Clean Energy Fuels' New Deals Set the Stage for Earnings

In a press release two days before its earnings release, Clean Energy Fuels (NASDAQ: CLNE  ) announced the signing of three important deals, each of which represents a significant win for the company. The news did little to move shares, suggesting that investors are taking a wait-and-see approach ahead of the release. Consensus estimates are for the company to lose $0.17.

In addition to the press release, the U.S. Energy Information Administration (EIA) recently announced a 9.8% increase in proven natural gas reserves (see table below). This is important for Clean Energy as the company continues its efforts to create "America's Natural Gas Highway", because natural gas remaining an affordable alternative to petroleum options is vital. While the stock is down about 5.5% in the last three months, it looks well positioned over the medium and longer terms.

 

Wet Natural Gas*
(trillion cubic feet)

U.S. proved reserves at Dec. 31, 2010

317.6

Total discoveries

49.9

Net revisions

(0.1)

Net adjustments, sales, acquisitions

6.0

Production

(24.6)

Net additions to U.S. proved reserves

31.2

U.S. proved reserves at Dec. 31, 2011

348.8

Percentage change in U.S. proved reserves

9.8%

*Wet natural gas includes natural gas plant liquids. Columns may not add to total due to independent rounding. Source: U.S. Energy Information Administration, Form EIA-23 "Annual Survey of Domestic Oil and Gas Reserves."

Positive developments
In its press release, Clean Energy announced three deals:

  • A 10-year deal with the LA Metro Board to provide compressed natural gas (CNG) and maintenance to CNG-powered buses; the contract includes the construction of an 11th filling station for the county's buses.
  • A fueling agreement with Fox Transportation that includes a plan to deploy as many as 100 CNG delivery vehicles by year end; the fleet is expected to use 600,000 diesel-gallons-equivalent of CNG per year.
  • A 10-year partnership with NG Advantage to build a natural gas compression facility in New Hampshire with the goal of bringing natural gas to energy intensive manufacturers that operate away from traditional pipeline options.

Each of these transactions has the potential to drive positive growth for Clean Energy over time and help the company continue to expand into new markets. CEO Andrew J. Littlefair said: "Clean Energy is at the forefront of this wave as we push the boundaries of natural gas into new industries and markets that only five years ago were simply not viable." As the company keeps pushing into these new markets, others are beginning to follow.

One such "follower" is Ford (NYSE: F  ) , which is reportedly planning to release a CNG-powered option on the 2014 F-150. While the option is only expected to cost $315, to make the vehicle fully capable, buyers will need to outlay an additional $7500-$9500. Despite the expense, a recent report from Zacks.com suggests that consumers could realize gains from the switch within 24-36 months. This projection is based on the price of natural gas staying low, which is why the EIA report is so important. Unlike what you see in crude, natural gas production, while lagging increases in proven reserve growth, is growing fairly steadily. This will remain a critical feature for Clean Energy if it is to realize profitability and capitalize on its first-mover status.

Buying ahead of earnings
While the market seems content to remain on the sidelines, the longer-term prospect for Clean Energy looks very solid. You will want to keep track of production growth as well as how it relates to the cost of natural gas, as well as to the relationship between gas prices and oil prices. The later relationship will impact the relative attractiveness of gas and drive Clean Energy's ability to drive growth.

Beyond new technologies like those being driven by Clean Energy, record oil and natural gas production is revolutionizing the United States' energy position. Finding the right plays while historic amounts of capital expenditures are flooding the industry will pad your investment nest egg. For this reason, the Motley Fool is offering a comprehensive look at three energy companies set to soar during this transformation in the energy industry. To find out which three companies are spreading their wings, check out the special free report, "3 Stocks for the American Energy Bonanza". Don't miss out on this timely opportunity; click here to access your report -- it's absolutely free. 


Read/Post Comments (1) | Recommend This Article (6)

Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

  • Report this Comment On August 28, 2013, at 12:01 PM, RussHurley2014 wrote:

    RussHurleyForCongress2014~Social Media Volunteers Needed! Ohio 2nd District

    America isn’t free. But we like to pretend that it is. We hate to even approach the premise, but here goes.

    1) Having a republic requires an informed electorate. While an autocracy (like China) gets results much, much, much quicker, a democratic republic is supposed to be better long-term. It serves the greater good and prevents “absolute power from corrupting absolutely.” As a tradeoff for this advantage, we get more mess and it requires voters to pay attention. That’s the cost: we’re supposed to pay with our attention, so we can have informed judgements that we vote with. Reflecting how badly we’ve failed in this regard, are our terrible soundbite-driven, billion dollar elections. That’s what my book is all about.

    2) We tax like a small government, and spend like a large government*. Think back to the wars in Afghanistan or Iraq. Or the prescription drug benefit for Medicare. Or, now, our sky high budget deficits. We have the lowest total tax rate in the world of all developed nations, yet spend massively on our military and all kinds of other programs. Do we complain? Yup. Do anything about it? Nope.

    3) Some gave all. All gave some,,, ,,, Less than 1% of Americans serve in the military today, we don’t share the financial burden through higher taxes when our nation is at war, we’re “spared” from graphic wartime photos, and the media barely covers injuries and deaths. We’re sheltered from all of it. Yet, it might be easier than any other point in history for a president to send Americans to war. Might this be because it impacts so few of us?

    The idea of America as an exceptional nation is sacrosanct. We’re like all other nations, except we’re a cut above. Yet we demand this as fact, without wanting to pay any kind of price. The irony is that this flies in the face of the most American idea of all: the egalitarian idea that it’s only our sacrifice and hard work that yields us results. You earn it. It’s this that has incensed me. How we can remember this concept individually, but forget that it also has to apply collectively as a nation? It’s why I literally spent 5 years thinking of this book, and finally spit it out over 2 months. America isn’t free. And if she’s going to stay special, we’ve got a whole lot of work to do.

    (Reprinted from Surya Yalamanchili)

    ***ENDORSEMENTS***

    Willie Nelson & The National Teapot Party 07/19/2013

    It would appear that we have forsaken one of the planets best crops for ethanol. Also, Hemp seed oil can be extracted and utilized for bio-diesel. Not to mention that Hemp does not take massive amounts of fertilizers, pesticides or water to grow. It can also be cultivated and harvested 3-4 times per year yielding 3000 to 4000 gallons per acre per year.

    I will advocate the legalization of marijuana. I advocate growing the benign plant Hemp for fuel. It was put on this planet for a good reason. Let’s take advantage of it along with wind and solar and leave the Middle East alone.

    Here are some estimated ethanol yields by the gallon for different plants per acre of land:

    Corn Grain = 354 gallons per acre (one of the world’s life sustaining food crops)

    Sugar Cane = 662 gallons per acre (from South America, imported with a 100% duty)

    Switch Grass = 1150 gallons per acre ( there is no reason to oppose this crop)

    Hemp = 1000 gallons per acre (no need for chemicals or irrigation and can be cultivated 3-4 times a year)

    The saying "The price of freedom

    is eternal vigilance !" certainly seems to apply here.

    "The bottom line on Congress is simple. You can place all the blame

    you want on George W. Bush or Barack H. Obama. But the simple fact is

    that it was Congress who voted twice to start wars without raising

    taxes to pay for them. It's Congress that has wasted taxpayer dollars

    fighting to repeal a law that's already withstood Constitutional

    scrutiny at the hands of the Supreme Court. And it's Congress who has failed to take the lead on climate change, immigration or ending our stupid War on Drugs. It's Congress that is most to blame for what's truly broken in our country, regardless of which person sits in the big chair in the Oval Office."

    For the first time last year the USA incarcerated more people for

    Marijuana than ALL VIOLENT Crimes COMBINED! We don't need MORE JAILS. We need to decriminalize marijuana and release 40% of the prison population. When we end "The War on Marijuana" we won't need a new prison for decades.$42 Billion in taxes and wasted law enforcement expense annually lost to the economy and right into the black market. Mean while our children can score in school any day of the week and there's nothing we can currently do about it. Because it's completely UNREGULATED.

    I know I'm not crazy to think an ordinary citizen (Not a

    CAREER Politician) with out a huge fund raising machine can

    not only run for US House in a district that is better than 70%

    Republican. But can win support on the merits of what I say, do and believe using social media. I need a few thousand ??? likes to be able to claim mass support for legalizing nationally, hemp/marijuana. Be it

    manufacturing, medicinal or recreational use for adults.

    Lets show Washington We are serious? Help a regular(NOT a Career

    Politician/LAWYER, or MILLIONAIRE) guy, go to Washington. Give me a look, then a like if you think a barber, *****AWARD***** winning small business(Kings Court

    Master Barber & Shoe Shine Service Est~1936)owner, US Navy veteran, former firefighter from Cincinnati could bring real change to the Peoples House in D.C.

    Open my page & like on Facebook, Search {Russ Hurley for Congress

    2014} on Facebook link below:

    https://www.facebook.com/pages/Russ-Hurley-for-Congress-2014...

Add your comment.

DocumentId: 2584710, ~/Articles/ArticleHandler.aspx, 4/23/2014 12:26:35 PM

Report This Comment

Use this area to report a comment that you believe is in violation of the community guidelines. Our team will review the entry and take any appropriate action.

Sending report...


Advertisement