Boone Pickens Just Cashed Chesapeake Energy Corporation (CHK) Out of Clean Energy Fuels Corp (CLNE): What Should You Do?

Page 1 of 2

Chesapeake Energy Corporation (NYSE:CHK) has been decreasing its ownership stake in Clean Energy Fuels Corp (NASDAQ:CLNE) for a few months as it looks to get its own house in order. Last week, Clean Energy co-founder, board member, and outspoken proponent of domestic energy T Boone Pickens picked up a $60 million promissory note from Chesapeake Energy Corporation (NYSE:CHK) for its remaining Clean Energy shares, which will increase his stake in the company by about 25%, to more than 22 million shares. Is this strong vote of confidence from an insider and co-founder mean it’s time for you to go “all in” too?

BP CAPITAL

Momentum is building

Clean Energy Fuels Corp (NASDAQ:CLNE) and Westport Innovations Inc. (USA) (NASDAQ:WPRT) co-hosted a web presentation on June 18, aimed at helping potential customers better understand how natural gas could significantly lower costs for shippers and fleet operators. One nice bit of information that investors gained in this call was an update of Clean Energy’s buildout of its touted “America’s Natural Gas Highway.”

There are a total of 76 locations complete, with 15 now open and another 25 in construction. This is compared to only ten open just a month ago, and less than fifteen new stations under construction. This rapid expansion and opening of locations is a very positive sign. But the real question still hasn’t been answered and won’t be for several more quarters: When will the rapid growth in revenues turn into positive cash flow and profits? And don’t count the profits from last quarter. I documented in a prior post how they were in large part the product of new tax incentives and not improved business performance.

But right now, Capex is still a big number, even though it is expected to be much less this fiscal year than last. With many stations built and idle, just waiting for more shippers to buy trucks, the company is in a great position as first mover.

But I think Westport Innovations Inc. (USA) (NASDAQ:WPRT) holds the key to the future. The Cummins Inc. (NYSE:CMI)-Westport ISX 12 G  natural gas engine is now in full production, and 2013 is a critically important year for both Westport and Clean Energy Fuels Corp (NASDAQ:CLNE). Rapid adoption of these engines by shippers is central to the success of both players in the North American energy boom. And while Westport’s rapid growth in China with partner Weichai seems to be moving even faster than expected, Clean Energy is completely leveraged on rapid adoption in the US.

Opportunity on the E&P side

Natural gas Exploration and Production giant Chesapeake Energy Corporation (NYSE:CHK) has faced serious challenges over the past couple years, and is still early in its recovery phase. The aftermath of Aubrey McClendon’s mis-management of the company is central to its decision to sell all of its stake in fast-growing Clean Energy Fuels Corp (NASDAQ:CLNE), even as the company was just beginning to see returns from its expansion into LNG for trucking.  The bottom line is the company has a lot of work ahead of it before getting back on solid ground. It still carries a heavy debt load and is having to sell off assets to both meet its debt obligations and return to being the nimble player it was. Today, Ultra Petroleum Corp. (NYSE:UPL) is already there.

Page 1 of 2
blog comments powered by Disqus
Insider Monkey Headlines
Insider Monkey Small Cap Strategy
Insider Monkey Small Cap Strategy

Insider Monkey beat the market by 52 percentage points in 24 months Click to see monthly returns in table format!

Lists

10 Top Reasons For Getting Fired

The 3 Best States to Start an LLC

10 Jobs That Allow You to Travel

7 High-Paying Jobs You Can Do From Home

12 Best Cities to Shop in USA

10 Best States To Practice Medicine

The 10 Best States to Have a Business

The 12 Most Expensive Apple (AAPL) Apps in the Market

The 10 Richest Billionaires in the World

10 Biggest Kickstarter Failures

The 10 Best Places to Work At

The Top 10 of Google Inc (GOOGL)’s Most Expensive Acquisitions

13 Best Cities to Visit in South America

10 Most Expensive Works of Art of All Time

The 10 Richest Banks in the World

The 10 Best-Paying Jobs in America (2014)

7 Most Expensive Foods in the World

The World’s Top 10 Earning Authors

Five Wicked and Very Expensive Items (and Other “Stuff”) Sold on eBay

10 Biggest Celebrity Bankruptcies

The Top 10 Highest Paid CEOs in 2014

The 10 Most Expensive Real Estate Cities in America

10 Most Expensive States To Live In America

The 10 Best Airlines in the World

The 10 Best-Selling Cars in 2014

The 10 Best Industries to Invest In

The 10 Most Expensive States to Own a Car In

Top 10 Business Schools in US: 2014 Rankings

Top 20 Female Billionaires in 2014

6 Movies That You Should Watch to Better Understand The Cold War

Top 15 Best Paying Jobs for Women in 2014

Top 6 Things Rich People Do Differently Every Day

5 Retirement Mistakes To Avoid (and Einstein’s Famous Quote)

11 Smartest People in the World

6 Films About the Financial World You Need To Watch (While “The Wolf” is Not Around)

Warren Buffett and Billionaires Are Crazy About These 7 Stocks

The Top 10 States With Fastest Internet Speeds

10 Best Places to Visit in USA in August

Top 10 Cities to Visit Before You Die

Top 10 Genetically Modified Food In the US

15 Highest Grossing Movies Opening Weekend

5 Best Poker Books For Beginners

10 Strategies Hedge Funds Use to Make Huge Returns

Top 10 Fast Food Franchises to Buy

10 Best Places to Visit in Canada

Best Summer Jobs for Teachers

10 Youngest Hedge Fund Billionaires

Top 10 One Hit Wonders of the 90s

Fastest Growing Cities In America

Top 10 U.S. Cities for Freelancers

Subscribe

Enter your email:

Delivered by FeedBurner

X

Thanks! An email with instructions is sent to !

Your email already exists in our database. Click here to go to your subscriptions

Insider Monkey returned 47.6% in its first year! Wondering How?

Download a complete edition of our newsletter for free!