Sovereign Wealth Investment Heads To Clean Energy (CLNE, CHK, WPRT)

For the past two years or so T. Boone Pickens has been telling anyone who will listen of the benefits of substituting natural gas for gasoline and diesel fuel. Pickens owns about 28% of natural gas fuel company Clean Energy Fuels Corp. (NASDAQ: CLNE), which yesterday received another $150 million investment to complement the $150 million the company received in mid-July from Chesapeake Energy Corp. (NYSE: CHK).  What really matters is who this investment came from.

The new money comes from two Singaporean investment firms, including one owned by government investment company Temasek Holdings. The investment consists of 7.5% convertible notes due in 2016. The notes are convertible to Clean Energy common stock at $15/share. The stock closed at $13.23 yesterday.

Like the funds it received from Chesapeake, Clean Energy plans to use the latest infusion of capital to build out its fueling station infrastructure in the US. Clean Energy currently operates about 224 fueling stations.

Compressed natural gas costs about $1.50-$2.00/gallon less than gasoline, and Clean Fuels is trying to scale up adoption among trucking companies. Converting diesel- or gasoline-powered trucks could reduce carbon emissions by about 20% or more if the natural gas is derived from landfill.

Auto parts maker Westport Innovations Inc. (NASDAQ: WPRT), which also received funding from Chesapeake’s clean energy venture fund, manufactures equipment that is used to convert petroleum-driven vehicles to natural gas-driven ones.  If demand for natural-gas fueled vehicles expands, Westport stands in a good position to benefit.

So does Chesapeake for that matter. More demand for natural gas is needed to help push prices up. Natural gas supply is booming, and the price remains closer to $4/thousand cubic feet than to $5. That’s not good for the gas producers like Chesapeake that would prefer a price nearer $6/thousand cubic feet.

Shares in Clean Energy got a boost in the after-hours market yesterday, but opened barely higher and are trading at $13.30 after the first hour today. The 52-week range is $11.16-$17.85. Westport shares are off about -0.3%, at $22.58, in a 52-week range of $14.25-$28.05.

Paul Ausick