Abraham Gaines

Five Reasons to Buy Raser Technologies

Dear alphaMS,
Thank you for your continued interest in my posts.
I apologize if the languge I used suggested that only $5 million of the wellfield costs were for Thermo and I could see why you would call this "far fetched and ridiculous." In fact, I do not think this is the case.
Thermo has consumed quite a bit of financial resources. However, as you well know (again please pardon the pun), Thermo is larger than a 10mhw resource. I suspect that some of the additional drilling costs were done for purposes of expanding and exploring the resource for future use.
$5 million is a general round number figure used per 10 mhw resource. If they were to look at doing 20mhw for example, they'd incur $10 million and if memory serves, they are going to produce 22mhw of power there - so that would be something north of $10million spent right there.
Now, the $5 million is a general industry figure - call the drilling companies and ask them. Call the other geothermal companies. From time to time, I suspect that figure will be lower (if it's a very shallow resource) or higher (if it's deep, if they encounter faults or granite caps, or if they run into unforeseen difficulties like breaking a liner or something like that). My point was not to get hung up on the $5 million figure (though I will defend it), but rather to demonstrate that the business model uses cash up front to the tune of roughly $5 million (if I increased that number to $7 or even $10 million to be conservative, my argument would still make sense) and then returns cash in the form of fee payments and electrical sales in the form of a $25m NPV. This also does not provide RZ with any value of owning the plant, which is a valuable balance sheet item itself. Either way, we can argue $5 million vs. another larger number, but the payback is substantial and the business model quite strong.
Although there are various costs which will not be reimbursed, the important one is the "wellfield development costs" which represent RZ's equity investment in each LLC/drilling/productio... program.
I hope this helps.