Philosophy of the Day
Tuesday 13 May 2008
Thursday 1 May 2008
No regret over Oil & Gas
BP and Shell both reported on Q1 this week and stunned the market with strong results. For example Shell Current Cost profit for Q1 was 12% up on the prior year, for BP the increase was 48%. The BP result was pretty exceptional but otherwise I'm not sure why there was so much surprise given that the current record oil prices are well known about. Under typical Production Sharing Contracts (PSCs) high oil prices have the effect of reducing volumes so it is wrong to look at production volumes in isolation without adjusting for this. The FT was grudging in it's appreciation commenting that without high oil prices it would be a very different story. But then, for me, the high oil price is the story.
As some of my friends know I have been predicting high oil prices for some time now. Over the past 12 months oil has more or less doubled to around $120. The head of OPEC Chakib Khelil has just warned that oil could hit $200. I think so too (just don't know when) and continue to invest accordingly.
As some of my friends know I have been predicting high oil prices for some time now. Over the past 12 months oil has more or less doubled to around $120. The head of OPEC Chakib Khelil has just warned that oil could hit $200. I think so too (just don't know when) and continue to invest accordingly.
Fuel Cells - Nearly here
Yesterday I attended the "Low Carbon and Fuel Cell Knowledge Transfer Network" (bit of a mouthful that) seminar on Fuel Cells. Four listed companies presented with others exhibiting. Interesting technology but despite low share prices (CMR Fuel Cells is valued at half it's cash holdings) I came away a little disappointed from an investment standpoint.
The fuel cell concept is not new having originally been invented in 1843 and, whilst used in the Apollo moon project, it is only now that commercial products are on the verge of being made available. There was a lot of talk at the show about how difficult they are to engineer for volume manufacture and to reduce the size of the devices to match modern requirements.
Ceres Power and Ceramic Fuel Cells both produce Combined Heat and Power (CHP) systems but on examination these are really just more efficient boilers, still running on natural gas, and producing a bit of electricity as well as heat. In the case of Ceres Power volume manufacturing is 3 years away, it is likely to be an expensive "top end" item which saves about 25% of fuel bills. OK in time that will make a significant dent in domestic fuel consumption but to my mind these need a Government subsidy (or much higher fuel prices) to make them really fly.
CMR make fuel cells for portable devices, laptops being the prime market targeted, but again a commercial product is still 3 years away.
I will continue to follow this sector but mostly through curiosity since I clearly have no way of being able to evaluate these companies technically nor come to any view on their ultimate profitability and hence current value. The OEMs themselves seem only to be cautiously investing in some of the companies, no doubt reflecting their uncertainty as to which technology will eventually succeed.
The fuel cell concept is not new having originally been invented in 1843 and, whilst used in the Apollo moon project, it is only now that commercial products are on the verge of being made available. There was a lot of talk at the show about how difficult they are to engineer for volume manufacture and to reduce the size of the devices to match modern requirements.
Ceres Power and Ceramic Fuel Cells both produce Combined Heat and Power (CHP) systems but on examination these are really just more efficient boilers, still running on natural gas, and producing a bit of electricity as well as heat. In the case of Ceres Power volume manufacturing is 3 years away, it is likely to be an expensive "top end" item which saves about 25% of fuel bills. OK in time that will make a significant dent in domestic fuel consumption but to my mind these need a Government subsidy (or much higher fuel prices) to make them really fly.
CMR make fuel cells for portable devices, laptops being the prime market targeted, but again a commercial product is still 3 years away.
I will continue to follow this sector but mostly through curiosity since I clearly have no way of being able to evaluate these companies technically nor come to any view on their ultimate profitability and hence current value. The OEMs themselves seem only to be cautiously investing in some of the companies, no doubt reflecting their uncertainty as to which technology will eventually succeed.
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