Shares of Clean Energy Fuels Corp. (NASDAQ:CLNE) surged as much as 22.7% today, before losing a little steam in afternoon trading. As of 12:20 p.m. EDT, shares were up 13.6% in very heavy trading. At this writing, more than 5 million shares have traded hands, about five times the average volume for the company's stock.
Today's big jump isn't from the company's earnings, which will be released later today after market close, but due to a surprise announcement that global oil and gas giant Total S.A. (ADR) (NYSE:TOT) has agreed to take a 25% stake in Clean Energy, with a deal to buy 50.8 million shares for $83.4 million.
In addition to an investment that would make Total the largest shareholder of Clean Energy stock, it is also partnering with the company to launch a leasing program to help accelerate adoption of heavy-duty natural gas vehicles. As part of this program, Total would provide up to $100 million of credit to fund leases.
This is a pretty big deal for Clean Energy and for its shareholders, even at the cost of significant dilution. The $83 million in cash that Clean Energy will receive would effectively position the company with more cash than debt, not only ensuring that the business has a substantial margin of safety, but also coming very close to a guarantee that it will be able to generate positive cash flows from its operations in 2018.
Furthermore, having a strong financial partner in Total to help it drive adoption of heavy-duty natural gas vehicles at this time could be a huge win. Prices of oil (and therefore diesel) have been steadily climbing over the past year, and the highly anticipated near-zero-emissions natural gas engine from Cummins (NYSE:CMI) and Westport Fuel Systems (NASDAQ:WPRT) is now being shipped to customers.
It may be premature to call this a game-changer for Clean Energy Fuels. But I don't think it's too big of a stretch to use that term. Stay tuned for more when the company reports first-quarter earnings later today.