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On April 18, 2016 Northland Power gave another press release on the status of it's two big power projects,that is, Nordsee One and Gemini.This one gave investors an update on Nordsee One.These days their press releases are more impactful than their quarterly reports.This one told investors that the installation of the foundations for Nordsee One are six weeks ahead of schedule.It is still on track to be commissioning power in early 2017.Northland Power told investors in their last press release that power would be pre-commissioned before the finish of the project.Presumably power could be sold to it's German partner RWE before their power contract comes into place in 2017.This information is contained in another post on Workathon dated March5,2016 click here to see about revenue from pre-commissioning.
Operational Details
Nordsee One is a joint venture done with the huge German utility RWE which has a 15% interest in Nordsee One.The contractor here is a firm called GeoSea;it has installed the 54 (900 ton) foundations ahead of schedule.The next step is to work on the inter-array cables and the offshore substation.When finished it will supply about 400,000 German households.Northland will be able to send power to the onshore substation and then to RWE.In fact Northland has already sent power to it's onshore substation.This will allow it to collect some pre-completion revenues in 2016.
Financial Results
Northland Power will be showing it's quarterly results on May 11.The results will be slightly ahead of guidance and on track to have EBITDA increase from 2015 which was a good year for it.But the news that is important to investors is that both Nordsee One(332 MW) and Gemini (600 MW) will be in operation before expected.By mid 2017 (or maybe earlier) Northland will have about a 66-70% increase from present output and revenues.Pre-completion revenues are just the jam on the toast.See Workathon dated March 5,2016 for details on pre completion revenues.Once again this blog advises investors this period in 2016 is the time to buy Northland Power before it hits $25 a share,especially with the extra pre-completion revenues. use Workathon for analysis of Cdn. utilities; use Workathon on Blogger for details on utilities
Algonquin Power is a Canadian utility that has been covered in several of my blogs on Workathon(December26, 2015 and June14,2015) and on Blogdaleupsome(October28, 2015).Algonquin although listed on the TSX has a large amount of resources in United States and in particular regulated resources.This blog ,in past posts has recommended that more of their rsources be diversified into other jurisdictions or at least into non-regulated assets.However it is realized that this is difficult to do when the rate of return is so enticing and rate awards come so quickly.Algonquin has added a couple of non-regulated investments recently in particular into wind farms with long term contracts.But Algonquin has come up with a strategy which may have solved their problems.
Operational Statistics
Before we analyze their recent strategy this blog will look at the results of their recent annual report.On March31,2015 Algonquin showed their 2015 annual and fourth quarter results;they were quite good.Net earnings for the year were $119 million(CDN.) or $.43 per share compared to $78 million (CDN.) or $.32 per share in 2014.Revenue was $1.03 billion compared to $942 million for 2014.While adjusted EBITDA grew by 29% over 2014.
Their year over year results were quite good but their fourth quarter results were basically flat in comparison to that of 2014.However this will be remembered as the quarter in which it bought the huge Empire utility.This is a huge investment for Algonquin which is not that small.And they have come up with a new form of financing called Installment receipts in order to help raise the money.These receipts trade on the TSX but it is not clear to this author whether they will trade on the NYSE as a form of depository receipt.Perhaps when the second installment has been paid up and full value received that Algonquin may trade them on an American exchange as the money is mostly used for American assets.
Regulators It is suggested that much of the requirements necessary for this instrument to become an American depository receipt have already been met.If Algonquin gets approval to do this it would be quite a feather in it's cap and might be smiled upon by the regulators that grant their rates.However it must be able to sign up an American bank to hold them and handle the depository recepits and this has not yet been done.Should this starategy continue to unfold then this blog suggests that this would possibly be for $1 billion in depository receipts and be a sizeable amount of the almost $3 billion of Algonquin Power equity. And if it is done then Algonquin Power might have a much easier time with American power regulators.This would likely propel the stock towards $12 a share by the first day of June. use Workathon for info. on Cdn. utilities ; subscribe to Workathon for utility analysis
