I wrote last night about the energy crisis pick that was being teased as a beneficiary of the “Dallas Step Change Resolution,” and, if you’ll recall, I ran out of steam (and words) before getting to the second company that was teased in that ad.
The ad was for Mike Burnick’s Market Shock Trader, and it was all about two companies that will benefit from increased investment in alternative energy … the first one was a sugarcane ethanol play, I wrote (though couldn’t identify it exactly), and the second one is also a little paltry with the clues …
The teaser made over the top promises, of course — including this: “Buy in today, and you could bank your first 100% gains
before the first day of A Very Hot Summer…”
Summer is about a month away … so are we really going to get 100% gains in a month? One hopes that this gets the skepticism flowing in any reader’s mind, but you never know.
Here are the clues we get:
“The “Giant Killer” of a Company that Picked Up the Goldmine Exxon Threw Away…
“ExxonMobil was sitting on a goldmine and they blew it…
“They failed miserably and dumped all of their primary alternative energy assets…That’s why today’s Dallas Clean Energy Resolution is so important…
“Because one company slid in and plucked nearly a billion-dollars worth of ExxonMobil’s neglected alternative energy assets practically for a “song.”
“I call this company the “Giant Killer” of the energy industry. Today, it’s up tenfold from 2005 and has sported 1400% returns on ExxonMobil’s mistake – no wonder Exxon’s shareholders are so concerned!
“And no wonder the Rockefellers are insisting that ExxonMobil pick up the pieces and refocus on this all important profit-churning trend of the future.
“You might be thinking right about now that if they’re up so much it’s probably too late – not so…
“You can still get in on this company and “steal” the stock – currently selling at 50% off its high!!”
Good stuff, huh? Unfortunately, still a little light on the clues … but let’s give it a whirl.
As far as I can tell, the only really significant alternative energy assets ExxonMobil has owned have been related to coal and nuclear power. They do currently invest in battery technologies and other alternative energy R&D areas to some limited degree, and they’ve invested in solar and efficient electric motors in the past, but as far as I know have never developed any particularly valuable “assets” in those areas — I’d say that most of their capabilities outside of the core oil and gas exploration, production, and exploration business have always been in chemicals. And in the last twenty years, you might say “all”, not “most.”
And they do a lot of transactions almost every year — they’ve sold oil and gas fields to other companies, refineries to Valero, pipelines to Buckeye Partners and others … but none of that counts as “alternative” in my eye. They’ve also sold mineral resources, like a Chilean copper mine, as they steadily got rid of non-petroleum assets over the years. In fact, they sold out of so many businesses in the 1980s that it makes the head spin a bit — and indeed, their legendary (at least for his retirement package) previous CEO, Lee Raymond, was brought in largely to make those decisions and cut off all the unprofitable side ventures to refocus the company (which is probably partly why he was stubborn about any reinvestment in solar or anything else, compared to competitors like Shell and BP).
So what did they own, when it comes to nukes? And who did they sell it to?
I’m most interested in the uranium story here, since it seems unlikely that coal is going to be the alternative energy solution if you’re approaching it from an environmental perspective — yes, I know there is clean coal, but I don’t think that was ever what ExxonMobil was into.
But ExxonMobll did have several uranium mining projects in the late 1970s, and was one of the largest suppliers of uranium to US power plants before eventually giving up most of that business right around at the bottom of the uranium market, when nuclear power was a pariah in the US.
Exxon for years owned rights to the controversial Crandon mine site in Wisconsin, a site that was consistently blocked by Native American interests and other local protests. They sold it to Rio Algom, which was bought by BHP Billiton, who then later sold the site to Nicolet Minerals, which was later bought by a few local tribes, who withdrew the mining permit applications. So that’s a dead end.
They also had a fair number of mine sites for what was often called “yellow oil” in Wyoming and New Jersey, among other places. New Jersey eventually banned uranium mining, and the Wyoming assets were apparently sold to Wold Nuclear (the unmined reserves) and Everest Minerals (the plant and equipment and, most significantl, the operating and controversial Highland mine).
As far as I can tell, nothing significant is going on with Wold Nuclear at the moment, to the extent that they still exist. Wold Nuclear was a private company run by former US Congressman John Wold (who was also a geologist, and was selected as the “Wyoming Oil/Gas and Mineral Man of the 20th Century”), and I suppose it might have been bought by someone, but I don’t know if their Wyoming sites are active.
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But more interestingly, Everest Minerals later sold the Highland Mine to a new company called Power Resources.
And then Power Resources was bought by Cameco, which I think is still the world’s largest uranium producer.
The Highland Mine has recovered significantly from the troubles during Exxon’s day, though for all I know it may be locally controversial, but it has been combined with the neighboring Smith Ranch and is still producing lots of U3O8 using newer techniques, and is a larger part of the reason why Cameco produces more uranium in the US than anyone else.
So, maybe that’s an interesting one to consider … though it, too is a guess and a stretch. Uranium is certainly a “hot” alternative energy source again, and ExxonMobil (then Exxon, I think), certainly did sell off the Highland Mine for a “song” 20+ years ago. But Cameco’s stock price is not up tenfold since 2005, which was part of the clue, and I haven’t dug through the filings to see if they’ve earned 1,400% returns on the Highland Mine (though I doubt it). The share price is also not 50% off it’s high, though it is down a bit from the $55 or so they hit last year (right around $40 now).
Exxon Nuclear, by the way, was their big nuclear power plant division, and that was sold to a German firm that was later bought by Siemens. Siemens then sold its nuclear plant division into a joint venture with Areva, a French company, partly beca