Thursday, June 9, 2011

And Now for Something Completely Different: Natural Gas Engine Maker "We Don't Need $100 Oil or U.S. Help" (WPRT)

Hear that T. Boone?
The stock was down 15.48% yesterday, closing at $19.76.*
From TheStreet:
Westport Innovations(WPRT) said the adoption of natural gas engine technology is at a tipping point, and it doesn't need $100 oil or subsidies from the U.S. government for its penetration of the transportation sector to continue to increase. 

TheStreet recently spoke with Westport CEO David Demers about the roadmap to profitability in the natural gas transportation sector.
Westport recently described the market as being at a tipping point. What did you mean, since for shareholders, the company still remains unprofitable?

Demers: Any technology story exhibits the same dynamic, by which I mean trying to get people to change something they've done the same way for decades is a challenge. We are trying to take a very successful technology, the diesel engine, and get people to change to a completely new fuel. It's hard to get people comfortable with that and that's why we use the concept of a tipping point.
At some point, people say, 'We need to do this and we understand the risks and see the benefits,' and you can see it has happened in other parts of the world when it comes to natural gas engines. If you look at the pattern in Argentina, Venezuela or Pakistan, these markets were at zero for years and then started to pick up and at some point reached critical mass. We think we have hit that point in the U.S. The U.S. is currently tied for last in natural gas transportation penetration, but it's not because we are stupid, but because we have a successful sophisticated transportation system. Now we are seeing the 'we have to do something' belief. It started with oil prices spiking in 2008 and now again with the latest blip up in oil.
Yet some say the commodities trade is now over, so what happens if oil continues down, say back to $60? Does the tipping point stop tipping?
Demers: The differential between natural gas and oil is the important thing, not the price of oil. We would need oil back at 20 bucks, which we think is unlikely, for that to be an issue. The more interesting thing is getting people past the tipping point in terms of a focus on high oil prices being solely driven by speculation. A few years ago, lots of people thought oil prices were all speculation and $20 should have been the price, and with that belief there was no reason to move away from the transportation status quo. Then in 2008 people started to realize that we do have fundamental oil supply and demand issues.

Whether oil is at $60, $80 or $200 is kind of irrelevant once people believe we are going to have a supply and demand-driven market that isn't a super-phenomenon of speculation. People have gotten through that and believe they have to have an alternative just in case of another oil spike, whatever the price is today, and whether they do 100% natural gas or 30% natural gas and play whichever is cheaper, I don't care. I have every belief that we will have a long-term supply of natural gas at good prices....MORE
*The company reported yesterday:
Westport net loss widens on higher costs, shares fall‎ 

Here's the stock action over the last year, note the two gaps: