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Raser reports Q1

Geothermal developer Raser Technologies reported Q1 earnings yesterday with mixed results. If one were to judge the company purely by financial measures one would conclude this is a penny stock headed toward zero with accelerating losses, very little revenue, and negative shareholder equity. However, the market seems to be taking a much more optimistic view, assigning a market cap in excess of $500M, based on the non-financial aspects of the report which principally involves the development of 8 geothermal electricity projects in Utah and Oregon. Here is a snapshot of the consolidated balance sheet and operations statement:

Raser Technologies Q1 2008 Balance Sheet

Raser Technologies Q1 2008 Operations Statement

With the bad news out of the way, the company has made progress toward developing its geothermal project portfolio with approximately 80MWe underway in 8 projects scattered throughout Utah, Nevada, and Oregon. Management expects that all 8 projects will be in commercial operation by the end of Q1 2009. Power purchase agreements totaling 22MW have been completed with the City of Anaheim and more agreements are in-process at this time. Ground was broken on the first plant in Utah and the company managed to secure some star power in the form of Senator Orrin Hatch for the ceremony. Project financing for 155MWe has been secured and power conversion units accounting for 45MWe have been ordered with about 8MWe now in possession of the company.

Possible snags in getting to commercial operation for these plants include: permitting, environmental impact reports, transmission, and most importantly, water availability and rights. The company has not spoken publicly about any of these issues and with 8 concurrent projects underway, there is substantial delay and completion risk yet to be mitigated. While it’s clear the company is moving full speed ahead in developing its projects, we can’t help but note that management claimed the first plant would be in operation in Q1 2008 in the earnings report one year ago. We said the company’s plans were overly aggressive then, we maintain that stance even as we’re impressed by the progress that has happened to date.

There is still substantial risk in this stock relative to the bet on positive cash flow in time to meet the committed financial obligations.

Raser Technologies

4 Comments so far

  1. Boris May 15th, 2008 6:49 pm


    Your article is a preliminary commentary but one which suggests snags which do not exist and show your ignorance of the development.

    You say snags are : permitting (none and none to be expected), environmental impact reports (none all on private property buffered by hundreds and thousands of surrounding acreage), transmission (hooking up to the grid will occur within one week of plant completion), and most importantly, water availability and rights (none issue- already reserved and legally assigned to RZ)

    The only snag could be a delay in funding of financing of plants but that is lined up and if ML does not come through others will as RZ has contingency plans.

  2. mike May 15th, 2008 8:48 pm

    I always find it peculiar when commenters find the need to attack to make their point. And one reason we don’t write about Raser much is that these articles really attract the crowd that is seems to be committed to this sort of commentary – particularly when the content of the article isn’t all sweetness and light.

    It is a fact that Raser represents a speculative investment, at best. It is a fact that Raser is in a precarious financial position, the auditors even make a note of this in the SEC filings. It is a fact that renewable projects, particularly geothermal projects are fraught with delay and difficulty coming from all the angles mentioned in this piece plus the uncertainty of resource until the hole is drilled and well is flow tested. To suggest that Raser will face none of these challenges is ludicrous.

    Demonstrate, with evidence please, one place where Raser’s land holdings are detailed. There is no specific location given, there is no disclosure of private vs. public. There are 8 concurrent projects, surely, not every one of them is the same.

    If you’re going to make this sort of claim, to be taken seriously, you’re going to need to identify yourself and your sources to have any credibility. Otherwise, please don’t waste your time or ours with vague refutation and insults.

  3. Joshua May 15th, 2008 9:22 pm

    It’s pretty clear Boris is a troll. Ignore him and his ilk.

  4. beth May 16th, 2008 4:49 am

    Personally, I don’t think your article goes far enough in calling out the risks of geothermal development in 8 projects happening all at once. How can Raser still be in business with their financials?