Investors give geothermal stocks the cold shoulder
Toronto Stock Exchange, Toronto/ON, Canada (source: flickr/ joseph a, creative commons)
Alexander Richter
8 Nov 2012
Poor drilling results and the general exploration risk in geothermal development is seen as the main reason for the continued cold shoulder given by investors to listed companies in North America.
A recent article in Canadian daily newspaper The Globe and Mail, looks at the reasons why investors are giving geothermal stocks “the cold shoulder”. The overall stock performance of geothermal stock listed on the Toronto Stock Exchange as well as the NYSE (essentially only Ormat here), has been poor to say the least.
All of the North America-based public geothermal companies are listed today at a fraction of their prices three years ago.
John McIlveen of Jacob Securities is quoted as saying, and referring to listed geothermal companies, that “they are definitely out of favour and deservedly so”.
Poor drilling results and the general exploration risk are named as the main reasons. Even a company like Alterra Power (company formed after merger of Magma Energy and Plutonic Power), which still is one of the companies with a generally higher market capitalization than its peers, struggles to maintain its valuation. It now has diversified into other renewables and seems to focus on progressing those.
Alterra, so the article is “now trading at one-third of the price of three years ago”. Pretty much the same can be said about the Australian listed geothermal players, who are also trading at a fraction of their value of 3 years ago. As an Example Geodynamics – the main Australian geothermal player – had a stock price of roughly $1 about three years ago and is now traded at $0.12. So things don’t look much better down-under
For more insight and some additional commentary, see article, link below.
