RE: Insights ... and interesting mathFascinating math, cosmicac. Looking out eighteen years and picking a a share price is fun. And anything is possible. In my view, where the exciting ride is, where the money is to be made, where the action is now, is what happens in the next few months, and the next year or two. Plenty of ups and downs, quiet periods and noisy ones.
The question of where NKW is going to get all the money to build anything is a good one. This is a company moving from purely speculative gaga to a proposal to BC Hydro to either gaga again or into semi-utility category.
How will the BC Hydro pitch be framed? Will it just be Phase 1, cost-justified on the economics of 350 MW or whatever? Intuitively, I don't see the feasability of that. NKW has to put in an expensive submarine transmission link, and my guess it that it is cost justified only if it's moving all 1750 MW - how else would they pick that number? But a 1750 MW multi-phase wind pitch to BC Hydro is also a BIG EPA, unprecedented in BC's history, fraught with risk, and highly political. My point, the economics of the project and the structure of the deal with BC Hydro, are by no means slam-dunk.
No significant financing will happen until an EPA with BC Hydro is in the works. When that happens, it's my humble and ill-informed opinion, that there is only one way NKW can get the money it needs. Even with the EPA, I don't think debt financing is in the cards. There's too much attrition doing a best results type financing. I think they'll have to entertain partnership with a major. GE, Epcor, Shell?
In that scenario, yes, there will be considerable dilution and perhaps a big shift in control. But the equity will not show up on the market, keeping the trading stock still pretty tight, and thus somewhat volatile.
Also, we need to keep our eyes on the status and rules that govern income trusts in Canada, because this kind of semi-utility (steady, predictable income, with no significant upside or downside potential, once it's at cruising speed) is perfect for an income trust.
Between now and the submission of the application to BC Hydro, sometime in 2007, not much of significance will happen, in my opinion. Sure, they may hire more people, may do another share offering because they'll have spent all their money before long, may announce wind results, blah, blah. But nothing that impacts the fundamentals. Left alone, the share price would drift back down to the 50 cent and below level (and we should be buying madly). Promoted a bit, kept in the news, we might see a dollar. We should be trading in there.
Once the application to BC Hydro is filed, hold on to your hats. NKW management say they've done their homework. Presumably with all the professional talent on board now, the company won't submit an application that stands much chance of failing. But. If it is rejected, it's bye-bye dreams. If it is accepted ...