“Geothermal Energy: A situation you can’t ignore!”

By Travis Johnson, Stock Gumshoe, February 4, 2008

Tim Fields and Eric Dickson over at Trinity Research have been selling subscriptions on the back of geothermal investing for a little while, and they’ve got a new brief “teaser” out about their pick for this sector.

Geothermal energy is nothing new to the Gumshoe Faithful, of course, and those of us who’ve been paying any attention at all have noted a significant raise in profile for geothermal stocks, notably US Geothermal,Western GeoPower and Ormat. Geothermal is perhaps the most appealing of the big “green” and renewable alternative energy sources, too, since it is so very clean and, in the few places in the country where it works right now, quite cheap.

So, we’re always excited to hear about another geothermal teaser company … and here we have one, including a solid solution to the teaser, courtesy of vigilant Gumshoe reader Greg Olson.

Here are the clues given:

“… we have hand picked a tried and true winner in the geothermal field and this company just released some incredible news today that could send this stock significantly higher in the short term future!”

“The company announced today that it now has more than 100,000 acres of property in Utah for geothermal development under lease agreements. The penning of supplementary leases in Southern Utah last week surpasses the 100,000-acre mark.”

They have rights to more than 7 thousand acres in two counties in Utah.

And, in a friendly offering to the sleuthing community, there’s a direct quote from the company: “We continue to see increasing demand for renewable, green electric power, and with this addition to our land holdings, we continue to position ourselves to take advantage of these favorable market dynamics.”

Shares are under $10.

And of course … “This position is only available to members of Untapped Wealth.”

Not entirely true, of course, thanks to Greg’s sleuthifying this one’s also available to the mighty Gumshoe community, finest, smartest and best lookin’ readers in cyberspace.

The company teased here is …

Raser Technologies (RZ)

This one actually trades on the NYSE, so it’s a bit higher profile than UGTH or WGP … but it’s also a significantly different company. They have indeed been increasing their leaseholdings in Utah and building up an “inventory” of potential land for geothermal projects, but they come at this from the technology side, not from the power plant operating side.

Raser, from my limited knowledge, has been trying to develop new techniques for harnessing geothermal power, and trying to license it’s technology and equipment to other operators. They’ve also been ramping up to actually get some sites developed.

Essentially, Raser’s geothermal work is focused on making geothermal generation feasible at lower temperatures — which would obviously open up many more sites to effective use of the technology (right now, geothermal is primarily limited to areas where it has been familiar and tested for generations like the Geysers in Northern California). They also have some new electric motor technologie for autos and other applications, though I have no idea what their possibilities are in that area.

My research on this one is very limited, but they are certainly, like most of the others in this space, unprofitable and probably in need of some cash if they’re to build out their ambitious potential projects themselves. While the teaser notes that this big new acreage area will drive the shares higher on future growth potential, they’ve actually gone in the other direction lately — shares are down since the announcement, and down quite dramatically from $18 to the current $9+ since late December.

So, this is one way to play geothermal energy — frankly, I don’t see any geothermal plays out there that don’t have some hair on them, so I’d be more or less equally careful about all of them. My shorthand on these risks is is that UGTH is awfully far away from big “green” energy markets and pretty expensive for the wattage expected, WGP is still a ways from producing any energy in California, Ormat is just plain expensive, and Raser is out on the edge technologically, trying to get their technology commercialized in an area where geothermal energy has not traditionally been used. I find them all interesting but scary, and haven’t bought any — if others have researched this more fully, I’m sure we’d all be happy to hear.


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16 Comments on "“Geothermal Energy: A situation you can’t ignore!”"

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ROBERT H WEIR
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ROBERT H WEIR
February 4, 2008 6:05 pm

I am amazed at your prowess. Very impressive! May I insert some grammar? It’s means “it is.” Its is the possessive. Like it’s nice to watch the cat like ITS paws. Fix that and I’ll relax.

arnold
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arnold
February 4, 2008 6:19 pm

Bob, I think you mean LICK… LOL!!!

Ferenc Pallos
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February 4, 2008 6:43 pm

I appretiate your personal comments e.g.your remarks about why you find geothermal stocks scary.Your insights are valuable! Regards,Ferenc

Jon
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Jon
February 4, 2008 6:55 pm

You all are just so sexy. . .

Dividends4Life
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February 4, 2008 7:43 pm

I can’t get excited about geothermal. The risks seem to high, even if the technology is good, it would be difficult to implement.

Best Wishes,
D4L

Greg Glenn
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Greg Glenn
February 4, 2008 8:04 pm
Today, February 4th, Seeking Alpha published an article entitled “10 Solid, Cheap Clean Energy Companies: #10 United Technologies”. UTC is promoted as having a lot of products that will be used in a world of higher oil prices and CO2 awareness. One of the many products is United Technologies’ PureCycle binary cycle turbine, which was modified from a Carrier chiller (Carrier is one of their product lines). Here’s what they say about this product and you will see the connection to our friend Gumshoe’s story “Geothermal Energy: A situation you can’t ignore!”: “With their PureCycle binary cycle turbine, UTC (symbol… Read more »
Wayne
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Wayne
February 4, 2008 10:01 pm

I liked a commentary from somewhere in all that I read. It said wait and see where this or any new technology goes. The developers of good viable and economically sound ideas will be bought by big companies or maybe in this case by big utilities. The real return on investment will be from owning the real users of the technology.

Gravity Switch
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February 5, 2008 7:53 am
OK, so it turns out even a former editor can’t edit himself — sorry! And good comments everyone. Wayne and Greg, those are both good points about getting some perspective on geothermal, which isn’t a new technology but is certainly getting a lot of attention for the first time in years (and some folks, like Raser, are using new technology). I like United Technologies, too, though geothermal is never going to be as important to them as the aerospace cycle or the Chinese construction boom — if the chinese stop buying Otis elevators or Carrier air conditioners, it won’t matter… Read more »
Big Mo
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Big Mo
February 5, 2008 8:22 am

Mr. Wier, you are not correcting “grammar”, you are correcting punctuation. So you’re not the God’s gift to the English language that you think you are.

psm
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psm
February 5, 2008 9:51 am

is that “the” bob weir of the grateful dead!

Kevin Rooney
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February 5, 2008 11:48 am

We like geothermal. Hey if its good enough for the country of Iceland (over 90% I believe) then we should get on board! The residential side is better than commercial especially if you have the room for horizontal lines!

Kevin Rooney
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February 5, 2008 11:49 am

Hey you didn’t post my web site! http://www.cgafoundation.org
Use biodiesel more!!!

G IMBURG
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G IMBURG
February 8, 2008 9:00 pm
I like goethermal for a variety of reasons. First,the company has a one time set up cost and very little maintenance cost there after. There is no toxic emmision. It doesnt rely on weather,sunshine or wind,it just keeps producing electricity whatever the weather. Less employees are required , and the water left over from the procss is recycled. The recurring costs in the future should be less than using coal,nat gas,wood pellets or any other fuel to get to the final product. This reduced cost should translate into higher profits and in terms of competition,each watt can be sold cheaper.… Read more »
Geo
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Geo
April 17, 2008 11:32 am

I just noticed Reuters research rated RZ outperform on 4-15-08.

ron martin
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ron martin
August 30, 2008 8:41 am

I did a high school science project in 1957 on geothermal power. Actual implementation of this energy source in the ensuing 51 years has been nil. Exciting future ideas do not equal current gains to investors. By the way, I am one of the 1% loyal gumshoe-addicts that awaits his sleuthology reports even on holidays.

charlotte
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charlotte
July 21, 2008 10:53 am

My cat licks its paw, even if it’s not especially tasty.
C.P.

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