“Dallas Step Change Resolution: Energy Crisis Picks”

This email had has been circulating for a few days, and the “hook” of the ad was the annual meeting of ExxonMobil.

You probably heard all about that meeting, if you watched CNBC at all or read any business news. The Rockefeller family, descendants of the founder of Standard Oi (predecessor of ExxonMobil), and still major shareholders, started rattling the cage more aggressively in favor of change at ExxonMobil.

The argument in this ad is that their influence is being felt, and that this means that the resolutions that were put forward at the annual meeting in favor of green energy and sustainability would force ExxonMobil’s hand, which in turn would mean lots more investment in renewable energy, which itself would be just part of the massive world push for clean fuels and green energy.

Phew. Lotta steps in that one. And it turns out, the resolutions failed at the XOM meeting just as they have failed every year for the last several years. It’s true that XOM is a bit more of a stick-in-the-mud when it comes to investing in anything, whether that means extra drilling or reserves replacement or alternative energy R&D, but that’s also why XOM doesn’t go down as fast as the other oil stocks when oil prices dip (usually, at least). They’re conservative, and if there’s a revolution in green energy — as I think there is, at least a’brewing on the horizon — ExxonMobil is probably not going to lead it, no matter how much the Rockefellers want them to.

But they are having some influence — they got close to 40% of the vote for their resolution to split the chairman and CEO jobs, which lots of institutional investors favor anyway (this is perceived as a way to get a more independent board that can serve as a real shareholder advocate — always nice in principle, though not necessarily more profitable in practice). Not nearly as much influence on the alternative energy stuff, which has a much stronger political ring to it — especially now that every XOM annual meeting is accompanied by street theater protests — but, on balance, I do agree that there will continue to be more investment in alternative energy of almost every type. I don’t really care whether that investment comes from ExxonMobil or someone else.

Let me be clear — I think ExxonMobil probably should invest in diversifying their energy production capabilities, for their own long-term good, but I don’t care whether or not they do because I don’t own shares. If they don’t (or even if they do), others certainly will.

But there was a point here before I started rambling. Hmm?

Yes, right — there are two companies that are teased in this ad, which is for the Market Shock Trader from Mike Burnick (I’ve never heard of either one of them, and don’t know their record). The newsletter charges roughly a thousand samoleons a year. Does anyone use that word anymore? Greenbacks, bucks, clams — 995 of them is what they’d like for a year of their service.

The first company?

Clues, please …

Energy Crisis Pick # 1:

“Renegade Oil Company Develops “HemiCell-190” And Begins to Power Over 2.6 Million Cars”

This special “Hemicell-190” …

“Doesn’t require deforestation or the destruction of natural resources to cultivate it.
“Can be processed and refined without expensive drilling – an average well costs over $150,000 and there’s no guarantee it will have oil.
“Produces 5 times the energy output of corn, is self-replicating AND supplies its own energy to create the fuel.
“Bottom line – oil companies have been pulling record profits decade after decade by raising gas prices at every opportunity.”

And they say that one company has got this technology worked out …

“This isn’t one of the “Seven Sisters”– the seven largest oil companies in the world. Instead it’s a renegade oil company that has found a way to send its earnings soaring into the stratosphere by taking themselves out of OPEC’s pocket. In fact, they’re set to ambush Big Oil and bring them to their knees. And the early investors will have an opportunity to earn 158% and more with this revolutionary fuel technology.”

So what is it?

“This new energy comes from refining a virtually unknown source called HemiCell-190. and it’s starting a Great Fuel Revolution that corn and oil simply cannot win.”

My head hurts a little bit … and I’m not sure I can tell you exactly which company they’re talking about, based on these clues. Here’s what I can tell you:

Hemicell-190 is sugarcane ethanol. Hemicellulose is the stuff we’re dealing with, and 190 degrees celsius is the temperature you need to separate it and get the alcohol fermenting, apparently. I’ve probably misstated those details in some way, but that’s the gist of it. No one calls it Hemicell-190 except the people trying to tease a stock, as far as I can tell.

Biofuels do reportedly power around 2.6 million cars worldwide. A lot of those are not ethanol-based, since palm oil and other biodiesel sources are also big players.

And the company we’re talking about? Here are my thoughts:

It could be BP. This is one of the “seven sisters” if you’re going by the original list of seven major world oil companies, but it’s not one of the “new seven sisters” of state-controlled oil powers (Saudi Aramco, Gazprom, etc). BP has invested in some joint ventures in Brazilian ethanol just recently, and at least one pundit has opined that this means BP shares are effectively a play on sugarcane ethanol. A little bit of a stretch, but BP has also had so many troubles of late that their shares are pretty cheap, maybe worth a gander.

It could be Petrobras, which has helped to make sugarcane ethanol a reality in Brazil, where it is roughly on even par with gasoline as far as use for transportation. Petrobras is not one of the original seven sisters, but is one of the “new” seven sisters.

And I was thinking, just for kicks, that maybe it’s a little oil company that’s involved in ethanol production in Peru — and therefore may have a trade advantage, since Peru has a free trade agreement with the US and Brazil does not (thus the oft-reported tariff on imported Brazilian sugarcane ethanol … which is the reason that we don’t import very much of it). This company is Maple Energy. I have no idea whether or not this is even in the ballpark, but it is a little oil company that’s exploring for oil in Peru, and they are building sugarcane ethanol production capacity at the same time.

There was an interesting article about this little company in Dallas Morning News about three weeks ago — another reminder that, if you’re interested in energy investments — especially oil and gas or oil services companies, you’re often better off reading the Dallas and Houston papers than the NY Times or Wall Street Journal (or in my case, the Washington Post).

Maple went public on the AIM in London less than a year ago and is now trading at about 225p (around $4.50), the shares have just about doubled since early April. Their website is here if you’re interested in reading up on them, it’s an interesting idea but I know nothing more about them than what I’ve shared here, and it’s a bit of a stretch to guess that this might be the company teased here. London ticker is MPLE, pink sheets ticker is MEYPF (don’t know that it trades at all on the pink sheets).

So … that’s a frustrating spiel, ending in guesses. Sorry! Need just a smidge more clues. I’ll move on to the next one, about another revolutionary energy company that’s light on clues, just as soon as I can smack my head against the thinkolator hard enough to disgorge something useful.


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5 Comments on "“Dallas Step Change Resolution: Energy Crisis Picks”"

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Floyd Loving
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Floyd Loving
May 30, 2008 1:33 pm
Sometimes I delete your mailings before I open them because I don’t have time to read them. On gmail your subject is always the same “(Forwarding to Friends is A-OK)”. I think you should change that heading to “Energy Crisis Picks” to let people know what is in the mailing. A teaser for Mr. Teaser-buster as it were. It would probably increase actual readership to more closely match subscribership. Just my two cents (which you had better dig the copper out of since it is worth more than the penny until they start minting using plastic. Of course one day… Read more »
Gravity Switch
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May 30, 2008 1:46 pm

Thanks Floyd. Don’t have the capability to do that just yet, but I agree it would be helpful. Hopefully soon.

Troy
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Troy
May 30, 2008 4:07 pm

I believe the company you are looking for is Brazil-based Cosan Group CZZ

Brazil-based Cosan Group is the largest grower and processor of sugarcane in the world, the largest ethanol producer in Brazil (and the second largest in the world), and the largest sugar producer in Brazil (and one of the three largest sugar producers in the world).

Robert T. Nelson
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May 30, 2008 8:23 pm

Dear Stock;

I too, try to read all of your mailings, but I am sure I have missed some really good recomendations, simply because I don’t have time to check each & every mailing. But keep-up the great work you do. I think Floyd is right; and the sooner the better, please! RN

Terry Waggoner
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Terry Waggoner
May 31, 2008 10:34 am

Shoe………

You’re worth a quick mouse click….. IMHO.

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