Investor interest in the natural gas space seems to have grown over the last six months, as crude oil prices increased to $80 per barrel and natural gas went down to about $4.50/Mcf.
According to ThinkEquity, LLC, Research Analyst David Woodburn, the natural gas investment story is one that touches on several themes, most importantly a compelling green initiative that also makes financial sense.
“One is a way to invest in the economy because once the economy picks up, fleets are going to be replacing trucks and looking at their fuel prices a lot closer; this is the way to take advantage of that. This is more of a question of ‘when,’ and not ‘if,’” Woodburn says. “The other theme is watching the potential for increased federal incentives for natural gas transportation.”
Although Woodburn predicts the U.S. passenger market won’t be the first priority for natural gas infrastructure installation, he does foresee high-volume fuel users, such as municipal fleets, private fleets and also heavy-duty trucks, as the best starting point for natural gas introduction.
“Westport (WPRT) has technology to enable traditional engines to burn natural gas instead of diesel fuel. There is also Clean Energy Fuels (CLNE). They design, build and operate natural gas fueling stations for municipalities or private fleets,” says Woodburn, naming the companies that have the most potential profit to gain from increased heavy-duty truck sales and government incentives. “Lastly, there’s Fuel Systems Solutions (FSYS). They have a transportation business that enables passenger vehicles and light-duty commercial vehicles to run on gasoline or natural gas/LP gas.”