Lease bidding and the Emerging Geothermal Sector Horse Race

Posted on 17 July 2009

We see this result as indicative of the horse race that is emerging in the Geothermal sector.

Magma recently became a public company in a TSX listed IPO.  Run by the highly successful Ross Beaty (see Pan American Silver, among others) we expect Magma to become a significant player.   The strategy is for Magma to become the biggest pure play Geothermal name by building a portfolio of assets, in parallel.  This bidding is consistent with the strategy.

Contrast that with the likes of Nevada Geothermal, Western Geopower, US Geothermal, and others – all proceeding in a near linear, plant by plant, pattern.

Ormat, the established leader, played the bidding in a cautious manner and probably has dozens of geologists looking very carefully at the available lands.  We suspect they know something special about that particular site. Ormat also has ambitious growth plans having a stable of leases from previous auctions.

It will be interesting to see how both development strategies play out; either way, we like the prospects for Geothermal power in general and these two names in particular.