From AOL
Subject: Research
Date: Sun, Dec 7, 1997 13:32 EST
From: Kathylane
I have been in this stock for a long time. I will try to give a brief background on it. My problem is information overload--I am an owner of LOTS of stock with an insatiable appetitie for research on the topic; I have no official tie to the Company. It is difficult to condense hours of research into a page or two, but I will try.
Historically Standard Energy has been in the business of the acquisition of unproven oil and gas leases, primarily for resale. I suppose there are a few stockholders who are still in it as an oil and gas play. I think, however, that most current holders and buyers are in it because of the Company's efforts to commercialize its technology for recycling municipal solid waste (MSW) into fuel grade ethanol and other recyclable products. The plan
is to obtain financing, purchase an ethanol production facility and a separate MSW receiving facility. The Company would then accept MSW, sort it and sell off the recyclables; and clean, shred and bale the remaining mostly paper products ("celmat" for cellulosic materials). Surprisingly, aboaut 60% of MSW is celmat. Eliminating the recyclables and celmat from the landfills would extend their life by more than ten times. The celmat would be used
as feedstock for the ethanol plant instead of the corn that is used at present. The key to this whole process is the Company's technology for breaking the lignin/cellulose bond of celmat, resulting in mostly glucose. Once processed, the glucose from the celmat would simply replace the glucose currently obtained from corn by traditional ethanol manufacturers. What makes the process exciting is that the combination of the MSW facility and ethanol
manufacturing facility would provide the feedstock at no cost instead of the approximate $100 a ton currently paid for corn. Surprisingly, despite the big cost savings, the yields would be quite close: each ton of corn yields around 90 gallons of ethanol, while a ton of celmat would yield about 80 gallons of ethanol. At today's prices, the cost for Standard Energy to produce a gallon of ethanol would be 30 cents vs the approximate $1.50 to
produce it from corn! With fluctuating corn prices, sometimes ethanol producers are not even profitable--witness High Plains' sales last year of its corn futures. It was more profitable to trade them than to buy the corn and produce the ethanol for sale. NOTE: the above calculations are based on dry weight and current prices as they can and do vary, but the Company's technology will always provide a clear pricing advantage.
Recently there has been a lot of news about global warming and alternate-energy vehicles. Battery powered vehicles are not taking off in popularity--largely because they have such limited ranges. Also--as someone stated earlier, the infrastructure isn't there. Until there is a quick recharging facility on every corner, I think battery powered vehicles will be few in number. Ethanol offers a realistic, renewable alternative to fossil fuels.
Ethanol is currently used, as is methanol, as an oxygenate (actually ETBE and MTBE) for the "clean gas" sold at most stations in California and elsewhere. Most pumps state that the gas is blended with 10% oxygenates. There has been much discussion in the news lately about the carcinogenic effects of MTBE. Not only is ethanol not carcinogenic, it actually burns cooler and provides higher octane. Ford and Chrysler have announced that some
500,000 ethanol powered vehicles will be available next year. They are actually referring to E-85--a blend of 85% ethanol and 15% gasoline. In the Midwest, there are over 40 fueling stations dispensing E-85, up from 20 last year. Some, which service fleet vehicles, are dedicated E-85 stations, others are gas stations which have converted an existing pump to dispense E-85. E-85 represents a growing market for ethanol--there is currently simply not
enough ethanol produced to satisfy the demand. Last year only 1.2 billion gallons of fuel ethanol were produced compared to some 130 billion gallons of gasoline.
So--we have a company that looks to have a solution for extending the life of landfills and providing an alternative fuel source that will be cleaner, safer, and cut down on oil imports. Until financing is obtained, however, it is all just potential which is why it is trading at about a quarter. It is the kind of story, though, that excites people--so when a new group hears the story, you will often see a buying surge. Then it will be quiet for
an extended time. Most of the people that I know that have bought the stock have hung with it because of the exceptional potential.
There used to be a group of people here that discussed the stock--maybe someone else can add something. |
