“We have the largest (RNG) network in the United States,” Littlefair, whose firm counts approximately 540 fueling stations across the U.S. and Canada, noted in response to the questioning. “Fleets like that.”
Clean Energy is the largest provider of RNG as a transportation fuel in North America.
The CEO listed other company advantages and concluded by saying: “I didn’t specifically say that we have a deal with that (Amazon) fleet that you’re talking about. But that’s why fleets like them would look to Clean Energy, I think, because we have those capabilities.”
Last week, Littlefair not only had a more concrete answer to those analyst questions, he also had a powerhouse new investor in his $2 billion-valued firm (Nasdaq: CLNE).
Clean Energy said on April 19 it would provide low and negative carbon renewable natural gas to Amazon, via 46 existing and new fueling stations in its network. The firm said it will spend upward of $60 million this year to build out the 19 new or upgraded stations that are part of the deal.
It also issued warrants to Amazon to buy close to $500 million of the company’s stock, a deal that could see Amazon ultimately control about 20% of Clean Energy’s outstanding shares, based on a reading of regulatory filings pertaining to the deal.
That would make Amazon the company’s second-largest owner of its stock, according to regulatory filings.
Biden Boost
The deal caps a whirlwind six months for the firm, co-founded in 2001 by the famed oilman T. Boone Pickens, who died in 2019.
Shares in Clean Energy are up some fivefold since November and the election of President Joe Biden, who is pressing for a variety of environmentally friendly energy initiatives.
As a result of the stock gains, the company jumped 10 spaces to No. 21 on the Business Journal’s latest list of Orange County’s largest public companies (see list, page 21).
Clean Energy’s RNG fuel is derived from capturing the biogenic methane produced by the decomposition of organic waste from dairies, landfills, and wastewater treatment plants.
The fuel “allows thousands of vehicle fleets, from airport shuttles to city buses to waste and heavy-duty trucks, to reduce their amount of climate-harming greenhouse gas by at least 70% and even up to 300% depending on the source of the RNG,” the company said.
The company “was the first to commercially make RNG available as a vehicle fuel in 2013, and now fuels tens of thousands of vehicles across the country every day,” Littlefair said in announcing the Amazon deal last week.
“If the world is really going to tackle the issue of climate change, all of us need to find solutions that work both environmentally and economically, and that is exactly what this agreement supports,” he said.
Rivian, Too
“The fueling agreement with Clean Energy Fuels is a logical follow-up to Amazon’s action earlier this year to reduce the carbon footprint of its delivery fleet,” analyst site TheMotleyFool said on April 19.
The deal marks another notable environmentally focused investment in OC of late for Amazon.
Amazon also plans to put nearly 100,000 electric delivery vehicles built by Irvine’s Rivian on the road over the next several years.
It’s currently testing Rivian’s delivery vans in Oklahoma, the third market the vans have now been deployed to, after Los Angeles and San Francisco.
Amazon is one of the largest investors in Rivian, which is said to be exploring an IPO later this year that could value the upstart EV auto and truck maker at around $50 billion.
Analyst Disagreements
Clean Energy’s shares went on a wild ride last week after the Amazon announcement, as analysts offered differing views of the arrangement and its impact on the local company’s fortunes.
Shares initially surged, then fell more than 20% following a downgrade from Raymond James analyst Pavel Molchanov, who criticized the Amazon arrangement as lacking “substance.”
Shares were trading early Friday slightly below where they started the week.
Credit Suisse said in its own research bulletin that the market bears “are missing few key elements of this deal.”
The research bulletin suggested the deal might ultimately be worth $850 million to Clean Energy, well above the stated $500 million value of the warrants issued to Amazon.
“Last but not the least, it’s (Amazon) we are talking about,” the Credit Suisse bulletin said.
