfield business as operators on the Intrepid South Ranch and AMI have aggressively increased development plans, resulting in significant water requirements for 2021. Due to the amount of water needed for multi-stage fracs, we expect to exploit the inherent optionality in our water book, narrowing our focus to the best margin opportunities as the year progresses. We are also opportunistically evaluating the purchase of additional water to meet the demand of large-scale fracs and to serve customers beyond our currently available water rights. Infrastructure improvements have lowered our per barrel cost of water transfers compared to last year and position us well for the coming year," Jornayvaz added.
Intrepid is a diversified mineral company headquartered in Denver, Colo. The firm is a supplier of potassium, magnesium, sulfur, salt, and water products essential for commercial enterprise in agriculture, animal feed and the oil and gas industry. The company noted that it is the only U.S. producer of muriate of potash, which is a critical nutrient for use in both fertilizer and as an additive to animal feed products. Intrepid's branded specialty fertilizer is called Trio®, which is a 100% natural langbeinite that is certified and approved for organic farming. Trio contains three key nutrients, potassium, magnesium, and sulfate, that are formulated and delivered in a single granule. For the energy industry, the firm provides brine, magnesium chloride, water and various oilfield products and services. Intrepid employs solar evaporation processes in its production of potash, which it states lowers cost and reduces environmental impact. The company noted that it operates three solar solution potash facilities and one conventional underground Trio mine.
Intrepid Potash started the day with a market cap of around $235.8 million with approximately 13.29 million shares outstanding and a short interest of about 1.8%. IPI shares opened about 5% higher today at $18.61 (+$0.87, +4.90%) over yesterday's $17.74 closing price and reached a new 52-week high price this morning of $28.23. The stock has traded today between $18.61 and $28.23 per share and is currently trading at $24.81 (+$7.07, +39.85%).[NLINSERT]
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