$CEI - Paytience Pays (+All the DD You'll Ever Need)
Things are heating up for $CEI again. With its filings behind it, the acquisition of Viking on the horizon, and energy demand peaking, the stage is set for CEI to squeeze.
I’ve been watching CEI for some time now and remember how in August it shot up to $4.32 before Kerrisdale Capital’s short report took it down.
The excitement we all felt when CEI announced its exclusive intellectual property license agreement with ESG Clean Energy is still fresh in my memory and now that Doris got the ball rolling again for CEI - I’m bullish that history will repeat itself. So here’s why I think CEI isn’t going to stay at 63 cents for long.
ESG Clean Energy
The IP license for ESG was done through Viking Energy Group and gives exclusive rights for all of Canada and non-exclusive rights for 25 locations in the US. So VKIN will have ESG’s patent rights for stationary electric power generation and CO2 capture.
This was a huge deal then and it's an even bigger deal now. The fact that this system generates electricity from internal combustion engines and uses the heat so that 100% of the CO2 emitted is captured is just amazing!
But it's so much more than that. Because this system is able to capture the CO2 admitted from internal combustion engines, it is well suited to capture carbon emitted during the manufacturing processes for some important commodities or chemicals like:
- Distilled Water: Of course generating water is always a good thing, but deionized water is used in laboratories to remove impurities for lab experiments too
- Ammonia: It's mostly used as a fertilizer but is also useful for refrigerant gas, purifying water, manufacturing plastics, explosives, textiles, pesticides, dyes and of course for cleaning.
- UREA: This one I’d never heard of before but it's a chemical that comes from ammonia and carbon dioxide. It's typically used as a fertilizer or for resins. But it's become more sought after recently because it can help reduce the
nitric oxide pollutants emitted from diesel engines.
- Ethanol: Medically it's used as an antiseptic but it's widely used as fuel now and many believe that it reduces emissions of ozone-forming pollutants like carbon monoxide, particulate matter, and nitrogen oxides.
- Methanol: This chemical is very versatile and is hailed as the future of energy generation. But it can be used to form plywood, high-performance plastics, synthetic fibers, films, and even pharmaceuticals.
All of these chemicals have important uses which means demand for these commodities isn't going anywhere. If CEI is able to demonstrate its system’s importance to the manufacturing process, then it will have secured a place in a growing market for years to come.
This seems bullish to me.
TBH, the ESG system is what originally drew me to CEI. The company’s worldwide license for its technology used for power generation, energy storage, exhaust heat to power, and more seems really promising. I can’t wait to see how the company applies this to other opportunities like plastics recycling, micropower grids, data centers, or even crypto mining.
It looks like ESG’s systems are uniquely suited to some of these operations because it provides low-cost, CO2-free heat and energy. This can be utilized in some interesting ways like nitrogen removal in wastewater treatment plants or stranded natural gas wells.
It also recently received a new patent for its “Bottoming Cycle Power System” which covers its "exhaust-gas-to-exhaust-gas heat exchanger" for greater energy output. A key aspect of the patent is the carbon dioxide capture system which uses the waste heat of the carbon dioxide pump to heat and regenerates the adsorber for safely containing and packaging the CO2.
Simon-Maxwell (Simmax)
Another benefit of the Viking acquisition is its subsidiary Simon-Maxwell. A manufacturer and supplier of power generation products - the subsidiary specializes in combined heat and power generation, natural gas industrial engines, solar, wind, and tier 4 final diesel engines (these engines meet the strictest EPA emissions requirements for off-highway diesel engines).
Simmax has also been in business for over 80 years and services over 4 thousand maintenance contracts. But it doesn’t just sell equipment, it also offers additional services related to installation, maintenance, or custom design which means this company has lifelong clients.
It even offers a Simmax cryptocurrency mining power solution that is optimized for any cryptocurrency mining project.
Right now the company appears focused on expansion throughout Canada. You can check out its current projects on its site too.
Viking Energy
Obviously, this merger brings a lot to the table. Viking has a lot to offer CEI including the IP for Electrical Transmission and Distribution Open Conductor Detection Systems. These systems will detect a break in the line and immediately terminate the power to the line before it reaches the ground.
Usually, we only see things like this in movies.
But the reality is that these downed power lines can cause wildfires and substantial damage. There are supposed to be protective devices like fuses, and circuit breakers to detect short-circuit fault conditions but 30% of the time when a single line conductor breaks and falls the surface contact doesn’t trigger a blow to the fuse or circuit breaker. This is a HiZ fault and is known to trigger wildfires.
So this IP could be really valuable since it offers a cost-effective, simple, and scalable way to advance grid protection technology. It's also a better alternative to trenching power lines underground or trying to plan out comprehensive forest management. When HiZ faults usually occur, it could take minutes for someone to call it into the power company, but Viking’s technology detects a downed conductor and de-energizes the circuit within half a second.
I think this alternative technology will have a lot of demand since ratepayers (ie. you and me) are the ones who ultimately pay for improvements to the power lines and replacing existing infrastructure to make these changes would be cost-prohibitive.
Viking has two solutions for this problem - a software-based one (Viking Protection’s Transmission Line) or a hardware one (Viking Sentinel’s Distribution Line).
Another one of Viking’s subsidiaries is Viking Ozone Technology, LLC which owns a Medical & Bio-Hazard Waste Treatment system. You know all those shots you get at the doctors? How do you think they are disposed of?
Typically through incineration, chemical, or heat treatment.
But Viking’s OZONE technology offers an alternative by reducing the volume of the waste by up to 90% so that it eliminates the chance of any HIPAA violations. This waste is actually classified as a renewable fuel for waste-to-energy (WTE) facilities in many places. The system also produces NO by-products.
I know most of us don’t think of this very often, but this is a very real problem for the environment. Tens of thousands of tons of medical waste were produced from treating COVID-19 and WHO is concerned that it is “threatening human and environmental health and exposing a dire need to improve waste management practices,”
So isn’t it handy that CEI will have the technology for handling this in a safe and healthy way?
Institutions
I get the feeling that CEI is ready to dive into things now that the rest is sorted and I’m really looking forward to what’s next for the company. I don’t think I’m the only one feeling this way since CEI saw a bump in its institutional ownership recently. Now, there are 79 institutions holding 23,148,732 shares. 69 of these are LONG ONLY and there’s just one institution holding a short position alone.
Options Flow
Looking at the unusual whale’s option flow it's clear that tomorrow (June 3rd) people are expecting some action. On May 26th, there were several investors that bought calls with June 3rd expiries at premiums of $7k, $3k, and $6k. A few other investors sold their puts around mid-May also with June 3rd expiries and premiums of $12k and $8k. Because CEI is trading at less than $1 it's not surprising to see less action on the options flow but looking at the options chains, people are mostly looking farther out towards June 17th with a strike price of $1. The next most popular calls are on the 15th and 10th.
I’m guessing this is because we are all expecting some news from the CEO.
It’s also worth noting that calls with a July 15th expiry are seeing a lot of action with bullish premiums making up 66.9%
Technical Analysis
5 Minute
I see that we are at strong support which has held up since mid-May. On the 5-min time frame, we had a death cross of the MAs on June 1st, but I feel that this support will hold up well, nonetheless. Even if it breaks towards $.56 I think it could be an opportunity to add on shares because I'm bullish that once news is released about the merger CEI could run.
On that note, I think $.87 is a hard resistance but if we break past that we’ll probably hit $1 easily.
1 Hour
On the 1 hour time frame I want to point out that when CEI hit its support around $.56 in March after dipping below it in February, the stock had a fantastic run to almost $2. While this was triggered by a lot of factors, I think it shows that this is a critical level for the stock.
It also looks like the death cross started back in April as accumulation started to drop. Right now the RSI is approaching oversold at 37 so it could be a good time to add on shares at the support.
Macro Events
I know oil took a hit after the Financial Times reported that Saudi Arabia said it would raise production if it decides that the global supply is facing a big drop in Russian output due to sanctions. OPEC+ will be meeting today to decide its output targets for July and there’s pressure coming from Biden who is even considering meeting with Mohammed Bin Salman to discuss it.
So there’s a lot going on at the macro level which is affecting CEI too. I’m interested to see what the results of OPEC’s meeting will be and I’ll also be watching for news from Doris to see where CEI is going next. But I feel pretty certain that regardless of what OPEC does, the range of assets and services CEI is getting from Viking will position it for major success as time goes on.
I’ve been watching CEI for some time now and remember how in August it shot up to $4.32 before Kerrisdale Capital’s short report took it down.
The excitement we all felt when CEI announced its exclusive intellectual property license agreement with ESG Clean Energy is still fresh in my memory and now that Doris got the ball rolling again for CEI - I’m bullish that history will repeat itself. So here’s why I think CEI isn’t going to stay at 63 cents for long.
ESG Clean Energy
The IP license for ESG was done through Viking Energy Group and gives exclusive rights for all of Canada and non-exclusive rights for 25 locations in the US. So VKIN will have ESG’s patent rights for stationary electric power generation and CO2 capture.
This was a huge deal then and it's an even bigger deal now. The fact that this system generates electricity from internal combustion engines and uses the heat so that 100% of the CO2 emitted is captured is just amazing!
But it's so much more than that. Because this system is able to capture the CO2 admitted from internal combustion engines, it is well suited to capture carbon emitted during the manufacturing processes for some important commodities or chemicals like:
- Distilled Water: Of course generating water is always a good thing, but deionized water is used in laboratories to remove impurities for lab experiments too
- Ammonia: It's mostly used as a fertilizer but is also useful for refrigerant gas, purifying water, manufacturing plastics, explosives, textiles, pesticides, dyes and of course for cleaning.
- UREA: This one I’d never heard of before but it's a chemical that comes from ammonia and carbon dioxide. It's typically used as a fertilizer or for resins. But it's become more sought after recently because it can help reduce the
nitric oxide pollutants emitted from diesel engines.
- Ethanol: Medically it's used as an antiseptic but it's widely used as fuel now and many believe that it reduces emissions of ozone-forming pollutants like carbon monoxide, particulate matter, and nitrogen oxides.
- Methanol: This chemical is very versatile and is hailed as the future of energy generation. But it can be used to form plywood, high-performance plastics, synthetic fibers, films, and even pharmaceuticals.
All of these chemicals have important uses which means demand for these commodities isn't going anywhere. If CEI is able to demonstrate its system’s importance to the manufacturing process, then it will have secured a place in a growing market for years to come.
This seems bullish to me.
TBH, the ESG system is what originally drew me to CEI. The company’s worldwide license for its technology used for power generation, energy storage, exhaust heat to power, and more seems really promising. I can’t wait to see how the company applies this to other opportunities like plastics recycling, micropower grids, data centers, or even crypto mining.
It looks like ESG’s systems are uniquely suited to some of these operations because it provides low-cost, CO2-free heat and energy. This can be utilized in some interesting ways like nitrogen removal in wastewater treatment plants or stranded natural gas wells.
It also recently received a new patent for its “Bottoming Cycle Power System” which covers its "exhaust-gas-to-exhaust-gas heat exchanger" for greater energy output. A key aspect of the patent is the carbon dioxide capture system which uses the waste heat of the carbon dioxide pump to heat and regenerates the adsorber for safely containing and packaging the CO2.
Simon-Maxwell (Simmax)
Another benefit of the Viking acquisition is its subsidiary Simon-Maxwell. A manufacturer and supplier of power generation products - the subsidiary specializes in combined heat and power generation, natural gas industrial engines, solar, wind, and tier 4 final diesel engines (these engines meet the strictest EPA emissions requirements for off-highway diesel engines).
Simmax has also been in business for over 80 years and services over 4 thousand maintenance contracts. But it doesn’t just sell equipment, it also offers additional services related to installation, maintenance, or custom design which means this company has lifelong clients.
It even offers a Simmax cryptocurrency mining power solution that is optimized for any cryptocurrency mining project.
Right now the company appears focused on expansion throughout Canada. You can check out its current projects on its site too.
Viking Energy
Obviously, this merger brings a lot to the table. Viking has a lot to offer CEI including the IP for Electrical Transmission and Distribution Open Conductor Detection Systems. These systems will detect a break in the line and immediately terminate the power to the line before it reaches the ground.
Usually, we only see things like this in movies.
But the reality is that these downed power lines can cause wildfires and substantial damage. There are supposed to be protective devices like fuses, and circuit breakers to detect short-circuit fault conditions but 30% of the time when a single line conductor breaks and falls the surface contact doesn’t trigger a blow to the fuse or circuit breaker. This is a HiZ fault and is known to trigger wildfires.
So this IP could be really valuable since it offers a cost-effective, simple, and scalable way to advance grid protection technology. It's also a better alternative to trenching power lines underground or trying to plan out comprehensive forest management. When HiZ faults usually occur, it could take minutes for someone to call it into the power company, but Viking’s technology detects a downed conductor and de-energizes the circuit within half a second.
I think this alternative technology will have a lot of demand since ratepayers (ie. you and me) are the ones who ultimately pay for improvements to the power lines and replacing existing infrastructure to make these changes would be cost-prohibitive.
Viking has two solutions for this problem - a software-based one (Viking Protection’s Transmission Line) or a hardware one (Viking Sentinel’s Distribution Line).
Another one of Viking’s subsidiaries is Viking Ozone Technology, LLC which owns a Medical & Bio-Hazard Waste Treatment system. You know all those shots you get at the doctors? How do you think they are disposed of?
Typically through incineration, chemical, or heat treatment.
But Viking’s OZONE technology offers an alternative by reducing the volume of the waste by up to 90% so that it eliminates the chance of any HIPAA violations. This waste is actually classified as a renewable fuel for waste-to-energy (WTE) facilities in many places. The system also produces NO by-products.
I know most of us don’t think of this very often, but this is a very real problem for the environment. Tens of thousands of tons of medical waste were produced from treating COVID-19 and WHO is concerned that it is “threatening human and environmental health and exposing a dire need to improve waste management practices,”
So isn’t it handy that CEI will have the technology for handling this in a safe and healthy way?
Institutions
I get the feeling that CEI is ready to dive into things now that the rest is sorted and I’m really looking forward to what’s next for the company. I don’t think I’m the only one feeling this way since CEI saw a bump in its institutional ownership recently. Now, there are 79 institutions holding 23,148,732 shares. 69 of these are LONG ONLY and there’s just one institution holding a short position alone.
Options Flow
Looking at the unusual whale’s option flow it's clear that tomorrow (June 3rd) people are expecting some action. On May 26th, there were several investors that bought calls with June 3rd expiries at premiums of $7k, $3k, and $6k. A few other investors sold their puts around mid-May also with June 3rd expiries and premiums of $12k and $8k. Because CEI is trading at less than $1 it's not surprising to see less action on the options flow but looking at the options chains, people are mostly looking farther out towards June 17th with a strike price of $1. The next most popular calls are on the 15th and 10th.
I’m guessing this is because we are all expecting some news from the CEO.
It’s also worth noting that calls with a July 15th expiry are seeing a lot of action with bullish premiums making up 66.9%
Technical Analysis
5 Minute
I see that we are at strong support which has held up since mid-May. On the 5-min time frame, we had a death cross of the MAs on June 1st, but I feel that this support will hold up well, nonetheless. Even if it breaks towards $.56 I think it could be an opportunity to add on shares because I'm bullish that once news is released about the merger CEI could run.
On that note, I think $.87 is a hard resistance but if we break past that we’ll probably hit $1 easily.
1 Hour
On the 1 hour time frame I want to point out that when CEI hit its support around $.56 in March after dipping below it in February, the stock had a fantastic run to almost $2. While this was triggered by a lot of factors, I think it shows that this is a critical level for the stock.
It also looks like the death cross started back in April as accumulation started to drop. Right now the RSI is approaching oversold at 37 so it could be a good time to add on shares at the support.
Macro Events
I know oil took a hit after the Financial Times reported that Saudi Arabia said it would raise production if it decides that the global supply is facing a big drop in Russian output due to sanctions. OPEC+ will be meeting today to decide its output targets for July and there’s pressure coming from Biden who is even considering meeting with Mohammed Bin Salman to discuss it.
So there’s a lot going on at the macro level which is affecting CEI too. I’m interested to see what the results of OPEC’s meeting will be and I’ll also be watching for news from Doris to see where CEI is going next. But I feel pretty certain that regardless of what OPEC does, the range of assets and services CEI is getting from Viking will position it for major success as time goes on.