How Boone Pickens Will Benefit For NAT GAS Act? Clean Energy Fuels Corp.

Author's Avatar
Oct 15, 2009
(GuruFocus, October 15, 2009) As we discussed in an earlier article, there are four pillars to Investment Guru T Boone Pickens’s “The Pickens Plan”, namely better insulation of current building, wind power, use more natural gas, and smart electricity grid. Right now, with price for natural gas so low relative to oil, wind power is taking a break and the momentum is behind push US-produced natural gas to replace oil imported from foreign countries. According to Pickens, eliminating foreign oil means a reduction of $300 to $400 billion trade deficit for the US. His solution is natural gas, and US is producing plenty and has plenty under the ground. Natural gas is cleaner and produces less green house gas, so said Pickens (see video below).





That will bring us to NAT GAS Act of 2009. The legislation under consideration in Congress has almost all of the elements for natural gas that Pickens has been pushing for in the Pickens Plan.


-It extends the tax credit for natural gas used as a transportation fuel.


-It provides a tax credit for 80 percent of the additional cost when purchasing a dedicated natural gas vehicle.


-It creates incentives for the major manufacturers to sell natural gas vehicles (which they already produce for overseas markets) in the United States.


-It requires that 50 percent of the vehicles the federal government buys over the next five years to run on natural gas.


Other than advancing his cause, how Pickens will benefit from the new legislation. That will bring us to a company called Clean Energy Fuels Corp. (CLNE, Financial). In 1997, he formed Pickens Fuel Corp. and began touting natural gas as the best vehicular fuel alternative. Reincorporated as Clean Energy Fuels Corp. in 2001, the company now owns and operates natural gas fueling stations from British Columbia to the Mexican border. In the first half of 2007, the company went public under the symbol “CLNE”. As of December 31, 2008, Pickens and affiliates (including Madeleine Pickens, his wife) own 54% of the company.


According to the company’s 2008 Annual report:
Clean Energy is the largest provider of natural gas (CNG and LNG) for transportation in North America. We have a broad customer base serving over 320 fleets in the refuse, transit, ports, shuttle, taxi, trucking, airport and municipal fleet markets, fueling more than 15,000 vehicles at 176 strategic locations across the United States, Canada and Peru.


Clean Energy owns and operates two LNG production plants, one in Willis, Texas and one in Boron, California, with combined capacity of 260,000 LNG gallons per day and designed to expand to 340,000 LNG gallons per day as demand increases.


We also own and operate a landfill gas facility in Dallas, Texas that produces renewable biomethane gas for delivery in the nation’s gas pipeline network that can be used as a renewable fuel. Our plant is one of the largest active biomethane gas producers in the United States.


Since going public, the company has yet to turn in an earning positive quarter, losing $0.20 and $0.81 per share during 2007 and 2008. In the quarter ended on June 30, 2009, Revenue totaled $27.9 million, compared with $33.8 million in the same period in 2008. For the quarter the company registered a net loss of $6.4 million, or $0.13 per share, compared with a net loss of $3.2 million, or $0.07 per share, in the second quarter of 2008.


The losses concerns Pickens a bit as he is eyeing on converting the nation’s entire trucking fleet, 6.5 million strong, to natural gas powered, an issue he pushes so hard. When that happens, pioneers such as Pickens will truly make some serious money.


Comments


Clean Energy is a brain child of Pickens. It took him thus far 12 years to turn a visionary idea into reality With the passing of NAT GAS ACT 2009, the fortune of the company will be turned.


GuruFocus provides real time information and insights of Investment Gurus such as Warren Buffett and T Boone Picks for Premium Members. If you are not a premium member, click here to sign up or upgrade. 7-Day Free Trial is available.