Seal Beach-based Clean Energy Fuels Corp. is looking to grow with nearly $74 million raised from a stock offering.
The company builds fueling stations and sells natural gas to customers running fleets of cars and trucks.
The company is 40% owned by Texas billionaire T. Boone Pickens, who touts natural gas as a cleaner and cheaper alternative to gasoline and diesel.
The company plans to use the money to build fuel stations, an investment in biomethane plants, future acquisitions and general expenses.
The offering was a success, according to the company, with its mostly institutional investors wanting more stock than it was selling.
The company’s shares initially dropped on the news, falling 10% on June 22, as investors feared a dilution of their stakes in Clean Energy.
The shares gained back all of that ground and were up about 30% for the year last week on a market value of $400 million.
Clean Energy has about 185 stations across 13 states. Some 80 more stations are planned, with another 27 being built right now, according to Chief Executive Andrew Littlefair.
This time last year, the company had 40 stations in its backlog, Littlefair said.
Clean Energy foots the cost of the stations,which tend to run from $1 million to $3 million,and expects to make its investment back on fuel sales within four years.
The company looks for locations that are easy for its contracted clients. The contracts allow owners of natural gas fleets to use specific stations for about 10 years.
“We’re not looking for people who will just put a nickel in,” Littlefaire said. “Volume is the key.”
The company projects that its 2009 contract volume will grow about 25% compared to last year.
Price Factor
Part of its growth to date was fueled by the run-up in price for refined oil last year that sent consumers looking for cheaper alternatives.
As those gas prices have tempered, the demand for natural gas has waned somewhat.
Customers who benefit the most from using natural gas tend to have larger fleets of trucks that make it more economical.
Some of Clean Energy’s biggest local buyers include the Orange County Transportation Authority, which has 500 vehicles, and Santa Ana-based California Yellow Cab, which has 200.
Walt Disney Co.’s Disneyland, Houston-based Waste Management Inc. and the cities of Anaheim and Irvine also are customers, among others.
Aside from costs, many customers have gravitated to Clean Energy because natural gas is more environmentally friendly than gasoline, Littlefair said.
“People never used to talk about using it because it was cleaner,” he said. “But I think we’re at the tipping point where people want it.”
Two years ago there were about 5 million vehicles running on natural gas, now there are twice as many, Littlefair said.
Government action, such as the California Low Carbon Fuel Standard, which calls for reducing carbon omissions by 10% by 2020 and by 80% by 2050, has been a help.
Clean Energy also pushes to get grants for its stations. It’s raised about $150 million during the past six years.
Competitors
Other alternatives, such as electricity and hybrid technologies, could pose a threat to its business.
But, so far, the high cost of developing those technologies hasn’t allowed that to happen, Littlefair said.
On average, it costs about $300,000 to build a diesel fueled bus, $340,000 to build a natural gas one and $550,000 to build a hybrid powered one that uses a combination of diesel and electricity, according to Littlefair.
Clean Energy also dabbles with biomethane, a form of gas extracted from landfills. Right now, biomethane accounts for 10% of its business but is growing.
Its waste management clients especially like the concept of using fuel produced from their own properties.
Clean Energy employs about 180 people, 65 of whom work in Seal Beach. This year it’s hired about 21 people, half locally.
“We’ll probably add a handful more in marketing,” Littlefair said.
