gabby

5 Must Read Articles in Oil and Alternative Energy

Hey thanks to all the comments here. I am not able to comment on solar, I had stopped following, not because i don't value/believe in it, but there is a limit to what I can effectively follow. FWIW, tonight on Fast Money (2/19 -5:20pm ET). Tim Seymour reco'ed Brazil - specifically CZZ as a way to play Castro retiring. The reco has more substance than you would think. Lula has established ties w/Castro, Cuba has a historic capability w/sugar production, CZZ has considered opening plants in the Caribbean. This is all a little too intellectual to translate to investment right now, but things look to be moving in a good direction. And i didn't sell any of my CZZ on the increase today.

Optiondragon, I look forward to checking out your site. In the meanwhile, your coal plays sound really good.

GLTA,
gabby

5 Must Read Articles in Oil and Alternative Energy

David,
Can't think of any links off hand. Like everyone else, I scour Bloomberg, Reuters, Financial Times and enjoy the InvestorVillage message board very much.

www1.investorvillage.c...?

CZZ is up today on the Bovespa -- 3% at this writing.

www.bloomberg.com/mark...

Last week, CZZ announced buying out a production mill in Brazil (expanding their capacity) and also that Credit Suisse has taken a 5.21% interest in CZZ. I'm not trying to pump CZZ -- just find it interesting and a sensible way to play ethanol with the added benefit that - If sugar prices go up they divert less product to ethanol & make "hay" on the sugar price. Disclosure -- I own some CZZ, bought KOL shortly after it debutted (got it under $40) and bought ACI on Friday. Also own some Xstrata (for about 18 months). I'm bullish coal for a number of reasons.

gabby

5 Must Read Articles in Oil and Alternative Energy

Oilsands,
The alternatives area is already super funded with subsidies. There is a 51 cent/gallon tax credit for US ethanol producers and a 54cent/gallon tariff on Brazilian ethanol. Gov. subsidized research and tax credits for cellulosic.... We actually need to encourage free market competition. That would be greatest and most efficient inducement. Diverting foodstuff, grains, vegetable oils isn't viable. I like your hydro power suggestion and I also like wind power. T.Boone Pickens is involved with wind.

Coal to chemicals maybe a very old story but the growth in China will be exponential.

gabby

5 Must Read Articles in Oil and Alternative Energy

David,
Nice analysis. GS downgraded the coal sector on Fri. 2/15, but the merits of that call has been viewed with great sceptisim -- especially by me. (Took it as a buying opportunity). WSJ had a very interesting article on Coal to Chemicals - China is at the forefront. Coal is being converted for the production of plastics, fertilizer and believe it or not -- pharmaceuticals.

Zulauf, has it wrong on sugar. Sugar futures are unbelieveably speculative. All the experts are divided as to whether sugar will be up or down. Buying sugar futures guarantees that you won't be sleeping at night. If you like sugar try DBA, which has a sugar component - along with wheat, corn & soybeans or RCI - Rogers Sugar Income Trust. I'm still very bullish on CZZ. Check out the price action today for CZZ on the Bovespa. In terms of ethanol, we will see an enormous capitulation on employing vital grains & foodstuff for ethanol. We are only starting to see food inflation, Asia has been especially hit with shortages. And, in the short term, cellulosic is not yet widely & cost effectively available. Sugar cane ethanol is well positioned.

Link follows on the Coal to Chemicals story -- GL, gabby

URL for this article:
online.wsj.com/article...

5 Must-Read Stories in Oil and Alternative Energy

Willy,

Coincidence, but I just received this story that mentions Verenium. I think it might be worth doing some DD on CZZ instead.

GL - gabby

Associated Press
Sector Snap: Ethanol Shares Mostly Fall
Associated Press 01.18.08, 1:05 PM ET

NEW YORK -
Ethanol stocks mostly fell Friday after BioFuel Energy Corp. reported delays in the start up of its first two ethanol plants and investors remained concerned about the sector's near-term outlook.

Profits at producers of corn-based ethanol have come under stress, as commodity costs surged and ethanol prices became depressed because the sector expanded production too rapidly. Margins have increased recently as ethanol prices improved, though there are still concerns that tight corn supplies will support prices for the alternative fuel's main feedstock.

BioFuel's stock fell 24 cents, or 3.6 percent, to $6.42 after the company said late Thursday that construction problems would delay its plant startups by about three months.

Citigroup (nyse: C - news - people ) analyst David Driscoll said the delay does not have a material effect on his outlook for the company. He reiterated a "Buy" rating on BioFuel's shares in a note Thursday.

"Our positive thesis on BioFuel Energy (nasdaq: BIOF - news - people ) remains intact as ethanol industry profitability has begun to improve over the past three months on the back of strengthening industry fundamentals," he wrote.

Brazil-based Cosan Ltd. bucked the sell-off, after Bear Stearns (nyse: BSC - news - people ) analyst Marc McCarthy initiated coverage of the sugarcane ethanol maker's shares at "Outperform."

"Cosan, having bounced from its lows, is unmatched in size, liquidity, management strength, and corporate structure," McCarthy wrote in a note Friday. Its shares rose 12 cents to $13.29 in afternoon trading. They have risen fairly steadily since reaching a 52-week low of $9.53 in November.

Elsewhere in the sector, Verasun Energy Corp. rose 9 cents to $10.11 after receiving an upgrade from Broadpoint Capital analyst Ron Oster to "Neutral" from "Underperform." Oster cited the stock's "attractive valuation" following a recent sell-off, as well as moderate risk due to its scale.

Shares of Verenium Corp. (nasdaq: VRNM - news - people ), which makes ethanol from plant matter rather than corn, fell 11 cents, or 2.8 percent, to $3.83 in afternoon trading.

Aventine Renewable Energy Holdings (nyse: AVR - news - people ) Inc. fell 47 cents, or 5 percent, to $8.95, and Pacific Ethanol (nasdaq: PEIX - news - people ) Inc. fell 4 cents to $5.48. US BioEnergy Corp. (nasdaq: USBE - news - people ) rose 8 cents to $7.83.

Copyright 2007 Associated Press. All rights reserved. This material may not be published broadcast, rewritten, or redistributed

5 Must-Read Stories in Oil and Alternative Energy

PS -- On page 2 of the article, there is discussion on the ethanol "pipeline".

5 Must-Read Stories in Oil and Alternative Energy

David, I have no idea on the plant building cost differences. Transportation, is however, the area that CZZ will be addressing and improving. Currently, the infrastruture, (railroads, etc.) is not in place, so the ethanol is transported via truck (least efficient method). In terms of shipping from port, the tankers that can be used for ethanol transport are smaller than those used for grains, so that is another inefficiency.

The following link from the story below has a good overview & strategy discussion w/the CZZ CCO.

ethanolstatistics.com/...

GL, gabby
(openPR) - Brazil’s largest ethanol producer Cosan is actively looking to start producing ethanol in the United States. That’s what Marcos Lutz, Chief Commercial Officer told Ethanol Statistics in a interview this week.

In September this year, Cosan’s Chief Financial Officer Paulo Diniz was quoted saying that Cosan would start taking its first international steps. At the time, three options were presented. The first would be to invest in an ethanol dehydration plant in the Caribbean, following in the steps of companies like Brazil's Crystalsev and U.S. giant Cargill. The second option would be to install a distillery in Mexico, which has free access to the U.S. market through NAFTA (North American Free Trade Agreement) from January 2008. The third and last option would be to invest directly in the United States.

Mr. Lutz confirms all three options as viable but doesn’t consider investments in CBI countries as Cosan’s first international step. “CBI is a minor investment, which involves about 10 million dollars. What were talking about is actually having a plant or two in the United States. To have domestic supply there as well”.

Mr. Lutz made his comments in an interview with Ethanol Statistics on the strategy of Cosan in the next few years. Besides Cosan’s plans to enter the U.S. market, Mr. Lutz also discussed the attractiveness of greenfields and brownfields versus acquisitions, its involvement in the construction of a dedicated ethanol pipeline and possible plans to expand to other regions than the United States.

The entire interview, titled ‘Cosan’s Strategy for Future Growth’, can be found on

ethanolstatistics.com/...

5 Must-Read Stories in Oil and Alternative Energy

David -- Sugar has been the commodity under performer. There has been a vast global sugar surplus which has held down costs. Brazil is the largest sugar producer but India is close to over- taking Brazil. Thailand has also ramped up production. CZZ's CEO - Lutz, announced that given 1 year notice they could export 10 billion litres of ethanol within 1 year. Currently the geographic planting area of CZZ's plantations equal the size of Germany. That said, lots of funds and speculators are betting on sugar increasing this year, ethanol could be a factor, decreased production, weather. Transport costs matter to both corn and sugar, but corn is needed for livestock as well as people. Sugar isn't as vital a foodstuff. Also corn has to be planted annually, while a sugar cane plant will re-generate for up to 10 years, so that's another efficiency. Within Brazil the introduction of flex fuel cars has been a resounding success and up to 20% of the fuel is ethanol. Brazil is booming, more people buying cars. FWIW, Goldman Sachs has a 17% stake in a Brazilian sugar co. - Santelisa.

GL,
gabby

5 Must-Read Stories in Oil and Alternative Energy

Cosan produces sugar based ethanol and is even running some of their production equipment on cellulosic ethanol made from the sugar cane leaves. Sugar base ethanol is much more efficient than corn base and unlike Coskata, CZZ's product is available right now. When CZZ IPO'ed on NYSE they listed as Bermuda based which also provides some advantage in terms of avoiding the 54 cent/gallon tariff on Brazilian ethanol imports to the US.