Evaluating CNG Investment Opportunities: U.S. Energy Development Corporation
U.S Energy Development Corporation is an independent oil and gas company that has deployed more than $1.1 billion of investor capital in the oil and gas industry. It has invested, drilled or operated more than 2,300 wells in 13 states and Canada since its formation in 1980.
The company was approached by a CNG fueling infrastructure developer to be a potential investor/partner in four CNG stations to be deployed in Colorado, Kansas and Oklahoma. The projects would involve a unique technology, and while U.S. Energy has vast expertise in gas exploration and production, it needed unique expertise assessing the both technology and the business plans for the proposed stations.
“We contacted NGVi to discuss how they could help us, and after discussing their qualifications and strategy for approaching the project, we knew we had found the right source,” noted Todd Witmer, Vice President of Geology.
The project was approached in two phases. The first phase was to review the unique CNG fueling technology and compare it functionally and economically to traditional technology.
The second phase involved a detailed review of the financial performance and marketing plans for existing CNG stations operated by the infrastructure developer seeking investment funding. Next, we reviewed the projected financial statements, including cash flow forecasts, working capital estimates, and operating cost estimates, as well as marketing plans for the four new stations.