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Competition in Europe -- PetersShipyards LNG-Packs
Natural Gas Use is on the rise for European Inland Waterway Shipping By Peter Pospiech at September 19, 2013 04:28
This looks like an ideal application for Capstone
Yes, it is interesting. I had advocated voting against the last compensation package but seem to recall that I was then bombarded with data supporting overall improvements, which in turn at the time supported the outlandish compensation packages in the writer's view. Times change I suppose, as evidenced by the vote tally. "The mice have to smell the cheese" commentary was insulting. Profits used to be predicted to be "just over the tip of my skis" or "within the next two quarters," but now due a blinding snowstorm know one seems to know when that crucial point will be reached. The Queensland project receives no mention and it now seems that all hope is on the economic revival of Europe.
DJ did confirm my theory, put forth in my last post, that future growth lies in the commercial building sector and although they, Capstone, will continue to participate in the oil and gas sector for decades to come they feel that their real niche will be in baseload and off the grid load power requirements of commercial buildings.
If Capstone is really serious about the growth of the LNG shipping industry (DJ's projections, in the slide presentation, on the LNG new-builds was overly optimistic btw) Capstone should be in close contact with TOTE Maritime who just signed a contract with NASSCO just signed a contract with NASSCO of San Diego to build up to 5 LNG powered 3100 TEU container ships. Tote has also signed contracts with NASSCO to convert two of their Orca class Diesel Electric propulsion container ships to duel fuel diesel/natural gas. Most of the new-build LNG ships are being propelled by tri-fuel diesels electrics. Capstone's niche in these plays will be in the auxiliary power generation component for which I think they are ideally suited. It's nice to see to "potential market" pie charts but penetrating them is another matter. DJ admitted as much in saying that no one wants to be the first on the block to try new technology. Ocean going shipping is one of the slowest industries to adapt to change, but if you are interested in the market you have to go after it.
Emissions Control Area (ECA) fuel sulfur content requirements of MARPOL Annex VI regulation 14.4 is a game changer and presents a great opportunity for Capstone to strut their stuff--just looking over the tips of my skis...
About that growing backlog of orders...
On the surface it would seem to be a good thing to see growing backorder numbers. We now all await DJ's explanation as to how much inventory, if any, was "on the dock" awaiting shipment to DesignLine. A year or so ago, during a CC, DJ discussed the backlog quite frankly stating that while the orders are in the que they can and do sometimes stay there for quite sometime--awaiting delivery orders from the purchasers. It would be quite another matter if this backlog was simply due production levels and necessitated running another shift to whittle it down. Unfortunately, this is not the case.
During the above mentioned CC DJ also said "what is a year or two delay to a major oil company? We have to conform to their time-lines unfortunately (or something to that effect.) What a year or two has revealed is that the decline rate of natural gas in shale gas formations and gas liquids in "tight" formations is much higher than once believed. The majors are now selling acreage as fast as possible prior to the bubble bursting, all the while drilling as fast as possible to keep the illusion alive as they shed assets. Google up "shale gas production decline rates" for the latest news of this situation and form your own opinions. At the present time the only major shale formation not in decline is the Marcellus.
In the short term the increased drilling may bode well for Capstone, in the long haul I believe the picture changes dramatically. "The very high decline rates of shale gas wells require continuous inputs of capital - estimated at $42 billion per year to drill more than 7,000 wells - in order to maintain production. In comparison, the value of shale gas produced in 2012 was just $32.5 billion." Production at a loss isn't sustainable and only a large spike in Henry Hub prices to 5 - 8 bucks per MMBU or massive exports can reverse this situation. Overinflated industry claims could pull the rug out from optimistic growth forecasts within just five years
Of course there will continue to be a need for off he grid power and I personally believe that Capstone's success lies in the penetration of Data Center, and major commercial buildings. I admit I could be completely wrong in my assessment and would certainly welcome the numbers to prove that.
This would be a great time for Capstone to solicit Aux. Power systems with the big boys. The infrastructure for LNG will be built into the tankers therefore Capstone Turbines would be a perfect fit.
General Dynamics NASSCO to Construct Four Product Tankers for American Petroleum Tankers
* Reuters is not responsible for the content in this press release.
Fri May 31, 2013 2:30pm EDT
General Dynamics NASSCO to Construct Four Product Tankers for American Petroleum Tankers
PR Newswire
PLYMOUTH MEETING, Pa. and SAN DIEGO, May 31, 2013 /PRNewswire/ -- General Dynamics NASSCO, a wholly owned subsidiary of General Dynamics (NYSE: GD), announced today that it has entered into a contract with an affiliate of American Petroleum Tankers (APT), a company majority owned by funds managed by Blackstone on behalf of its investors, for the design and construction of four 50,000 deadweight ton LNG-conversion-ready product carriers with a 330,000 barrel cargo capacity. The contract includes options to build four additional ships.
Construction of the first tanker is scheduled to begin in the third quarter of 2014, with deliveries scheduled to begin in the fourth quarter of 2015, continuing through 2016. The four-ship APT contract will add up to approximately 800 jobs at NASSCO during construction and more than 165 seagoing union jobs during the operation of the vessels.
The 610-foot-long tankers are a new "ECO" design that offers improved fuel efficiency and incorporates the latest environmental protection features, including a Ballast Water Treatment System. All of the ECO-class tankers will be constructed at the NASSCO shipyard in San Diego. This contract builds upon the strong relationship NASSCO and APT developed during the construction of five State-class product carriers from 2007 to 2010.
The ships will be designed by DSEC, a subsidiary of Daewoo Shipbuilding & Marine Engineering (DSME) of Busan, South Korea. DSEC's ECO design achieves improved fuel efficiency through several features, including a G-series MAN ME slow-speed main engine and an optimized hull form. The tankers will have dual-fuel-capable auxiliary engines and the ability to accommodate future installation of an LNG fuel-gas system. The ECO-class tankers represent the continuation of NASSCO's successful partnership with DSEC, which was a partner on the five APT State-class product tankers and currently is contributing to two LNG-powered containerships for TOTE Shipholdings, Inc.
Fred Harris, President of General Dynamics NASSCO, said, "By continuing to bring the most economical and environmentally sound technology to Jones Act operators, these ECO tankers show our continued commitment to be one of the most innovative shipyards in America. I am pleased to renew our partnership with APT on this exciting new program. Along with TOTE, this is the second return customer we have welcomed back to NASSCO within the past six months, which speaks to the high-quality workmanship of our skilled workforce."
The construction and operation of the new vessels are aligned with the Jones Act, which requires that ships carrying cargo between U.S. ports be built in U.S. shipyards.
Rob Kurz, CEO of APT, said, "This investment demonstrates our continued commitment to building and operating ships for the U.S. Jones Act trade. We are proud to bring new U.S.-built tonnage into the market at this exciting time, helping our country achieve its long-standing strategic objective of energy independence."
Sean Klimczak, Senior Managing Director of Blackstone, said, "This investment demonstrates our long-standing support of the U.S. maritime industry and our commitment to bolstering job creation in the U.S. We are pleased to partner again with NASSCO on this important newbuild program and to provide growth equity to APT to construct and bring these new, state-of-the-art vessels to market."
{Apparently they think they know something, and I'm betting on them....}
They have been making money...
{I want to point out that your choice of words, carried a negative intent, and are not factual.}
Lord. Negative intent? Factual? Assumptions are generally not factual although my assumption was based on a link provided by another well informed member.
Let's not dare say anything negative about this company, that we have rode so long...it might hurt the PPS. We hear plenty about how the shorters and MMs are in control factual or not ad-nausum. I would like to see the company in control and show a profit. Other posters seem to make comments in the negative without a keel hauling but for some reason you add extra ballast to mine.
We've sailed this course before and I thought we were past such pettiness.
What I wrote was "From the above I assume that Capstone would have to include the "Hail Mary" of a reverse stock split as an option in the request for extension. Hopefully, this appeals process will delay the delisting and Capstone's Q4 and Y/Y numbers will beat expectations and the pps will break and maintain above a buck thereby eliminating the reverse split." I would also assume that anyone reading my post would see that I do not advocate a reverse split. Your points about OTC are well taken and understood; the topic was about the NASDAQ delisting.
Now show me some of those last quarter post wherein you state that "This same poster was throwing around "reverse split posts" and the like before last quarter's report beat the street."
{This same poster was throwing around "reverse split posts" and the like before last quarter's report beat the street.}
If you are referring to me I believe you are mistaken. I have never "thrown" around reverse split posts and in fact have mentioned in the past that in my experience they generally don't turn out well. This poster is not a fan of reverse splits.
This particular poster, meaning me, certainly has no interest in a reverse split. Did I "selectively" focus on the reverse split sentence in Gene-genome's post? Yes, that was the topic of discussion. Did I not ask for clarification if I was wrong or mis-reading it? I re-read it again and it sure seems that the requirement is there, although the language in the referenced post indicates that NASDAQ has stated that such language be included, i.e.:
{The plan of compliance should describe the manner in which the company will regain and maintain compliance with the NASDAQ continued listing standards. NASDAQ has stated that the plan should include the implementation of a reverse stock split in the near term – no later than 180 days after receipt of the delisting letter. In determining whether to provide the company with the opportunity to implement its plan of compliance, the panel may consider other factors such as the company’s fundamental financial strengths and weaknesses, the overall market, the company’s historical bid price and impending corporate actions.}
These are valid questions considering the take-down to the 70's last quarter from which the stock pps has been churned ever since. Also, we all have an opportunity to learn from one another when we have open dialog.
Re-reading the "reverse split in the near term" portion it would appear to me that Capstone would have to announce that prior to or during the Q4 CC. The way I'm reading this is that Capstone will be forced to reverse split unless there is other compelling evidence that the PPS will trade above a buck for 10 consecutive business days shortly after sending in the appeals letter (unless of course it does so prior to then.)
Correct me if my interpretation is in error.
{NASDAQ has stated that the plan should include the implementation of a reverse stock split in the near term – no later than 180 days after receipt of the delisting letter.}
From the above I assume that Capstone would have to include the "Hail Mary" of a reverse stock split as an option in the request for extension. Hopefully, this appeals process will delay the delisting and Capstone's Q4 and Y/Y numbers will beat expectations and the pps will break and maintain above a buck thereby eliminating the reverse split.
Thanks for the info.
{Still, it has recently announced a bunch of promising deals and some think the many folks short the stock will end up burned.}
No doubt they do. The same goes for the longs unfortunately. While the major indexes continue their upward push Capstone remains mired in a very narrow channel waiting for the water to rise. As Gene_Genome stated in so many words...with 300,000,000 shares of cargo in the hull this boat might not float in its current configuration.
If the Q4 and year end reports come on or around June 14th even good numbers will not help with the June 19th deadline. The only hope I can see at this point is a very significant order announcement real soon.
{The way I see it is May 6th would be the last day to break above a buck and stay there for 10 consecutive days prior the 19th,...}
June 6th of course. Sorry for mistake.
Delisting... 36 "business days" to go although I'm not sure how Memorial day will work into the equation. The way I see it is May 6th would be the last day to break above a buck and stay there for 10 consecutive days prior the 19th, so that cuts us down to 26 days max to start the clock. Any speculation about applying for an extension, etc. is just that. "Ask Management" states {If Capstone does not regain compliance prior to the June deadline, Management would seek a time extension from Nasdaq or take other remedial actions to maintain its Nasdaq listing.}
What other remedial actions are available other than a reverse split? I've never seen one pan out in the past and it generally just delays the inevitable.
Big news we could use right now is the only way I see out of this. DJ was all upbeat about this quarter being very good. We shall see... Does anyone know the projected Q4 CC date?
{I am going back and looking once again at my charts, chicken bones, weather dice and pig entrails.
LOL. The chicken bones, weather dice and pig entrails I can understand, especially after scrutinizing the tea leaves. The charts are what confuse me.
Looks like the recycle is in effect today. I, like several others here, was thinking that it would be around .93 or .94, but that theory is out the window at the moment.
{They way I'm interpreting this is that the MMs ceased pecking the bid with conviction to move the price lower - either capitulation to the trend or they didn't really care (they had accomplished their goals earlier?) - and allowed the market to operate, more or less.}
Looks like you were right as the trend is not our friend so far today. Very light volume so who knows what may materialize in the next 2 1/2 hours? IMHO that answer to that is that we drift lower. Hope I'm wrong.
Some news about a large order of C1000s wouldn't hurt about now.
It was interesting to see a hundred thousand II2 bids at.89 in the last two minutes. Those bids would come and go generally averaging around 60K until the spike above 100K. It really seemed as if the MMs didn't want it to close at .90 or above.
{This is biggest bull stock on the nasdaq}
Its going to be a pink bull should it not trade above a buck for a minimum of 10 consecutive business days by June 19th. Capstone states that in the event that they do not come into compliance that they will apply for an extension.
{Russel comes and goes, I don't put much stock in it.}
The only rub with that is funds within the index that hold Capstone. Those portfolios would have to be rebalanced. I have no clue as to how many shares may, or may not, be held in Russel Index funds.
From Seeking Alpha: Sunday 04/14/2013
8:25 AM The reconstitution of the Russell indexes coming up in June, Credit Suisse aims to anticipate who's in and who's out. The rules-based approach of the Russell 2000 has allowed arbitragers to profit each summer by front-running the moves, making the Russell 2000 ETF (IWM) a poorer play for small cap fans than IJR . Expected among the top 25 adds are ARCP, SRPT, PBYI, ACAD, and WSTC. Among the top 25 deletes: CPST, FCEL, CHKE, OMER, and EML. Read comments: The reconstitution of the Russell indexes coming up in June, Credit Suisse aims to anticipate...
CPST price at time of publication: $0.93. Check CPST price now »
(78,711 square feet for $60,371.34/month.} Plus a 60 month extension. It would seem that Capstone intends to be around for a bit longer.
{I really didn't think it was coming to this.}
Well, after the enthusiasm displayed during the 3Q CC, i.e. "we think 4Q will be real good" or something to that effect, I doubt most of us thought we would be here at these prices today. Perhaps there is still something in the works that will take the shorts down--time and our wearing patience will tell.
Pretty good as they are only sitting .0001 away from the ask. There does seem to be more than the bots in play today. Those 80s scare me but not as much as the 70s did.
If this thing were to go into the 70s again I might be inclined to get back in for awhile.
GLTA and its a shame we have to think luck plays a part.
Yes, it certainly is weak for Capstone. Check out LNG for a nice daily chart.
Perhaps Capstone should start thinking smaller with huge volume.
From David Crane, president and Chief Executive of NRG in yesterday's WSJ:
Natural gas futures prices @ Henry Hub just notched above $4.00 per MMBTU. It is my feeling, and has been, that higher natgas prices are a double edged sword for Capstone. One one hand the producers will be more inclined to drill new wells (although they are doing quite well with gas liquids and oil right now) which may spur wider use of on-site Capstone power generation. On the other hand higher gas prices for the consumer will dampen demand and take some of the wind out of the NatGas transportation and off the grid power applications.
The current "high" prices in Henry Hub are the result of decreased production (closed wells) and a harsher and longer winter heating season than anticipated and lower storage inventories (imagine that in a country awash in NatGas.) Last year at this time Henry Hub was trading just below 2 bucks.
All of that said I just learned today of some large ship diesel conversions and several new container ships that will utilize duel power, i.e. MDO and NatGas. The market is still out there...Capstone just has to figure out how to sell their "Value Proposition" technology to these new markets. While C1000s won't replace the prime propulsion movers on these vessels there is certainly a big untapped market for Auxiliary power which Capstone could fill, whether it be gas or diesel fuel being used.
I also believe, regardless of fuel price to some extent, that Capstone can still tap the Urban high rise and critical uninterrupted power supply needs of customers seeking a low maintenance, highly reliable power source connected to the NatGas underground infrastructure. I mention "regardless to fuel price" as the grid price will increase as the cost of NatGas does and we are also hearing talk of the power producers switching back to coal believe it or not.
All of the "happy talk" during the last CC and the Roth "Buy" rating has yet to show results in new announced orders or share price. Will Capstone's day in the sun come prior to Q4? Your guess is as good as mine.
Great presentation all the way around. It is good that Capstone is finally looking into the LNGC market as well as the non-LNGC ocean going ships like I mentioned in a prior posting.
Several years ago I called Capstone HQ and told them about some great opportunities in the Floating Storage and Regas Unit sector. I also contacted some former colleques who are in senior management positions at various LNG shipping companies and passed on the Capstone Turbine concept.
What Capstone needs to do is market their solution to the ship builders, mainly in S. Korea and Japan, and the ship owner's. There are curently 103 new-build LNGCs under contract through 2017. These are already spec'ed out, but no doubt there will be plenty more new-builds on the horizon. The ideal conference for Capstone to exhibit would be GasTech 2014 in S. Korea which occurs about one year from now.
I know of one West Coast shipping company that pays more in fines for pollution and cleaning costs for boats across the channel in a year (because of their soot belching standby diesel generator sets) than the cost of several C1000s. They are just waiting for Capstone to make the call and offer a solution.
Hopefully Mr. Gilbreth left in good graces and will put his knowledge to work designing and selling Capstone's product line. If he has been a believer all of these years you would think he will take that away with him.
Yes, those boats do use Bunker C which is the residual fuel oil that remains after everything else has been cracked out. Bunker C has to be heated to flash point and centrifuged to make it a suitable fuel for a diesel engine (somewhat different than from a steam ship in which it is only heated to flash point.) Bunker C is used along with Marine Diesel Fuel (MDO,) and Heavy Fuel Oil (HFO) depending on supply and environmental issues, i,e, MARPOL Annex VI.
On the LNG ships now being built, diesel engines that will burn CNG are being installed which have a seamless switch over or fuel sharing mode, in which liquids and gas can be burned simultaneously depending on requirements. The Box boats Car Carriers, bulkers, and tankers utilizing slow and medium speed diesel propulsion (almost all of today's fleet) can be converted to utilize fuel sharing mode, but the cost is running about 1 million per vessel. Problems with bunkering facilities for LNG of course are problematic.
You are a brave soul to play the markets in shipping which is notorious for its boom and bust cycles--as you said "dangerous." I have quite a bit of experience in the LNG shipping world, but personally stay away from investing there. Gotaas Larsen, aka Golar LNG (GLNG) would have made a nice play in the past two years.
On the shoreside aspect of LNG Cheniere Energy (LNG) has been very nice in the past 28 months or so having made a run from $2.32 to over $22 today. Nice!
Just saw the 8K also. Mark Gilbreth has been with Capstone since August 1995. Greener pastures selling rather than manufacturing? I would expect that his experience will be difficult to replace.
Hope you have a great time and are not sailing on a Carnival Cruise Lines vessel. Don't know that a Cappy would have made any difference in the latest disaster though.
Really small boat is what it is. Here is where Capstone can provide some real solutions:
Q-Max and larger LNG Carriers are being built at a rapid pace
The new generation of LNG ships are being built with duel fuel Diesel Electric propulsion. Although the diesels are the prime mover of choice because of fuel economy, they do have their issues.
IMHO the turn around will only happen due some significant order announcements to fill the production gap. I've been wrong before, and of course could be again. I think we have some further downward movement in store unless those sales announcements start flooding in.
LLoyd,
No matter how you dice it Captone is a "Penney stock" and therefore inherently risky. I think it will remain a niche player until it overcomes reciprocating engines that are house hold name. I do think that time will come, just perhaps not on the schedule we would like.
Okay Gene, no seller's remorse as I kept a boatload, just sold a ship load LOL. I have to listen to the CC again a there were too many disruptions this afernoon. I look forward to seeing the comments here on this board and the pps action going forward.
GLTA
Yep, just as Fukushima, (non-nuclear Japan becoming nuclear Japan again) Lower Manhattan (Sandy,) and now the snow storm of 2013. We can ramp right up from an anemic 540 per year to 4000 per year just send in those PO's.
Name one contract issued in relation to any of the aforementioned disasters.
{Excluding working capital requirements, management believes we can expand our combined production capacity to approximately 4,000 units per year, depending on product mix, with approximately $10.0 to $15.0 million of capital expenditures. We have not committed to this expansion nor identified a source for its funding."}
That's about saying the we believe in the tooth fairy. Even if a funding source was identified so what? You would still have to ramp up sells from 135 to 4000 and I've yet to see anything on the horizon that would portend of such in increase in sells. It would seem to me that we are paying a lot of unused space at the present time.
I seem to recall that the that the question was asked and answered at one of the conference calls. At this point and time it is totally unrealistic to be even speaking of such non-sense. Just my thoughts of course.
No matter what Monday afternoon brings in way of numbers we will all be subjected to all of the pundits talking about Capstone for the next week or so due the blizzard of 2013. Fukushima didn't result in a rush of orders, nor did HC Sandy.
I seem to recall if past practice is any guide we'll be hearing 2015