Crownbutte Wind Power Inc (CBWP) Review – You Must Read The Filings!
Crownbutte Wind Power completed an amendment in June as the last filing completed and continues to move forward in the initial business model with 11 projects in the pipeline and 2 projects that are disclosed as being the only two sold so far. The S1 /A filed in June 19th 2009 is the prefect example of an excellent and well written registration. The offering disclosed at $0.50 a share is a good example of the current market price of $0.55.
It is interesting to review the business plan, as they do not plan on entering into Power Purchase Agreements (PPAs) but selling the electricity on open markets as they believe this will give more favourable returns unless otherwise offered to them. It also suggests that they may be in the business of building and selling the Wind Parks. Both ideas a genuinely interesting and promising for this fairly new company in an era of alternative energy for the United States.
For those who don’t have the time to review over 100 pages of great insight into the workings of the wind power industry, and possibly too lazy to see what I feel to be a great up and comer if they get their financings, let me summarize it for you:
Crownbutte ND was founded in 1999 Chief Executive Officer, Tim Simons, with the goal of addressing the requirements of regional utility companies to satisfy increasing renewable energy demands. They develop wind parks from green field to operation, which they have sold to regional utilities. One park developed by CBWP was purchased directly by Basin Electric Power Cooperative (2.6 megawatts (MW) near Chamberlain, South Dakota). In addition to these two operating parks, they have completed various consulting activities with regional utilities and international energy companies. The ultimate goal is to develop, own and operate merchant wind parks in the 20 to 60 MW capacity range. Currently, they have 11 projects totaling approximately 618 MW (0 MW currently in operation) of prospective capacity in various phases of development primarily in North Dakota, South Dakota and Montana, with a total of over 40,000 acres under lease option. They have options to acquire an additional 60MW of prospective capacity in fully developed sites ready for construction, and their project management team is exploring other opportunities in this region.
From what I was able to read, they have built an extensive network of contacts and a unique process to build the parks and bring them to market, whereby the only fork in the road is the need for 60-90% financing on the turbines themselves, and the capital required combined with the 24 month process for bringing the feasibility to the first shovel in the ground. Their goal of 3 years to production per site and entering into 2-3 projects per annum is realistic and achievable based on the other industry examples I have observed, a market norm if I can say that.
While most developers have focused on large projects of 100 MW or more, they hope to have found a niche in the 20-60 MW range. The focus being to bring these smaller parks from concept to operation. The project sites currently in development by CBWP according to their filings are located directly on some of the most ideal wind regimes in the country, with net capacity factors of up to forty-six percent (46%). These above-average net capacity factors have a significant impact on the amount of electricity that can be generated and therefore on future revenues.
It is unfortunate, but the last piece of news on the company was the lawsuit with Centre Square Capital, which in my personal opinion looks as if Crownbutte decided not to take the type of financing offered by Centre Square Capital, which was most likely toxic financing or just never occurred, since it was defined the agreement did not apply to the current shareholders and their region. The fees associated to it appears to be a last ditch effort to muscle the firm in September 2008. The case was actually dismissed and Centre Square Capital was penalized, whereby Crownbutte Wind Power was rewarded a reimbursement of approximately $129,227 for legal fees and disbursements, which is payable to the Company as of March 2009.
It appears that Crownbutte won its first battle, launched its first projects, and successfully continues down the road it began on. I am impressed by the management of the company on paper, and I hope to see more of this group and continued financing and success for their venture.
Their website can be found at: http://www.crownbutte.com
This blog and review has not been paid for, no compensation has been received, and the writer holds no position within this firm at the date of publication. The article is not intended to be financial advice, as the writer holds no such accreditation or qualification. The article is strictly the opinion of the writer and any forward looking statements or comments should be seen as amusement and the opinion of the writer and in no way fact. Read the companies filings, gather as much information as possible on the firm prior to making any investment, and discuss your decisions with a broker dealer to ensure it meets your threshold as an investor. Do not rely on any information within this blog or website.