RPG: Positive Results Continue at Orita

JOHN MCILVEEN, Jacob Securities, Inc. (01/05/2011)
"Ram Power. . .is poised to break out in 2011 with many catalysts to move the stock higher. Continued positive drill results at Orita. Ram recently announced a successful flow test at Orita; 8–10 MW is the estimated capacity. Bottom hole temperatures of 300˚C are more than enough for a flash plant, which is ~$0.5M/MW cheaper than binary. Lower salinity also negates the need for expensive well liners and will present less of a problem during power generation. The Orita 2 well was small diameter 8.5 in. (cheaper), which limits the flow rate. Also, the well was still heating up when it was shut down for lack of injection capacity. The next well, likely 9–7/8 in. (increasing confidence), will give at least 70% more capacity (the flow is proportional to the diameter to the power of 2). The target is 1,000,000 lb./hr. for the next well (#2 was 500,000 lb/hr). Orita Phase one 50 MW should be online in 2013 and provide annual revenue of $46M, EBITDA $36M and FCF $19M. About $67M in ITC cash grants should also be available in 2013.

San Jacinto going online. Ram is set to bring 36 new MWs online Q211 and another 36 MW in Q411 for combined annualized revenue of $57M, EBITDA $45M and FCF $8M. . .All financing is in place and no additional equity will likely be required.

Financing and/or a JV partner for the Geysers. The Geysers is drilled for 25 MW. $88M has been spent and the remaining $100M should be financed by debt and/or tax equity, and allow some return of capital. About $37M in ITC cash grants should also be available in 2013."

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