2 GUYS ON GAS: BOONE PICKENS LIKES CNG

More on compressed natural gas.

Boone Pickens eyes $70 mln for Clean Energy IPO; Natural gas fueling station provider to raise about $300 million
Steve Gelsi, May 23, 2007 (MarketWatch via Dow Jones)

WHO
Oil and energy billionaire and powerbroker T. Boone Pickens, co-founder, Clean Energy Fuels Corp.
T. Boone Pickens, a hands-on guy
WHAT
An Initial Public Offering for Clean Energy Fuels Corp., owner and operator of natural gas supplies and filling stations, advocate of (CNG) as a vehicle fuel; CLNE, Nasdaq. The results were reported as “lackluster.”

WHEN
- The IPO was scheduled for May 25.
- Follow-up story on results of IPO: Pickens’ Gas IPO Runs on Fumes (Business Week, May 25, 2007)

WHERE
Clean Energy Fuels Corp., based in Sea Branch, Calif., has natural gas stations in California, Colorado, New Mexico, New York, Texas, Washington, Wyoming, British Columbia and Ontario, and a liquid natural gas (LNG ) facility in Willis, Texas.

WHY
- Clean Energy Fuels Corp. sells natural gas fuel to Los Angeles International Airport, Phoenix Sky Harbor International Airport, SuperShuttle, Foothill Transit, Waste Management, Dallas-Ft. Worth International Airport, Sysco Foods, Denver International Airport and the US Navy.
- IPO: 20 million shares, $13-$17 ea., to raise $300 million
- May 25 Update: Share price dropped to $12 and shares offered cut to 10 million.
- 1st Q, 2007: $861,000 loss, $28 million revenue; 1st Q, 2006: $3 million loss, $21 million revenue.
- Pickens: oil and natural gas entrepreneur, 1980s corporate raider; invested $32 million cash, 2004 – 2006, + $50 million line of credit (increased to $100 million in 2006) to fund margin calls on futures; December, 2006, cancelled $69.7 million debt + assumed all outstanding futures contracts/associated liabilities-obligations ($78.7 million); Got 5-year warrant for 15 million shares CLNE @ $10/share. Now selling 4.9 million shares for $70 million @ $15/share. Will still own 29 million shares worth $435 million, the company's biggest shareholder. (Other shareholders: Westport Innovations Inc., Perseus 2000 LLC.)
- Pickens’ hedge fund, BP Capital, earned $1.8 billion in 2006 betting on a decline in natural gas prices. His Exco Resources (oil and natural gas company) went public at $13/share in Feb., 2006, now at $18.40/share.
a coming technoogy? (click to enlarge)
QUOTES
- IPO prospectus: “…[In the 1980s Pickens] became convinced that natural gas had a number of advantages over gasoline and diesel as a vehicle fuel…Over the next 15 years, Pickens and Clean Energy CEO Andrew Littlefair worked to develop the market through vehicle fleets that run on natural gas, which burns cleaner than gasoline or diesel. Natural gas is also widely produced in North America, unlike imported oil.”
- Business Week: “…Clean Energy faces plenty of obstacles, which may have dragged on the offering. According to James DeStefano, an analyst at IPO research shop, Renaissance Capital LLC, natural gas lags far behind ethanol in gaining the American public’s attention. While corn-based ethanol has plenty of critics for being inconvenient and inefficient, it has a much larger U.S. footprint. Major car makers like General Motors produce cars that can run on a fuel mixture of 85% ethanol. More importantly, ethanol is a common additive in much of the U.S. fuel supply; drivers are frequently ethanol customers whether they know it or not...By contrast, DeStefano says there are fewer than 150,000 natural gas powered vehicles in the country. “This is more of a show-me type story,” he says. “You’ve got to get the automakers in.” And that will be difficult with so few places where natural gas powered vehicles can fill up. And he says the company does not yet have the reach to move to international markets where natural gas is more popular.