A fast-growing Irvine-based company is casting a wide net across several energy markets, as it strives to become one of the biggest independent suppliers in the U.S.
Universal Bioenergy Inc. markets and distributes natural gas, propane, petroleum and coal, and has struck several deals in the past year to pave the way for an aggressive expansion in its targeted growth market.
The company aims to raise $50 million to $100 million in a public offering in the next six months to fund acquisitions in the oil, natural gas and coal sectors.
Universal recently retained Newport Beach-based attorneys Chris Manderson and Lance McKinlay to help move the company to a larger trading board such as Nasdaq or the New York Stock Exchange. It now trades over the counter under the UBRG ticker.
Universal’s revenue in 2011 rose 74% from a year earlier to $71.7 million, while its 311% revenue surge in a two-year span through June placed the company at No. 4 in Business Journal rankings of OC’s fastest-growing public companies last month.
A key investment in April 2010 that followed a restructuring paved a path to strong revenue gains after some misses in the biodiesel market.
Maryland Buy
Universal acquired a 49% stake in Maryland-based natural-gas producer NDR Energy Group LLC for $2.5 million in 2010, moving into a growing market that’s seen adoption increase in the last few years.
“We decided to get out of biodiesel and get into natural gas marketing and distribution,” Universal Chief Executive Vince Guest said.
NDR went from no revenue in 2009 to $43.1 million a year later. Its customers include San Francisco-based Pacific Gas & Electric Co., Brooklyn Union Gas and Houston-based CenterPoint Energy Resources and 27 other utilities, power providers and distributors.
It gets supply from EDF Trading, Chevron Texaco and ConocoPhillips, among others.
Strong revenue gains in the last few years haven’t translated into profits in the capital-intensive energy sector.
Universal has lost $23.2 million since its inception in 2004, according to regulatory filings, and has been forced to raise debt and equity to fund operations. The company has raised more than $6 million to date.
It had about $8.3 million in debt and $1.3 million in negative cash flow in the nine months through September, according to its third-quarter earnings report.
Universal recently announced plans to lower corporate debt, improve shareholder value and move the company toward profitability. Proposals include raising cash to pay down debt, renegotiating terms with creditors and converting debt into preferred stock.
Strict credit lines have prevented the company from selling more than $20 million worth of natural gas and other energy supplies per month, Guest said.
“We move a lot of product, [but] we’re limited in how much we can sell,” he said.
A string of recent developments and pending deals could improve Universal’s financial picture.
The company is in talks with several commodity brokers to ship thermal steam coal from its mine in Kentucky to China that could be worth nearly $82 million in the next 12 months. The coal is used as a primary source of energy for power plant electricity.
Universal paid about $2.7 million in February for a 40% stake in Whitesburg Friday Branch Mine LLC located at the Kentucky and Virginia border.
A partnership inked in October with Houston-based Texican Natural Gas Co. brought new customers in North and South Carolina, Georgia, Alabama, Mississippi, Louisiana, Tennessee, Kentucky and Ohio. Texican manages pipeline capacity and storage, and markets natural-gas products and services. It sees more $1 billion in annual sales.
Bakken Reserve
That same month NDR signed a memorandum of understanding with All Nations Bakken Reserve LLC to form a joint venture aimed at land acquisitions, financing, drilling and capture, and distribution. The Bakken oil and gas fields in northwestern North Dakota and northeastern Montana have created a boom industry in the region.
The U.S. Geological Survey in 2008 estimated the 200,000-square-mile area had 3 billion to 4 billion barrels of recoverable oil. More recent estimates put reserves as high as 24 billion barrels.
In July, NDR established an electric power division to market and distribute bulk wholesale electric power to its current electric utility customers and potential new clients in the public, defense, commercial and industrial sectors. The company also has applied for a Federal Energy Regulatory Commission license to sell wholesale electric power in deregulated states, such as California, Texas, Florida, Illinois and New York. Deregulation reduces government control and allows users to choose the gas and/or electric that powers homes and businesses.
The new division is projected to generate $96 million to $384 million in annual revenues, the company said recently.
Universal also has a subsidiary aimed at acquiring and developing oil and gas wells in Texas, Louisiana and other states.
