Orange County Business Journal

Clean Energy Shares Jump on $150M Investment

Chris Casacchia Tuesday, July 12, 2011

Shares of Seal Beach’s Clean Energy Fuels Corp. jumped Tuesday, a day after the natural gas fueling stations operator received a $150 million investment from Chesapeake Energy Corp.

The company’s shares closed up 15% Tuesday, to a market value of about $1 billion.

The investment will help pay for some 150 liquid natural gas fueling stations at Pilot-Flying J Travel Centers across the U.S. to form what Clean Energy is calling “America’s Natural Gas Highway.”

The funding is designed to provide a low-cost, low-carbon American alternative to diesel fuel that's derived from foreign oil, officials said.

Oklahoma City-based Chesapeake made the investment through its newly formed subsidiary Chesapeake NG Ventures Corp.

Under the deal, Clean Energy convertible debt will be issued in three $50 million phases. The first came Monday and the other two are slated for June 2012 and June 2013.

The debt carries an interest rate of 7.5% and is convertible at Chesapeake’s option to Clean Energy’s common stock at a 22.5% premium of the weighted average closing price of the 20-day period leading up to such a move.

Clean Energy, under certain circumstances, can force conversion of the debt if its common stock is trading at a 40% premium to the conversion price.

The entire principal balance of each note is due and payable seven years after its issuance.

Clean Energy may repay each note in cash or shares of its common stock.

The company develops and runs natural gas stations near airports, utility companies, universities, city yards and other places they’re likely to see a lot of use.

Legendary oilman and corporate raider T. Boone Pickens started Clean Energy as a tiny part of his Dallas-based Mesa Petroleum in the late 1980s. He split it off in the late 1990s.

Pickens has partnered with Chesapeake Co-founder and Chief Executive Aubrey McClendon in the past to push natural gas to reduce oil imports and fuel alternative sources of energy.

The Clean Energy investment was one of two Chesapeake announced Monday as part of a $1 billion initiative to promote wider use of natural gas.

In the other deal, Chesapeake paid $155 million to acquire a 50% stake in Colorado’s Sundrop Fuels Inc., a clean energy provider.