This week the CEO of OriginOil (OTC:OOIL) Riggs Eckelberry released a message to his shareholders (see below). In it he highlighted several new developments including the incredible opportunity that has presented itself within the bio-fuels sector as the recent slide in oil has taken control of prices. Mr. Eckelberry states:
You'd think that biofuels would crash along with the price of crude. But here's analyst Chen Lin, explaining how it's exactly the opposite… The conventional wisdom about ethanol has been proved wrong. Lower oil and gas prices encourage more consumption. More gas consumption, by law, requires more ethanol-more ethanol, in fact, than can be produced.
According to the Environmental Protection Agency, U.S. plants are running at 930,000-940,000 barrels per day. Maximum daily U.S. ethanol capacity is 925,000 barrels per day. That's why the ethanol price rebounded sharply in October and is now higher than in the summer, when oil sold at $100/bbl. Wild, isn't it! Cost of gas goes down, people use more gas… and now there's not enough biofuels to go around.
As I've said in the past, OriginOil is not an oil and gas company, they are a water technology company that just so happens to have a hand in saving all water intensive industries a lot of money. The recent decline in oil price has other companies like Halliburton (NYSE:HAL) scrambling to adjust but for OOIL, they've already built in two other revenue drivers to capitalize on.
The one major outlier and the piece of the logistics puzzle that is "clean water" comes down to efficiency of production and…of course…water. If these companies can save on this aspect alone, there could be hundreds of thousands of dollars left over to put back into R & D or simply attribute it to the bottom line of the financials.
OOIL has gained much more attention as of late, for its novel water remediation process. In fact AlJazeera America's TechKnow series profiled the company and its processes. It was then broadcast across the world to 250million viewers. The added exposure from TechKnow could expand the reach of the Company's technology on a much larger, global scale. It wasn't that long ago when OOIL announced the signing of a 7-figure sale to Oman and most recently set up several licensing deals for resellers in the Caribbean and in the Middle East. Based on the overall amount of progress Origin has been realizing, we see that there is incredible potential for a long-term vision that involves this unique water remediation process not only being used by the oil and gas industry but far reaching into algae and even waste water clean-up as well.
In my opinion, OriginOil has a multi-pronged approach to generating additional sources of revenue in situations such as the current state of the oil and gas industry. It will be those involved at these early stages who will have the biggest opportunity to reap the largest rewards and therefore I think that based on the current price OOIL is trading at, this could be an incredibly undervalued play in the OTC; worth a closer look heading into the rest of this year.