Robert,
Your question is rather interesting in its relevance to the beginnings of GRNO. Bill was telling me that he had invested in a company touting a similiar concept back in the late 1980's. This company wanted to set up small thermal crackers at various "jiffy-lubes" and create fuel to run generators for providing power to the lube facility as well as for sale back into the general power grid. Bill soon realized that the economics for the process weren't there, but that the concept for the process seemed sound on a larger scale. He consulted with his old college roomate who is a chemical engineer and was told that it should be possible to "convert" motor oil into diesel like products.
Thus, GRNO was born. They spent the next 5 years and some $5 million perfecting the process for commercial operations until they suffered the temporary setback with the South Carolina Environmental folks. Thankfully, all of that is behind them and they are cleared for renewed operations.
However, theoretically the process could be utilized to refine crude oil stocks as well, (Thermal Cracking is one of the most basic forms of refining) and erected in isolated areas near oil rigs that have spillage or contaminated crude oil unable to be refined. I don't fully understand this concept, but it is something that Bo has mentioned is possible in the future. However, no one really sees it being as profitable as the current business strategy. And it would distract the company from current operations.
Bill has a large enough market that he can sell every bit of the fuel that he can currently produce into the local market. S. Carolina apparently has forbade the burning of low-grade "off-spec" fuel so local customers have to use #2 fuel oil or diesel, (same thing, different additives) He will be diversifing his customer stream so that he is isn't dependent solely on one customer. Bill's main strategy is to purchase 500,000 gallons of waste oil in the NE US at about $0.09/gal and barging it to his location. He has day storage available and he found that the price for barging it in is cheaper than obtaining waste oil locally by about $0.10/gal. He plans on maximizing his profit on the operation of this first unit.... :0) Some quick calculations, (probably inaccurate) tell me that his production revenue should be $151,653 per month in fuel production with fuel priced at $0.65/gal, which is not unreasonable.
As to stock price, I can tell you that Bill watches that issue like a hawk. We talked to Bo several times yesterday regarding the volume and lack of stock price response. It was known that apparently some original shareholders of the private stock had recently died and their estates were being liquidated. However, we tend to think that it that the mmkrs are holding the price down and letting their "special clients" build up a position before letting the price increase. Like us, these folks want to make money on the long side as well. They can see from the news that the company has HUGE potential with relatively little risk, given proven test lab results, sufficient cash reserves, as well its first sale under its belt. However, there will come a time when all of you folks out there will eventually have to settle for market price as the mmkrs start to scramble to find stock. We saw that happening on Wednesday apparently.
I certainly can't and WON'T advise anyone to buy or sell. However, I can tell you what I'm doing or not doing, and I'm holding with the current price just about at my average cost basis for my GRNO position. Each of you should play this stock as you see fit. There will be plenty of opportunity to be in and out of this stock at varying levels over the next several years. No stock goes straight up without gravity and profit taking bringing back for a rest.
Regards,
Ron |
