Whether the typical investor likes it or not there are many ways to use the financial system. Governments can regulate all they wants but there will always be methods that will ring out every last penny of profit from any particular sector or segment. How a company goes about it, within the bounds of those regulations, is the key. Get the process right and a profit can be made. Get it wrong and go directly to jail without passing go. The point being that there are many legal ways to go about the process as have been practiced for centuries.
Arabian American Development Company, a company involved in specialty petroleum products and mining opportunities within the United States and Saudi Arabia, works to provide specialty petroleum products while also exploring and developing copper, zinc, gold and silver mining opportunities. The company was formed in 1968 and is based in Sugarland Texas.
To write that this company’s business is not intricately created and operated would be a mistake. The company uses all financial and manufacturing options available to it to squeeze potential profit from its activities. Its natural gas pipeline operations serve as a financial bargaining chip while its petroleum operations generate operating revenue. Its hedges through derivatives constitute a substantial portion of its safety net (30%) while its administrative savings, past recent increases, always seem to derive new opportunities. In this sense, Arabian American Development is anything but a typical operation and needs to be closely assessed as one becomes involved. This is not to suggest that the company is operating past the norm but rather that it is a complicated network that needs to be assessed carefully.
Perhaps the best example of the intricacies involved in the company’s operations is its first quarter 2010 10-Q report. Net income decreased substantially but net revenue increased due to higher selling prices within the petrochemical section. Financing also found a similar situation where net borrowing fell but higher natural gas pricing, which is used as a feedstock product for the company’s petroleum manufacturing, increased. Combine these elements with other financial manipulations by the company and one can understand where the complexity of the company lies. Overall, however, Arabian American Development does seem to be well run and managed past its somewhat larger exposure to the variations of commodity pricing. Spending some time to untangle its operations may be necessary but it is a profitable and going concern designed to take advantage of all aspects of the natural resources financial system.