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Contributors: Douglas McIntyre Jon C. Ogg

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Wednesday, September 06, 2006

IPO Filing Alert: Clean Energy Fuels Corp., Backdoor Play for T. Boone Pickens

Clean Energy Fuels Corp, a Seal Beach, California based alternative energy provider has filed to come public in an IPO under the ticker "CLNE." We have often looked for "backdoor plays" into certain IPO's, and you could probably joke that this is a backdoor play into T. Boone Pickens.

T. Boone Pickens is one of the founders of the company, and he will be the largest shareholder after the IPO. The company serves over 200 fleet customers operating over 13,000 natural gas vehicles in public transit, refuse hauling, airports, taxis, and regional trucking. They own and operate 168 natural gas fueling stations in 10 states and in Canada. It also a a LNG liquefaction plant capable of producing 35 million gallons of LNG per year.

As faras the proceeds, the company has made many earmarks. It will allocate $50-55 million to build a LNG liquefaction plant in the western US, $30-35 million for CNG and LNG fueling stations, $15-20 million for natural gas vehicles and equipment for anticipated sales to customers, and the balance for general corporate purposes.

The 2005 revenues were $77.95 million, with net income stated as $17.25 million. For the first 6-months of 2006 CLNE has posted revenues of $42.55 million and it had a loss of $4.1 million on the books. One thing that needs to be noted is that the company does have some fluctuating results as a result of its gains and losses that are both realized and unrealized in various derivative contracts that the company has entered. That almost gives the feel that it has hedging and trading operations in the sector that could be deemed a lock-in or speculation, which is part of what got Mr. Pickens where he is now.

As of June 30, 2006 the balance sheet looked in shape compared to many pre-IPo companies that need to come public. It held $35 million in cash and equivalents, and carried a mere $810,527 in long-term debt. It also had $100.7 million in additional paid-in capital and $13.2 million in retained earnings.

On August 2, 2006, it purchased the following natural gas futures contracts and made related deposits of $9.5 million:

Futures settlement year (gasoline gallon equivalents)
2008 161,300,000
2009 201,625,000
2010 201,625,000
2011 201,625,000

There is one kicker to this IPO, and you can decide if it is a plus or a minus. The company is handling its IPO via W.R.Hambrecht's OpenIPO®: The method of distribution being used by the underwriters in this offering differs somewhat from that traditionally employed in firm commitment underwritten public offerings. In particular, the public offering price and allocation of shares will be determined primarily by an auction process conducted by the underwriters and other securities dealers participating in this offering. The minimum size for any bid in the auction is 100 shares. W.R.Hambrecht is the lead underwriter and Simmons & Co is the other underwriter. This OpenIPO format is one that has not come without controversy,and many institutions feel the OpenIPO process takes out much of the post-IPO gas (no pun intended). Some traders also feel that traditional street players refuse to give much analyst coverage to these OpenIPO companies, but perhaps a key name like T. Boone Pickens can overcome such things.

You can probably bet that the next few times Mr. Pickens appears on CNBC he will probably be "Pro-Nat Gas" on his outlook.

Jon C. Ogg
September 6, 2006

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