The U.S. Energy Information Administration projects both production and consumption of natural gas will increase in the United States for the next 25 years. The chart below reveals where this increased consumption will come from. A closer look reveals transportation-related use of natural gas will grow only marginally over the next few years before picking up in 2030. This bodes ill for the likes of Clean Energy Fuels (NASDAQ:CLNE) and Westport Innovations (NASDAQ:WPRT). Can these two companies generate enough cash to stay in business?

Source: EIA

Clobbered by losses
Clean Energy's latest earnings report delivered some bad news to investors. The company's quarterly revenues declined 14.2% compared to the previous year's fourth quarter. Losses totaled $0.23 a share, $0.05 more than expected. While year-over-year losses narrowed, the company still seems to disappoint, if not struggle. Not surprisingly, the stock dropped over 13% in one day. So while Clean Energy touted the rise in gallons delivered and new deals to supply fuel, investors were clearly looking at other metrics.

So can Clean Energy hang on? Maybe not. According to its latest Form 10-K, the company states, "We may not have sufficient cash flow from our business to pay our debt."

Interest payments for 2014 are projected to run to $35.7 million. This is higher than 2013's interest expense of $29.2 million. Given total revenues for 2013 were just over $352 million and total operating expenses were a little over $404 million, Clean Energy Fuels looks a little precarious. In fairness though, the company has liquid assets it can sell to cover any shortfall. However, Clean Energy Fuels posts a five-year track record of losses with no clear trend toward profitability -- not a reassuring sign.

Not doing too much better...
In its latest earnings report, Westport put its best foot forward by announcing revenues increased 32% year over year. However, earnings declined for the fourth quarter and for the year as compared to 2012. Specifically, losses per share increased from $1.83 in 2012 to $3.22 in 2013. All else created equal, growing revenues should reduce losses, not increase them. So, what happened?

The company states that it is transitioning from a "market creation, demonstration project culture to a focused product business in a strong growth market." This meant restructuring businesses and reworking supply chains & production operations, all of which costs money. Westport management claims they are reviewing product lines and business opportunities and otherwise focusing on reducing costs.

Can Westport break even by the end of 2014, a milestone the company insists will happen? It's going to be tough. Total revenues for 2014 are projected to be $175 million to $185 million. Total expenses for 2013 were $166 million. The cost of doing business with Westport's two joint ventures, the only profitable segments in the company, increased more than 50% in 2013. If this trend continues, the increased expenses of just the joint ventures will eat up the most optimistic revenue projections.

Research and development expenses also increased, to the tune of almost $18 million in 2013. Any further increase in 2014 will push the company into the red. Lastly, the company announced a recall with its Cummins-Westport engines. No word on what that will cost.

On the bright side, Westport's sales and administrative expenses were essentially flat, and interest payments on its debt actually fell. Further, the company lists over $200 million in cash, having burned through about $5 million in 2013.

Any more bad news?
Earlier in the year, UPS announced it was launching a fleet of 1,000 delivery trucks that would not use diesel or gasoline. They will use propane instead. No mention was made of why they didn't go with natural gas, but this had to be a disappointment to both Westport and Clean Energy. Ford, a collaborator with Westport for natural gas vehicles, offers a competing line of propane-powered vehicles. 

Additionally, the U.S. Energy Information Administration forecasts the price of natural gas will steadily increase through 2040. This will put pressure on any economic advantages natural gas offers over gasoline or diesel.

Final Foolish thoughts
Natural gas as a vehicle fuel is a great idea. It's clean, the U.S. produces clouds of it, and at current prices, it's cost-effective once the start-up and infrastructure expenses are recouped.

So, the question becomes, can Westport or Clean Energy hold on until the infrastructure is built and natural gas goes mainstream as a vehicle fuel? If Westport continues burning $5 million a year in cash reserves, then it should manage to get there with its current cash balance. If it continues to disappoint on the earnings front though, the stock will continue to suffer. Clean Energy seems little better off with a cash balance of $240 million but plans for $135 million in capital expenditure in 2014 and "substantial capital expenditures thereafter."

For my risk tolerance, I'd avoid Westport until it proves its restructuring pays off in improved earnings. I'd also avoid Clean Energy until it stops saying things like, "we may not have sufficient cash flow from our business to pay our debt."

For those in the market for a new car, read this first:

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