Wall Street Fallout: No Deal for Ethanol Plant
A story in Thursday’s editions of The Oklahoman reported that Oklahoma Sustainable Energy LLC had withdrawn from a $100 million ethanol plant project in Blackwell because of problems obtaining financing by a Sept. 15 deadline.
Terry Detrick, company president, said that it would refund more than $8 million to investors, many of whom are Oklahoma farmers. He wrote an article for an American Farmers and Ranchers publication that used the headline “Wall Street Detours Oklahoma Ethanol.”
But others who reacted to the news weren’t heard in the story. Here are the reactions of David Fleischaker, Oklahoma Energy Secretary, and Shane Frye, executive director for the Blackwell Area Chamber of Commerce and Blackwell Industrial Authority. Plus, a final comment from Detrick:
“It’s sad but understandable. This is a very difficult time for new ethanol projects. The ones that are going to be successful in the near term are the ones that are built and have their construction costs behind them and are generating revenue from production of ethanol.“The ones that were late to the game, they faced increased costs in terms of plant construction costs and increased costs in terms of input costs, and at the same time there was downward (price) pressure on their product because there still are relatively few retail outlets. They are getting pinched at both ends and the results are road kill.”
— David Fleischaker, Oklahoma Energy Secretary
“Major projects all over the country are suffering right now due to the challenges in the investment banking world right now. And this is one of those projects. I know our community here in Blackwell is very committed (to the project). We are in weekly meetings with the folks involved with Oklahoma Ethanol and Chaparral Energy, and they are extremely committed to continue, as well. We are all in a holding pattern to get the clouds out of the way as far as the investment banking scenario right now.”Those folks (Oklahoma Sustainable Energy) were the folks who had the dream and the vision to get the project started, and we are going to continue working with them, and they are part of this deal wehtehr their investment continues or not. We’re proud they put this project forward.”
—Shane Frye, executive director for the Blackwell Area Chamber of Commerce and Blackwell Industrial Authority
“It was an honor to be in a position that we could kind of pull the trigger on the starting gun to introduce a whole new vision and dream and opportunity for Oklahoma,”
— Terry Detrick
Jim Stafford
Business Writer
Boone Pickens on stock market mess
T. Boone Pickens has a unique take on the current economic woes and the pain they are causing investors (including Pickens). He thinks high oil prices are the root problem. Pickens also predicts that oil prices, currently less than $100 a barrel, will return to $125 by year’s end and jump to a record $150 within a year.
Don Mecoy
Business Writer
Old-time oilfield equipment
When you’re in the oilfield, sometimes you have to adapt to your surroundings. That’s always been the way, as evidenced by this old newspaper clipping. (via boingboing)
Don Mecoy
Business Writer
ClimateMaster president poised despite CNBC glitch
Dan Ellis, president of Oklahoma City-based ClimateMaster, appeared on CNBC this morning to talk about his company’s growth. Ellis was very gracious, especially considering the fact that the host called him “Dave” throughout the conversation and the graphics on the screen also referred to him as “Dave” Ellis, ClimateMaster president.
You can view Ellis’ poised performance at the CNBC Web site.
ClimateMaster installs geothermal heat and cooling units in homes and businesses, using underground pipes to move heat into and out of buildings at great cost savings. The installation costs are about twice as high as conventional systems, but the energy savings make up those higher initial costs fairly quickly, Ellis said.
ClimateMaster is a subsidiary of publicly-traded LSB Industries, which is one of Oklahoma City’s biggest employers. LSB shares have gained about 15 percent in the past month.
Don Mecoy
Business Writer
Aubrey McClendon’s stock advice
Aubrey McClendon says to buy Chesapeake. Whadya expect from a guy who owns $1.5 billion worth of the stock?
McClendon, chairman of Oklahoma City-based Chesapeake Energy Corp. appeared Monday on CNBC to discuss the recent decline in this company’s stock price. The drop mirrored a decrease in the price of natural gas, of which Chesapeake is one of the nation’s biggest producers.
Chesapeake Energy’s stock price has tracked the price of natural gas over the past couple of months.
McClendon pointed out that Chesapeake has hedged all of its natural gas production through 2009, and the lion’s share of its 2010 production. Most of those hedges are well above the current market price.
Those hedges offer protection for shareholders while the recent dips in the stock prices of Chesapeake and other producers offer something else, McClendon said — an opportunity.
“It gives investors an opportunity to build positions in E&P (exploration and production) stocks that they might not have had the opportunity to do when prices were higher,” he said.
The company’s hedging activities don’t reflect McClendon’s opinions about the future of natural gas prices, which he expects will head upward.
“I’m very very bullish about gas demand going forward,” McClendon said. “In the meantime, I always want to run scared as a company and that’s why we hedge, to make sure that we provide a downside risk to our shareholders through our hedging program.”
Don Mecoy
Business Writer
Get PWND
Some companies use their ticker symbols to help market the business. For instance, Harley Davidson trades under “HOG,” and Cedar Fair, which runs amusement parks, is listed as “FUN.” Perhaps the best-known creative ticker symbol is Southwest Airlines’ “LUV.”
Most companies, however, just pick a group of letters from the corporate moniker. That’s the case for the new exchange traded fund called PowerShares Global Wind Power. The unfortunate ticker is PWND.
If you don’t see the problem, ask your kids.
Next up, the grand opening of Epic Fail. (via Dustbury)
Don Mecoy
Business Writer
Not in my backyard, or on my street
For every action there is a reaction, and never is that more true than with advances in technology.
For instance, wind turbines allow the ultimate renewable energy source — wind — to be captured and turned into electricity. The concept is great until it turns up in someone’s backyard or spoils their view from the living room window.
Suddenly, wind power isn’t so great.
Same goes for transmission lines that bring the electricity into heavily populated areas to power our lives. The not-in-my-backyard naysayers come out in full voice. It spoils their view. It hurts their property values. It’s dangerous. High-sulfur coal is a wonderful alternative.
Yada, yada, yada.
All of which leads me to the latest cry from the naysayers. This one is from a group called stopinternetpredators.org. Seems like a worthy cause.
However, from an e-mail that landed in my mailbox today, it appears that the main focus of stopinternetpredators.org is to stop Google from offering its Street View. That’s the Google mapping feature that offers a detailed, 360-degree look at property along thousands of streets and roads nationwide.
In a video linked from the e-mail, a spokeswoman speaks passionately about the dangers that lurk behind Street View because it allows online predators ways to scope out areas such as playgrounds, yards and bus stops where children congregate.
It’s sort of a chicken little syndrome long before any signs appear that the sky is falling. As far as I can tell, Street View has not been linked to any kidnappings or sexual assaults.
But the danger is there, aided by Google’s Street View, stopinternetpredators.org alleges. There is also a danger that falling space junk might crash on my house, too.
Jim Stafford
Business Reporter
Pickens on Iraq
Boone Pickens participates in his favorite weekend activity. (Photo courtesy of BoonePickens.com)
Boone Pickens never ducks a question. And Pickens, who has launched an all-out effort to promote wind energy and natural gas as primary energy sources, has been talking to the media a lot in recent days.
In a recent interview with The Hill, a Washington, D.C., publication that focuses on politics, Pickens provided some good copy. After noting that he intends to spend $58 million this year to promote his energy plan, Pickens gives some thoughts on Iraq.
We should never leave Iraq without a call on that oil. It should be made available to us at market price. I mean, we’ve earned that by the trillion dollars or whatever it is we’ve spent plus the fact that we lost 4,000 people.
And we should have a call on it. Did we go there for it? Hell, no, we didn’t go there for it. … This came up the other day. They said, “How would you suppose we do that?” I said, “When they push one of those documents in front on me and say, ‘We need another $100 million,’ ” I’d say, “Here’s one for you to sign.” That’s the way I’d go. Every time I sign one for them, I’d get somebody else to sign one that says we get a call on the oil. At market price, so they don’t lose any money.
Pickens also discounts speculation as a primary cause of surging oil prices. It’s simply supply and demand, he said.
Doesn’t have anything to do with it. You have 85 million barrels of oil available in the world, and demand is at 86.4. I don’t think that guy over in China paying $140 for oil is blaming Wall Street speculators for what’s happened to him.
Everybody tries to place the blame. And the blame is our own lack of leadership over the last 40 years on energy.
Don Mecoy
Business Writer
Just one thing
You remember the scene in “City Slickers” when Jack Palance tells Billy Crystal about the secret of life? “It’s this,” he said, holding up his index finger. “One thing.”
“That’s great, but what’s the one thing?” Crystal’s character asked.
”That’s what you gotta figure out.”
Aubrey McClendon has a similar theory about investing. Just one thing — Chesapeake Energy — seems to be his favorite thing to buy. On Thursday, an SEC filing showed that McClendon this week bought 750,000 shares at $57.25. That’s a cool $42.9 million.
Although McClendon has a piece of a basketball team, a private equity fund, a fondness for real estate here and elsewhere, Chesapeake appears to be his favorite place to sink cash.
Don Mecoy
Business Writer
A billion here, a billion there
Forbes magazine covers the billionaire beat like a blanket. Who are the billionaires? Where are the billionaires? What do the billionaires drive? Forbes can answer those questions and more.
This week, Forbes.com offered a story on blue-collar billionaires. The photograph above of Enid’s Harold Hamm hunting with his trusty dog was featured prominently in the report. Hamm, the youngest of 13 children, was reared in a one-bedroom house. After taking his oil company public last May, Hamm’s fortune crossed that magic billion-dollar threshold.
A couple of little corrections for our Forbes friends. Hamm lives in Enid, not Oklahoma City. And his net worth now is a bit more than $4.4 billion. Just his stock holdings in Continental Resources are worth more than $9.4 billion.
The increase in the value of Hamm’s holdings combined with the recent slip in price of BOK Financial Corp.’s stock may have allowed the Enid oilman to surpass BOK Chairman and oilman George Kaiser as Oklahoma’s wealthiest citizen.
I’m sure Forbes will keep us apprised.
Don Mecoy
Business Writer
