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Kevin Quon

 
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  • Solazyme Becomes More Disciplined In Its Use Of Cash [View article]
    Bravo, txpe2003. Do enjoy a cup for me as well.
    Jan 18, 2015. 11:52 AM | 2 Likes Like |Link to Comment
  • Solazyme Becomes More Disciplined In Its Use Of Cash [View article]
    Unfortunately, this comment actually places a higher emphasis on frac fluids rather than drilling fluids with the key phrase being "out of the wells they have already drilled". I would be bold to suggest that SZYM is probably working on a frac fluid itself (but we're not there yet) and a "green" company to most benefit from this is probably Flotek (FTK).

    While inevitably drilling was going to take a step back and we're beginning to see some of the reduction in drilling now, the underlying truth is that legacy oil production just falls too fast and the amount of rigs disappearing has been minimal at best. http://1.usa.gov/IuUMQp

    Keep an eye on the Bakken where we're bound to have a growing presence. Rig counts remain stable and the legacy production drop is falling like a rock due to the nature of rapidly decreasing returns upon the well's opening. I'm actually starting to believe that drilling might not take as hard a hit as I previously thought given the slow decline to date amidst rapidly falling prices.
    http://1.usa.gov/1xyaPXd
    Jan 16, 2015. 05:10 PM | 4 Likes Like |Link to Comment
  • Solazyme Becomes More Disciplined In Its Use Of Cash [View article]
    txpe2003,

    Let's not gloss over the distinctions with such a wide brush. Aurora Algae is an autotrophic algae company that has struggled for some time given the necessary costs & low yields (autotrophs yield much less oil than heterotrophs before even considering genetic engineering). Limited control over the growth conditions also bring about a greater susceptibility to invading micro-bugs/plants that further reduce yields.

    Some quick math should really put an end to the debate. The video states that the biomass output is ~30 MT per acre per year (bear in mind the oil content here is likely <20%). Try comparing that to Solazyme's Moema facility which will produce 100,000 MT of oil (meaning a similar amount of biomass if estimating 50% oil content which can be typical for heterotrophic algae). Somehow, I doubt that Solazyme's facility takes up more than 3000 acres to even be compared on an efficiency level (that's like a square facility that spans more than 2 miles in either length). Before even considering the tailoring capabilities of SZYM over Aurora when it comes to product value differences, the efficiency contrast alone is astounding.
    Jan 11, 2015. 02:23 PM | 3 Likes Like |Link to Comment
  • Why Investors Should Consider U.S. Silica Holdings Now [View article]
    If you could, that's not a bad idea. Historically the trend has been for such diversified stock indexes to rise over the long term ...

    And I'll take a bullish CEO over a bearish CEO any day.

    In any case the key phrase is "locked in" which provides for stability in light of growth. If you start seeing project cancellations then I'd consider being more concerned.
    Jan 7, 2015. 03:32 PM | 1 Like Like |Link to Comment
  • Why Investors Should Consider U.S. Silica Holdings Now [View article]
    Thanks for the idea and your continued readership, mykiemon. Unfortunately I don't think it'll materialize however as I'm not keen on comparing corporations with LP's. As a whole though, I do believe sand companies in general have been discounted far below what is proportionately fair and it is this macroeconomic theme that makes me like this sectors valuation in the present looking forward on a long term basis. Given the decay rate of oil recovery in fracking and the drilling of deeper wells, I find that the industry will continue to support a decent amount of demand going forward even if some near term softening is in store.
    Jan 7, 2015. 03:17 PM | 1 Like Like |Link to Comment
  • Why Investors Should Consider U.S. Silica Holdings Now [View article]
    U.S. Silica Holdings Inc., which operates sands mines in Wisconsin, Illinois and Oklahoma, says it is still expecting to grow in 2015, said chief executive Bryan Shinn. Even if oil companies drill fewer wells next year, they are increasing the amount of sand they use per well, he said.

    “This is providing us with a backstop,” said Mr. Shinn, adding that job cuts aren’t in the cards for his company. “We’re not even talking about that. If anything we might be looking to add jobs as opportunities arise.”

    About 70% of U.S. Silica’s sales are under contract and locked in at attractive margins, the company said.

    http://on.wsj.com/1xSnyri
    Jan 7, 2015. 03:12 PM | Likes Like |Link to Comment
  • Solazyme Becomes More Disciplined In Its Use Of Cash [View article]
    Maxxwell Chatsko of the Motley Fool,

    Despite your facetious efforts to be cordial after frankly being quite rude in the past and in your original comment above, I am only responding to you in particular because you have been the most assertive when it comes to declaring new "facts" even when they are merely presumptions made by yourself. With so little fact-checking and your bold approach to be sensational when it comes to your "facts", I wanted to clarify how misleading they could be and how it is your responsibility to be more careful.

    In particular, your most recent broadcasted "fact" of late has been a supposed total production cost for intermediates of ~$6100/MT to which you broadly assume is both damning and representative of Solazyme's capabilities to become profitable, especially when you contrast an expected ASP across this cost figure.

    Yet with your asserted $9.19 million (even though you stated $11.298 million on your last article in the comment section [http://bit.ly/1zPUMrN]), you are openly suggesting a continuing cost that is rather high. To attest to this, are you even aware that your cost estimate exceeds the total difference between the cost of revenue ($5.148 million difference) and the total cost of R&D ($3.015 million difference) found in both Q3 2013 & Q3 2014?

    As declared on pages 32 & 33 of the 10-Q, the total difference between the cost of revenue & R&D for Q3 2013 and Q3 2014 was only $8.163 million. Yet you are declaring that Solazyme's production costs for making only the intermediates portion of the revenue exceeds this increase in these total costs from the time between when Clinton was not yet open and when it is. This simply appears irrational. For emphasis, understand that these total costs which you are exceeding includes the cost of revenue derived from Algenist, from research, and all other products, and all other activities from all of the existing facilities under the control of Solazyme. Again, this is just irrational.

    Let us consider where you could have made some very important errors in terms of ascertaining your costs based on errant assumptions.

    1) Realize that the amount produced in a quarter is not properly correlated to the cost of revenue attributed that quarter. Just as the company was selling product made in 2013 in Q1 & Q 2 2014, your simple division of the quarter's estimated production just won't do. Product made in the quarter does not necessarily sell in that quarter.

    2) You added $1.1 million to the $3.6 million found in the Q3 2013 statement presuming that this reflects the costs related to scale up of commercial production. This in itself is not necessarily true. For starters, the $1.1 million includes "...costs related to product development of new algal products and AlgaVia TM food ingredients as well as scale-up of commercial production at the Clinton/Galva Facilities" which suggests that at least a portion of the $1.1 million is going towards costs not reflective of normalized production costs going forward (new algal products & development activity for Algavia). This also sheds doubt upon the other $3.6 million you are including as to whether they truly reflect ongoing production costs.

    3) You also seem to misunderstand the allocation of R&D costs. As Laurence Alexander asserts on the conference call: "you're going to have a lot of noise about fixed cost absorption distorting your gross margins for a while..." The R&D fraction of the total production costs are not necessarily representative of ongoing costs related to production but can represent one-time fixed costs and should therefore not necessarily be used in the hypothetical equation to determine a current status on the normalized cost of production.

    4) You also assume $3.6 million of costs incurred to scale up production in Q3 2013 is still relevant when in actuality the $1.1 million only explains a difference between Q3 2013 & Q3 2014. There is no reason to believe that the original $3.6 million which may or may not have affected production costs provide any attributed cost to ongoing production. In any case, this could again also just be fixed costs related to scale up which are again not relevant to a production cost metric going forward.

    5) You group intermediates together in order to establish a base production cost to apply across Solazyme's platform. However, as mentioned in the comment by 'just read the instructions' stated above, there are radically different products included in intermediates/ingredie... As mentioned by Wolfson in my previous visit, the cost structure of each varies naturally depending upon the finishing steps in order to ascertain a certain amount of quality required by the industry.

    Therefore while production costs for fuels might currently be $1500 for example, the cost for algavia might be $3000 since it requires steps such as refining & bleaching & deodorizing... (reminder: these are just hypothetical costs used just for example sake). The key point to consider is that margins are what matter in the end, not the cost to make it. However, because you broadly painted the platform as spitting out a single production cost of (ex. your ~$6100/MT cost, which seems quite high) you continue to mislead people who may be comparing apples to oranges when it comes to expected product ASP's and their associated costs.
    ----------------------

    Having said this, I understand that you want to be the one to discover something new and exciting such as the production cost metrics to which even the analysts have resigned to not be possible in the moment. We all do, myself included. Likewise, I understand this isn't easy stuff and actually appreciate having someone like you who is willing to look deeper into the issues in stark contrast to your fellow Fool writers.

    But when you continue to pour our assertions and state them as a truth and continue to build upon them without even suggesting the possibility that they are mere assumptions, you simply degrade the integrity of our writing as a whole. I am only responding to you in particular in order to suggest that you use more caution in your negative spins of this company that you seem to dislike so much.

    This will be my only comment on this article. As writing is merely my hobby and not my career, I simply find it exhaustive and not worthy of my limited time to go back & forth. Given the existing negative sentiment (that is quite understandable), I also have no tolerance for those who are looking for a pinata to hit out of their own frustrations. The soap box is yours.
    Dec 23, 2014. 12:49 AM | 15 Likes Like |Link to Comment
  • Solazyme Becomes More Disciplined In Its Use Of Cash [View article]
    Before I consider responding further, care to enlighten us with every specific number taken from the 10-Q used in your inerrant calculation, Maxxwell Chatsko of the Motley Fool?
    Dec 22, 2014. 12:29 PM | 5 Likes Like |Link to Comment
  • 3 Speculative Oilfield Service Plays For Contrarian Investors [View article]
    Figure its worth a horn toot at this point, although its entirely due to an irrational market over oil anyways. Since writing this less than a week ago on December 14:

    CRR: $34.60 --> $42.34, UP 22.4%
    FTK: $16.15 --> $19.16, UP 18.6%
    SZYM: $2.25 --> $2.53, UP 12.4%
    Dec 19, 2014. 06:33 PM | 1 Like Like |Link to Comment
  • Is It Time To Cut Back On The Railroads? [View article]
    I have no thoughts on Keystone. I hear it really isn't too relevant at this point.
    Dec 16, 2014. 10:35 PM | Likes Like |Link to Comment
  • Is It Time To Cut Back On The Railroads? [View article]
    Shale won't be broken. It needs consistent renewal & will continue to innovate. Many individual companies might be hurt, however. I actually doubt that OPEC's really targeting shale as the very concept is a bit absurd and I'm pretty sure they know it. I personally believe they're just trying to shake out the speculators and commit a warning shot across the bow to those who are accelerating the production rate without any regards to the existing supply. OPEC is being portrayed as the bad guy in the media, but in all honesty, its the over ambitious shale companies who are leveraging their bets that are the real bad guys IMO.

    Things will level out eventually, but unfortunately oil has also become a commodity that attracts a lot of investor speculation as well. Expect volatility in the prices for some time IMO, but I wouldn't expect much action from OPEC unless things really get out of hand (ie. like $30/barrel)
    Dec 15, 2014. 10:56 PM | 1 Like Like |Link to Comment
  • Why Investors Should Keep An Eye On Flotek Industries [View article]
    Also FWIW, expect SZYM to eventually compete in d-limonene markets, or at least as an algal-based alternative. It'll likely start off with their solvent line although who's to say if that'll happen anytime soon with the latest strategy shift. A high margin oilfield solution using it might be possible. Still trying to figure out what their trademark "Shalemaster" is going to be.
    Dec 2, 2014. 11:05 PM | 2 Likes Like |Link to Comment
  • Why Investors Should Keep An Eye On Flotek Industries [View article]
    FTK's certainly not cheap and the oil market's clearly unstable now, but FTK is progressing nicely & its been discounted quite unfairly in relation to its forward progress. While I just began to pick up some shares around $18, I wouldn't dare say its a bottom. It definitely has to round out some support first and would suggest others keep on watching until that happens. But given that I personally was willing to pick up shares around $23, I'm not complaining either and I definitely don't mind averaging down. I was really impressed with their acquisition of Florida Chem a few years back. Orange oil is going be a pretty important commodity going forward IMO.

    In the mean time, the race is on for more efficient & more productive wells now. For the same reason why Berkshire wanted Weatherford's fluids business, I think we'll see a greater demand for oilfield chems (especially green fluids) from here out.
    Dec 2, 2014. 10:56 PM | 1 Like Like |Link to Comment
  • Why Investors Should Keep An Eye On Flotek Industries [View article]
    FTK & SZYM both have some interesting tech for green drilling fluids, although they don't necessarily compete since SZYM only has Encapso at this point (expect more) which addresses a unique drilling lubricant niche. FTK has a much wider breadth of products & is largely focused on well stimulation.

    I wouldn't necessarily say FTK bought out ARC Fluids, but they did contract its founder as a consultant and some of his patents/secrets via ARC. I also would not suggest any relationship between FTK and SZYM exists. It's fairly possible, but I would be more inclined to believe it's really a small world out there in the fluid market.
    Dec 2, 2014. 10:50 PM | 2 Likes Like |Link to Comment
  • Solazyme's (SZYM) CEO Jonathan Wolfson on Q3 2014 Results - Earnings Call Transcript [View article]
    "Over almost 12 years at Solazyme, we believe that we built a company and a technology that will produce numerous disruptive products that are better for the planet and will ultimately deliver a multi-billion-dollar profitable commercial entity."

    They knew they were going to destroy expectations, but this is the line they stuck with in order to convey the long-term view of what is now unfolding. I think it's a rather bold statement given the expected outcome of the ensuing conversation. I know it's a statement that will fall on deaf ears now whether one shares these expectations or not. It'll be insulting to some and accused as intentionally misleading by others, but it'll eventually come to pass or not in the course of time.

    I doubt MacArthur's words on returning were held with much esteem at the time of his rout as well.
    Nov 11, 2014. 04:37 PM | 3 Likes Like |Link to Comment
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