“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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