Must give credit to HTM for slowly prodding along and growing their business. Would like to know how they plan to finance these future plants at Neal and San Emidio, let alone finance the rest of the drilling? Thoughts?
It seems pretty clear they will do another stock offering, since that's what management has indicated a few times.
I see stock dilution versus debt financing a six-of-one and half-a-dozen-of-another kind of thing. The scenarios play out differently, but either way there's the same cost.
I expect the purchasers of the last offering aren't in a hurry to buy more, with the warrants they exercised under water. If I remember correctly, the offering was at $2.35 and the investors exercised their option to buy 50% more shares at $3. Maybe the recent company PR efforts have been aimed at moving the stock price off $2 to take the bad taste away. on the other hand, every new deal stands on its own merits. USG has done what they said they would and achieved the goals they set out to achieve, so USG should still have the trust and respect of their investors.
I don't have much knowledge or insight into the mechanics of how the offering price gets set and how the buyers buy-in mentally. Obviously there are significant amounts of selling and analysis involved, and a lot depends on the goals of the investors.
Another question to consider is when will they finance. The credit markets can only improve with time. The stock market's not in great shape either. The debate on how to deal with alternative energy is only just starting to pickup, and any actual action won't be happening anytime soon. You could make a good argument for USG doing not raising cash until things improve. I doubt that will happen. Management has been full steam ahead so far, with a serious will to survive and grow. They will take the best deal at the time to keep moving forward. So when will that be?
"This second test allowed the well to flow without restriction and resulted in a much higher flow rate and higher flowing temperature, thereby confirming the potential production of at least five to six megawatts from this single well," said Daniel Kunz, President and CEO.
Permits to drill three more wells were submitted to the Oregon Department of Geology and Mineral Industries in April and are pending approval. Additional wells and reservoir testing is needed before the size and power generation potential of the Neal Hot Springs geothermal reservoir can be determined.