Watt’s Up With That: A Tale of Two Sigmoids

There are dozens of different mathematical constructions that yield bell-shaped curves. The “Hubbert” or “Peak Oil” curve is actually a special case of a class of s-shaped functions called sigmoids. While most sigmoid functions begin and end at different values, Hubbert’s curve is constrained to begin and end at zero by the formula and boundary conditions imposed that represent a perfect mathematical translation of Hubbert’s worldview. The curve reflects a battle between two competing forces or trends – one for growth and one for contraction – where the balance shifts between the two along the way. […]

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Drilling For Value, Appendix A: Energetic Factors of Resource Economics

  • Energy Return on Energy Invested (EROEI) is a popular metric for resource quality which attempts to cut through economic distortions caused by taxes, subsidies, and current market conditions.
  • Energetic factors of resource intensity and efficiency also have practical applications for estimating long-term resource project economics.
  • Declining EROEIs, which have been hyper-politicized by peak oil enthusiasts, have been counteracted by gains in full-cycle energy efficiencies.
  • Though other energetic measures of return incorporate financial metrics, EROEI is still the purest key performance metric which exposes an energy resource’s underlying and long-term profit potential.


Source: Frank Reilly (Illustrator). Oilfield WorkerLiberty Magazine. 10 March 1945.

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MIT Energy Initiative: Venture Capital and Cleantech — The Wrong Model for Clean Energy Innovation

Date of Source: 01 Jul 2016

Summary:
Venture capital (VC) firms spent over $25 billion funding clean energy technology (cleantech) start-ups from 2006 to 2011 and lost over half their money; as a result, funding has dried up in the cleantech sector… We conclude that the VC model is broken for the cleantech sector, which suffers especially from a dearth of large corporations willing to invest in innovation… If a new and more diverse set of actors avoids the mistakes of the cleantech VC boom and bust, then they may be able to support a new generation of cleantech companies. […]

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PBF Energy’s Assets Trading Well Below Fair Value; Multiple Catalysts Ahead

Executive Summary
PBF Energy (PBF) is a bargain at current market prices. PBF’s adept management team, in conjunction with private equity partners, acquired its core refining assets at fire sale prices in 2010 and 2011. Among these assets are the Paulsboro and Delaware City refineries which, following initial turnarounds, are now the crown-jewels of the East Coast (PADD 1) refining system. East Coast refineries have historically lacked the structural advantages of their Mid-Continent and Gulf-Coast counterparts. However, management’s aggressive investment program in a “crude-by-rail” logistical infrastructure promises to close the gap by adding much lacking optionality through access to cost advantaged crudes. Although the ownership structure has legacy problems and the company will undoubtedly continue to face cyclical margin and secular regulatory issues, the stock is much too cheap. A discounted cash flow analysis and an economic book value analysis convergingly indicate that the stock is fairly valued at around $50 per share (about 60% higher than current prices of about $31/share). Continue reading