WAITING FOR GEOTHERMAL IN CANADA

Geothermal power waiting for its renaissance
Susan Taylor (w/Rob Wilson and Jeffrey Hodgson), September 20, 2010 (Reuters)

"For all the talk of a geothermal renaissance fueled by government incentives and the quest for clean energy, Canadian investors are cool on the sector, despite a list of compelling business advantages…[Claims] lauding the renewable, round-the-clock and profitable power source are more than just hot air, say analysts, who believe better times are ahead.

"All that's needed are more examples of companies with money-making power plants, a better investor understanding of the business and a dash of economic recovery…[F]or patient investors prepared to take a risk, now may be the time to buy these distressed stocks…Geothermal companies, which tap heat stored far below the earth's surface to generate electricity, are starting to attract serious interest from big, traditional power producers that are preparing carbon offset programs."

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"Enbridge Inc, Canada's second-biggest pipeline operator, said earlier this month that it would spend $23.8 million for a 20 percent stake in US Geothermal’s Neal Hot Springs project…"

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"Several analysts raised their stock targets for US Geothermal afterward. Wellington West Capital upgraded the stock to 'buy' from 'speculative buy". Over the past 12 months, the stock has shed more than half its value…Enbridge's investment, one of many it has made in renewable power, but its first in geothermal energy, briefly lifted US Geothermal's stock by more than 18 percent…

"Despite depressed valuations, geothermal companies have successfully raised cash in recent months, sending a positive signal for future project development and internal growth…A consolidation jag that has gathered steam over the past year is seen as another catalyst to stock gains. A dwindling number of targets may help drive M&A premiums higher…The deal-making is driven by the hefty financial and human capital required to develop geothermal power…"