Star Power

By Robert Rapier and Igor Greenwald • June 13, 2014 • Issue Articles

In this issue:

Renewable energy production continues to expand rapidly from a tiny base, with solar now clearly in the lead and China ramping up its clean-energy investments, according to a leading survey that drew on Robert’s expertise in the field.

Our look at the solar sector covers the leading technologies and their suppliers, then recommends a rising project packager set to profit from the ceaseless chase for yield. We think operators marketing low yields are a better investment at this point than the modest tax deferred income they’re selling.

Meanwhile, the battlefield gains in Iraq by Sunni extremists remind us that the global oil market is a lot less well supplied than rising domestic output might suggest.

Energy stocks have continued to outperform during the most recent bull run, and many of our picks continue to lead the energy sector. That’s once again left us with the high-quality problem of numerous exceeded buying limits. We’ll be updating these and our list of best buys in the next issue.

Portfolio Action Summary

SunEdison (NASDAQ: SUNE) added to the Aggressive Portfolio. Buy below $22

Commodity Update

Crude prices are moving higher as a result of the latest unrest in Iraq. The front month contract of West Texas Intermediate (WTI) has risen to $106.96 per barrel (bbl), up $2.74 over our previous report, while Brent traded up $2.73 at $113.02. The Brent-WTI spread is presently $6.06/bbl. The front month natural gas contract rose to $4.79 per million British thermal units (MMBtu), which is $0.31/MMBtu higher than two weeks ago and $1.05/MMBtu higher than the price a year ago. Natural gas in storage remains 37 percent below the five-year average for this time of year.

In Other News

The US Environmental Protection Agency (EPA) announced new regulations on carbon emissions from power plants that would ultimately ban nearly all US coal-fired power plants as currently operated.

More bad news from Kazakhstan’s giant Kashagan oil field, as the The Wall Street Journal reports that repairs to two pipelines will keep oil production there offline until at least 2016.

Warren Buffett said he has poured “billions and billions and billions” of dollars into the energy business, and would continue to do so “as far as the eye can see.” This includes $15 billion in renewable energy projects, with potentially another $15 billion to come.

Barron’s published a bullish article on Growth Portfolio holding EOG Resources (NYSE: EOG), arguing that it warrants a higher EV/EBITDA multiple than its peers.

The International Energy Agency (IEA) released the World Energy Investment Outlook 2014, in which it projects that $48 trillion will need to be invested to meet the world’s energy needs to 2035.

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About The Author

Robert Rapier

Bio | Archive

It's hard to imagine anyone better suited to covering the energy-investment waterfront than Robert Rapier.

Robert is no armchair analyst—he has two decades of in-the-trenches experience in a wide range of fossil fuel and biofuel technologies, including refining, natural gas production, gas-to-liquids, ethanol production and butanol production.

During a six-year stretch at ConocoPhillips, Robert ran a team of engineers in Scotland working on oil and gas projects in the North Sea.

For two years, Robert was an efficiency expert in a Texas petrochemical plant. The process changes he implemented saved the facility $9 million a year. He later worked as the Engineering Director for a Dutch environmental-technology company and provided engineering support for a Chinese facility the company was constructing.

Robert was also a butanol engineer in Germany for the Celanese Corporation, where he designed a novel butanol unit that cut production costs by $5 million per year.

In all, Robert has spent more than a dozen years working on liquid fuels technologies. Along the way he's picked up five patents, including one for a breakthrough way to convert ethane into ethylene (U.S. Patent 7,074,977).

Now, in addition to guiding readers to timely investments in Utility Forecaster and Rapier's Income Accelerator, Robert travels the world evaluating startup energy companies for deep-pocketed investors. After grilling management and assessing the technology on-site, he makes a go/no-go investment decision. His wealthy private investors and hedge fund backers trust him to make the right choice for the same reason we do: his vast real-world experience in just about every facet of the energy industry. If Robert votes thumbs-up, millions of dollars flow into these cutting-edge outfits.

Robert earned his master of science in chemical engineering and a bachelor of science in chemistry and mathematics (double major) at Texas A&M University. He tells us he was "this close" to finishing his Ph.D. before he decided he was having a lot more fun making money in energy stocks.

A prolific writer, Robert's articles have appeared in Forbes, The Wall Street Journal, The Washington Post and the Christian Science Monitor -- and he has been a featured expert on 60 Minutes and The History Channel. His new book, Power Plays: Energy Options in the Age of Peak Oil (Apress, 2012), helps investors sort through doom and gloom, hype and misinformation to understand the true costs, benefits and trade-offs for each of our major energy options.

In what little spare time he has left, Robert consults for a number of energy projects, including biodiesel, ethanol, butanol and biomass gasification facilities.