United Hunter Oil & Gas Corp (UHO)

[ICEQUITY]

United Hunter Oil and Gas Corp. (CVE: UHO) Don't Count On Renewable Energy ROI Anytime Soon

The renewable energy initiatives in this country are gaining steam, especially in California, a state that has allotted billions into laws, venture funds, and clean energy R&D. Clean energy jobs are being created and our dependence on foreign oil could one day be curbed.
At the same time, we’re moving from a “industrialize, pollute, and capitalize” society and taking a more environmentally sustainable engineering approach to enriching and growing our economy for the decades that lay ahead.
But according to the Renewable Energy Trends in Consumption and Electricity report released by the U.S. Energy Information Administration, as of 2008 only approximately 7% of our nation’s consumption is derived from renewable energy. Unfortunately for many proponents of the green movement, we’re still a long ways away from mainstream and widespread renewable energy consumption. At least for the next 30-50 years, by some analysts’ projections, we’ll be using oil and gas to power our lives.

So why not invest in what we use now? Hundreds of millions of dollars have flowed into clean energy and renewable energy stocks and companies by individual and institutional investors, and many of the small-cap players are even covered by the World Market Media Editor’s Desk (Cereplast, Novo Energies, etc.) And here’s a unique perspective; does the change in focus of investors make oil and gas stocks that much more enticing?

From an investor who wants a simple, proven business plan and the future self-efficacy of growth, United Hunter Oil and Gas Corp. (CVE: UHO) could be your play. This year, the company acquired a 65% stake in the underdeveloped Huasna oil field in California and is currently pursuing three larger play prospects in the U.S.A. generated by John Masters, a renowned oil and gas exploration specialist.
John is a pioneer in oil field discovery, largely credited for the birth of oil exploration. The Huasna field is located just north of producing and developed giant oil fields near the town of San Luis Obispo. The area has a low geological risk that could be packing as much as half a billion barrels in the rocks. The company reminds us of its short time to production and that organic cash flow will finance the drilling of additional wells in the future.
So will you be putting all of your eggs in the renewable energy basket? Tread carefully. While the electric utilities industry (companies that belong are A-Power Energy Generation System, a wind turbine production firm that traded as high as $20 a share in 2009 only to come crashing down to $5 a share today) boasts a wimpy P/E of just 15, the oil and gas drilling and exploration industry is projecting a forward P/E of 25.25.
The return on equities for the drilling and exploration industry beats that of the renewable industry at 12.2% and 10.7%, respectively. And finally, if that isn’t a solid starting point for the argument for oil and gas companies, the long-term debt to equity ratio of the drilling and exploration industry is about 35% of the debt the renewable energy industry carries.
Renewable energy may be the future, and that’s great; but in these economic conditions the future doesn’t look so promising. Perhaps we should be thinking about investing in the present, the known, instead.