In Sunday NY Times (Dec 6, 2009, pg 2) there is an article titled KLM Tests a Biofuel That’s Made From Weeds.? They are using Camelina oil as part of the fuel to run a Boeing 747. The question is: Should you invest in Camelina Oil?
What would be the first questions?
1. What is the economic advantage? Is it more efficient or cheaper or both?? Not mentioned in the article.
2. How safe is it? This is being tested according to article.
3. Who is producing it? Not mentioned but a Google search can find it.
4. What is the likelihood of it being picked up as a fuel? No idea.
5. What is the investment target?? Companies producing it, the oil or seed itself, or companies using it?
6. Finally, if it is patentable, who has it?
Lots of questions.? From the point of this blog, the best bet may be to invest in a company producing it. Why? It will be the efficiency of production, conversion, and delivery that will make this a viable fuel.? The seed can be grown in many locations by a variety of people.? Too much competition there. Assume the fuel can be used by anyone, it would only decrease the costs of that business by a fraction.
The real win is in the producer and deliverer of the oil.? The exit plan would be to go public or get acquired by another energy company.? The two key entry criteria would be an existing customer and demonstration by the company that they can deliver; or at least their managers have the experience of delivering on their promises.
A point I am making is that the methodology described in this blog is the ability to quickly evaluate an opportunity and determine if you should spend the due diligence on a deep dive.??I would look at the 14 points and see how well it fits and then make the recommendation.? If it passes all 14, I would only recommend this if I was looking at a viable concern.?? Oh, and one more thing, if the investor has experience in energy then I would make it positive; but if they are not experienced in energy, then I would suggest they get some before they invest.
