Sasol (NYSE: SSL) investors ought to be well aware of the issues that have crimped the ramp-up of the South African energy firm's Oryx gas-to-liquids (GTL) plant in Qatar. Although such hiccups are to be expected, today's news of further complications has nevertheless sent market participants into a tizzy. Shares dove more than 6% on word that production has been hampered by the presence of a high level of fine material in the plant's refined liquid fuel output.
If you are wondering what the heck that means, this mysterious fine material refers to the catalyst -- in this case, tiny iron particles -- used in the process of converting gas feedstock into synthetic fuel. These particles are passing through into the end product to an unacceptable degree. Bummer.
So, is the uncertain language in today's press release enough to give traders the jitters? Yes. Does this development change the long-term investment thesis for Sasol, the world leader in both coal-to-liquids (CTL) and gas-to-liquids (GTL) technology? Not a whit.
Sasol is not the only operator in the CTL and GTL field. There are tiny upstarts like Rentech (AMEX: RTK) and Syntroleum (Nasdaq: SYNM), in addition to big players like Royal Dutch Shell (NYSE: RDS-A) (NYSE: RDS-B). Nevertheless, Sasol is the go-to firm, whether you're talking about China looking to utilize its coal reserves or Chevron's (NYSE: CVX) plans to do likewise with Nigeria's gas fields. Countries the world over are demanding fuel in steadily increasing quantities, and coal is looking a lot more abundant than crude oil these days, so the future remains bright for Sasol.
This is a simplified view, but that's not to say it's a simplistic one. Focusing on the bigger picture can help you stick to the signal while avoiding all the noise. Sasol, a company with decades of experience in the field, will figure out how to resolve the issue of fine material. All you need to do is figure out whether today offers a buying opportunity in the company.
Sasol was runner-up in this year's Stock Madness tourney.
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Fool contributor Toby Shute doesn't own shares in any company mentioned. The Motley Fool has a fine disclosure policy.
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