Register for free to join our community of investors and share your ideas. You will also get access to streaming quotes, interactive charts, trades, portfolio, live options flow and more tools.
Register for free to join our community of investors and share your ideas. You will also get access to streaming quotes, interactive charts, trades, portfolio, live options flow and more tools.
I agree that much is unknown here. Let's wait and see what unfolds.
I'm confident that the $90M portion of the financing package is a loan. "Equity partners" is a phrase we've heard in conjunction with the smaller ($8M) part of the package for many months now. And think about this: if one equity partner puts down $90M and another puts down $8M, and LLEG puts down $2M or so, how much of the eventual profits can LLEG lay claim to? 2%? 10% I really don't think this scenario is realistic. JMO.
NJ, I agree with most of what you say. The "stretch" you made, that TSSP needs to become a reporting company, is where I disagree a little. It costs a couple hundred thousand dollars a year to report in compliance of with the Sarbanes-Oxley Act, and at $0.0004, $150,000 would be result in the creation of 375 million additional shares a year. The cost in terms of dilution in unacceptable. If TSSP can establish itself on sufficiently profitable terms, at that point it should begin to report and move to a higher exchange. A RS would be appropriate at such a time as well, but not before. My opinion only, of course.
What are you talking about? JP Morgan closed up 8% today!
For Matilda
http://messages.finance.yahoo.com/Stocks_%28A_to_Z%29/Stocks_I/threadview?m=tm&bn=26290&tid=50383&mid=50383&tof=3&frt=2
Naked shorts legislation on the way. Maybe.
I think the grid situation is more complicated than that, Brungy. There may be plenty of room for negotiating, both with ISO New England and with the other would-be electricity producers. And MBB really is very well connected.
It's best to take this one step at a time. I think the question of the day is: Does LLEG"s equity partner still have enough cash to be able to put down its share of the first $8M? If they do, then this stock is going to fly.
The next question will be whether the debt financing is still there with the $90M.
When LLEG starts paying for the interconnection studies and building the boiler, I think the chances are that the grid will work out a deal with them.
If Mike swings the financing, then I'm going in head first feet up. I've reduced my 13M position to 1M for just the reasons Matilda mentioned. I'll miss out on a lot of profit by waiting for the PR, but I don't mind too much. The PR, if it comes, will demonstrate that Mike is a miracle man who will actually transform a microstock into a mountain, so that would be a good time to get back in. My hat's off to the gutsier investors here like Tom V and Cyclone.
Makes a whole lot of sense to me, Matilda!
To everybody who has thanked me, don't mention it. I didn't do all that much work. Howard is right to some extent--the numbers just *had* to crunch right, or else nobody would be interested in building these things.
The main thing is that LLEG now close on the $8M part of the deal and buy that property from NAD. It wouldn't surprise me to learn that this plant, if it goes through, won't come on line until 2012. Like Howard, I am hoping that those mysterious other two deals (Massachusetts and Vermont, I think) are further along, because I'm very concerned that the dilution stop and revenues start up somewhere!
Back at you, Greg.
Attempt at Projection of Fair Value for Share Price
$61M annual revenues
$30M annual operating costs
$13 loan service (assuming 8% rate, 10 year repayment & $90M loan amount)
__________
$18M profit
I think we can count on sharing at least half of that with our equity partners, NAD and the other company (what's it called?)
Let's just assume we're talking about $9M profits left for shareholders. With 1.5 billion shares outstanding that gives an earnings per share of $0.006. At a multiple of 12 (average for utility-type stocks, I think), you end up with a fair pps of 7 cents.
That's a 20-bagger from here, eh? Not a bad start if they can pull it off.
Tally of Revenues: $61,000,000 a year
(That $75/MW price is wrong. I checked the ISO New England website and took the average price paid to electricity generators over the past 12 months. It came out to $63/MWhr.
In the case of LLEG's 65MW plant in Berlin, that yields $36M/yr.)
$36M electricity
$20M RECs
$5M tax credit
--------------
$61M total
Revenue Projection: Federal Renewable Electricity Production Tax Credit $5.1M/yr.
from my last post:
"it also is eligible for a federal renewable electricity production tax credit of 0.9 cents/kWh for its first 10 years of operation."
That translates into a $5M annual tax credit for LLEG's 65MW plant. Tax credits are good!
Revenue Projection: REC Revenues of $20M/yr.
A 50MW woodchip fired plant in Portsmouth, NH, is generating between 300,000 and 400,000 REC (Renewable Energy Credits) annually and selling them for $15M. This probably means that LLEG's 65MW plant will generate between 390,000 and 520,000 RECs a year and earn $20M from their sale.
http://findarticles.com/p/articles/mi_qa5392/is_200708/ai_n21293809
Public Service of New Hampshire (PSNH), the only regulated utility in New England that still owns its generating assets, commissioned the Northern Wood Power Project (NWPP) at its existing Schiller Station in December 2006. Schiller Station (Figure 1), in the city of Portsmouth on the Piscataqua River border with Maine, is PSNH's third-largest facility and has been in continuous operation for six decades. The first three units were retired decades ago, but Units 4, 5, and 6--each rated at 50 MW and built in the early 1950s--remain hard at work. In the early 1980s, they were refurbished to burn less than 1% sulfur bituminous coal and No. 6 fuel oil. Now, Unit 5 is burning wood instead of coal.
[...]
PSNH estimates that the NWPP will generate between 300,000 and 400,000 RECs each year. Selling them will bring in about $15 million of additional revenue annually, helping to keep rates low for PSNH customers. Because the repowered Unit 5 is an open-loop biomass system, it also is eligible for a federal renewable electricity production tax credit of 0.9 cents/kWh for its first 10 years of operation.
Revenue Projections for LLEG: Electricity Revenues
Wholesalers of electricity in New England were getting $75/MWhr in 2005 and were projected to continue getting that.
$75/MWhr x 65MW x 24hr/day x 365days/yr = $43M/yr.
http://www.iso-ne.com/pubs/whtpprs/elec_costs_wht_ppr.pdf
P. 11
Business-as-Usual Electricity Prices: Flat Natural Gas Prices ($/MWh)
2006 2010 2015
Wholesale electricity $75.50 $75.50 $75.50
Capacity $8.30 $14.30 $14.50
Transmission $3.60 $6.30 $6.40
Distribution $68.90 $69.00 $69.00
Total $156.30 $165.10 $165.40
Highlight #2, p. 21: Cost of Woodchips = $20M/year
Cost of *delivered* woodchips will probably start at $27/ton and increase as fuel costs increase. As Greg has pointed out, increasing fuel prices will also increase Laidlaw's revenues to a degree.
http://www.mass.gov/doer/programs/renew/bio-eco-impact-biomass.pdf
"Establishing the cost of this wood chip fuel for biomass plants is more difficult. New Hampshire has 6 biomass electricity plants that were constructed in the 1980s, and operated steadily from 1995-2006 (with the exception of one plant that closed in 2002). Average prices in the state during that time, as reported in the New Hampshire Timberland Owners quarterly market report, and expressed in constant 2006 dollars, ranged from $16.84 per ton (4th quarter 2002) to $27.40 per ton (2nd quarter 2006) averaging $21.37 per ton over the entire period."
Moreover, the authors of this study "calculate biomass plant wood demand to be 10,389 tons per MW of biomass capacity per year," so Laidlaw's Berlin plant will need 65MW x 10,389 tons/MW = 675,000 tons/yr. 675,000 tons x $27/ton delivered = $18M/yr for woodchips. Assume that cost is going to rise with rising diesel costs, and take $20M/yr, which is actually the number that Laidlaw gives on their new website (http://laidlawenergy.com/berlin-nh-project.html).
Very Useful Study on Biomass (woodchip-fired) Electric Plants
http://www.mass.gov/doer/programs/renew/bio-eco-impact-biomass.pdf
Highlight # 1: $7.4M annual operating costs for typical 50MW plant. Laidlaw's plant is supposed to be 65MW, so figure $10M in operating costs
p. 22, Table 5, Estimated Plant Operating Costs
50MW scale factor for payroll, supplies, and maintenance:
0.6 per MW @15MW size per MW @ 50MW size 2006 dollars
payroll 975,000 65,000 39,000 43,680
property taxes 225,000 15,000 15,000 16,800
supplies and services 400,000 26,667 16,000 29,867
maintenance 350,000 23,333 14,000 26,133
utilities 425,000 28,333 28,333 31,733
TOTAL 2,375,000 158,333 148,213
total @ 50MW $ 7,410,667
source: Innovative Natural Resource Solutions (2002) for 15 MW plant in NH
Revenue, Cost & PPS Projections
I've done it all over on the Ragingbull MB. Have a look if you like.
Does this help, Greg? (My post from the RagingBull MB)
***
Revenue Projection: REC Revenues of $20M/yr.
A 50MW woodchip fired plant in Portsmouth, NH, is generating between 300,000 and 400,000 REC (Renewable Energy Credits) annually and selling them for $15M. This probably means that LLEG's 65MW plant will generate between 390,000 and 520,000 RECs a year and earn $20M from their sale.
http://findarticles.com/p/articles/mi_qa5392/is_200708/ai_n21293809
Public Service of New Hampshire (PSNH), the only regulated utility in New England that still owns its generating assets, commissioned the Northern Wood Power Project (NWPP) at its existing Schiller Station in December 2006. Schiller Station (Figure 1), in the city of Portsmouth on the Piscataqua River border with Maine, is PSNH's third-largest facility and has been in continuous operation for six decades. The first three units were retired decades ago, but Units 4, 5, and 6--each rated at 50 MW and built in the early 1950s--remain hard at work. In the early 1980s, they were refurbished to burn less than 1% sulfur bituminous coal and No. 6 fuel oil. Now, Unit 5 is burning wood instead of coal.
[...]
PSNH estimates that the NWPP will generate between 300,000 and 400,000 RECs each year. Selling them will bring in about $15 million of additional revenue annually, helping to keep rates low for PSNH customers. Because the repowered Unit 5 is an open-loop biomass system, it also is eligible for a federal renewable electricity production tax credit of 0.9 cents/kWh for its first 10 years of operation.
Cost of *delivered* woodchips will probably start at $27/ton and increase as fuel costs increase. As Greg has pointed out, increasing fuel prices will also increase Laidlaw's revenues to a degree.
http://www.mass.gov/doer/programs/renew/bio-eco-impact-biomass.pdf
Establishing the cost of this wood chip fuel for biomass plants is more difficult. New
Hampshire has 6 biomass electricity plants that were constructed in the 1980s, and
operated steadily from 1995-2006 (with the exception of one plant that closed in 2002). Average prices in the state during that time, as reported in the New Hampshire
Timberland Owners quarterly market report, and expressed in constant 2006 dollars,
ranged from $16.84 per ton (4th quarter 2002) to $27.40 per ton (2nd quarter 2006)
averaging $21.37 per ton over the entire period.
Good news for Berliners
http://www.mass.gov/doer/programs/renew/bio-eco-impact-biomass.pdf
A number of previous studies have examined regional economic impacts of using
biomass energy. Benefits for local economies clearly exist; given the unequal geographic distribution of the world’s fossil fuel endowment, developing local energy sources means replacing imports to an area. Replaced imports may originate in other regions (e.g. coal) or outside of the U.S. (oil). But utilizing biomass and other renewables also creates more total employment than fossil fuels: a key conclusion of a study analyzing 13 independent reports was that “across a broad range of scenarios, the renewable energy sector generatesmore jobs than the fossil fuel-based energy sector per unit of energy delivered” (Kammen, Kapadia et al. 2004). The studies reviewed below (several of which are listed in Table 1) detail employment and other economic impacts from different perspectives.
Don't go, Matilda! Who the hell am I going to talk to?!
***
http://www.mass.gov/doer/programs/renew/bio-eco-impact-biomass.pdf
***
Bergman and Zerbe note that biomass fuel prices range widely, depending on wood residue availability and demand. In some areas, chip prices have been near pulp prices, at least for small-scale usage. At the power plant scale, Bergman and Zerbe cite Vermont prices for the Ryegate and McNeil power plants, for which whole-tree chips have been acquired for $12 to $20 per ton over the last 15 years. Harvesting costs are typically assumed to be $7-$10 per ton, chipping $4 per ton, stumpage about $1, and the balance in trucking. At $20 per ton, chip energy costs about $2.16/MMBtu (assuming 9.25 MMBtu/green ton), slightly more than coal at perhaps $2/MMBtu (assuming $50/ton and 25 MMBtu/ton). Yet capital costs for woody biomass plants are high, ranging from 50-Energy from Forest Biomass: Potential Economic Impacts in Massachusetts Page 5 200% more than for similar-sized fossil fuel plants (Bergman and Zerbe 2004). And our current study suggests that chip prices will be significantly higher than $20 per ton.
70 truckloads a day for 50MW plant
http://www.mass.gov/doer/programs/renew/bio-eco-impact-biomass.pdf
Given that biomass sources are dispersed over the landscape, most wood chips travel on trucks, which are well adapted to hauling short distances from differing points of origin. Thus good road access to plants is critical. A 50 MW plant operating at full capacity might get 70 truckloads delivered per business day, requiring 140 daily truck trips. This also suggests that 50 MW power plants will not be popular near residential areas, schools, etc., and that location in new or existing industrial areas with good access directly off major roads is most likely. Capital costs will also be minimized when plants are located close to existing high-voltage electricity grids (which would otherwise need to be constructed, at potentially high cost and time for permitting, and creating potential to generate public opposition).
Sorry, dude. I got in a snit there. I'm not a DD machine and am pretty lazy myself. But I do not think this is brain surgery or Maxwell's Equations. I'll try and poke around and come up with some better numbers. What would be really nice is if the company came out with some metrics to help us understand the profit potential and also the risks. That's not asking too much!
It's not in the least ridiculous to try to add up trucking costs. As Greg posted earlier, "in 2007 Public Service Company of New Hampshire replaced one of its three 50-megawatt coal-fired boilers at Schiller Station in Portsmouth with a biomass system." I strongly suspect that PSNH knows how much trucking and woodchips cost in our business model. Do you really think this information is beyond our reach? Lazy lazy lazy.
Oilcan, on the MBs of real stocks, investors try to understands the metrics and profit margins of a given business model. On hyping moronic pump boards, people squeal like pigs and discuss nothing but how rich they're going to be and what the pps is at a given moment. I'm hoping that this MB can become the useful kind. I have no illusions of grandeur, don't want to save the day, etc. I'm just curious about the metrics of the business that I'm invested in. Okay with you?
I know it's not new, but $4/gallon trucking costs are new. And the relative shortage of woodchips in Northern NH is also new. I'm not saying that this isn't going to pan out. I'm just curious to know the real numbers. Are the woodchips going to cost $20M/yr or $40M/yr. It makes a big difference, doesn't it?
Kermit, don't assume it will all work out. That's what they did with corn-based ethanol, but the price of corn went up, water usage became a big concern, and the numbers didn't crunch. Ethanol stocks are now a fraction of what they cost 18 months ago, and half-built ethanol plants litter the landscape. Let's be sure that biomass checks out.
Hell, Matilda, I'm just trying to get a sense of things. I've asked the board to offer more reasonable estimates than mine, so go for it.
If the round trip is 100 miles, then let's figure an hour each way, an hour to load and an hour to unload: four hours. A driver could do that twice, maybe three times a day. You've got 4x24=96 loads a day. 96/2=48 drivers. 96/3=32 drivers.
If this is wrong or stupid, tell me! Offer a more realistic scenario.
Oops, looks like I grossly underestimated the mileage for an 18-wheeler and forgot to factor in the price of diesel!. Between 2 and 6 MPG looks more like it. At 4 MPG and an average haul of 100 miles, you're going to need 25 gallons of diesel. At $4/gallon, that's $100 extra per load. If the chips cost $550, fuel costs are adding another 20%. So instead of $20M/year, count $25M a year at least for chips.
PennysfromHeaven says that $30/ton is NOT delivered. So what kind of mileage does an 18-wheeler loaded with 18 tons get? If it could even get one mile per gallon, and the average haul were, say, 50 miles, you'd have to add $50 to every truckload. 18 tons x $30/ton = $540, so you'd be adding 10%. But I doubt you could get anything like that kind of mileage, and we're hauling from Maine, which could be a greater distance. Anybody got more accurate numbers than mine?
Good point, Greg.
I've ben emailing with pennysfromheaven, whom some of you guys estranged from this MB. He has many connections in the Berlin area and knows people in woodchip hauling and all sorts of related fields. His contacts tell him
1) that woodchips are going for $30/ton, but that rising fuel costs are pushing that price ever higher, so heads up!
2) that the Laidlaw plant will need a 20-ton delivery every 15 minutes, four times an hour, all day long, every day of the year
3) that you can't count on each truck carrying the full 20 tons, because the chips get wet and sometimes you can only deliver 3/4 of the load.
So figure 18 tons per truck x 4 trucks per hour x 24 hours per day x 365 days per year x $30/ton = $19M/year.
But also keep in mind that this cost can go up dramatically as fuel costs rise.
Well, maybe we take the conservative number--150,000 RECs per 30MW = 300,000 Recs per 60MW. So let's figure 300,000 RECs at $50/REC = $15M. That takes our revenues from $60M to $75M, which is about right, I think.
Don't forget the other costs, and they're are PLENTY of them.
Salaries and benefits for 40 workers
Salaries and benefits for the company officers
Insurance of various kinds
Maintenance on the boiler
Corporate Income Tax
Etc. Etc.
Does anybody remember how many RECs 65MW will produce? I think that RECs were auctioned off in Massachusetts recently for $52/REC. Don't know if that price will hold in NH.
It seems pretty clear to me from the new website that the woodchips are going to cost $20M a year. I think we can assume that means delivered.
According to
http://www.nyenrg.com/berlinnhproject.html
the woodchips are going to cost $20M/yr.
(iv) $0.105 per kilowatt hour. (1 kilowatt = 0.001 megawatt) X 75 megawatts
this is per hour
So the answer is $0.105/kw x 1000 kw/mw x 65 mw x 24 hours/day x 365 days/year = just under $60M/year.
Jersey, I have no idea. I don't follow these things and must rely on the expert opinions of those who do.