HUGE PROSPECT ON D1 OILS

D1 was originally established in 2002 to focus on the development of a portable refinery technology to produce biodiesel for the UK transport industry. During this period, it was concluded that the high cost of rape seed oil, the main feedstock for biodiesel production in Europe, renders its use commercially unattractive. As a result, D1 explored the economics, suitability and yields of a variety of specific energy crops. During 2003, jatropha curcas was identified as its feedstock of choice and the focus turned to securing output from jatropha plantations.

Jatropha was selected as D1's primary energy crop due to it's high productivity, durability and longevity. Jatropha trees can be grown on marginalised land and are durable to the elements. Furthermore, jatropha can grow in areas of minimal rainfall, although it grows better in areas of higher annual rainfall. Jatropha trees produce nuts, which contain oil, for an average of thirty years and generally have their first harvest within two years of planting. Biodiesel refined from jatropha oil complies with EN 14214, the current European standard for biodiesel. Biodiesel meeting EN 14121 specification is an approved blend when mixed with petroleum diesel.

D1 is now commercialising its D1 20 refinery able to produce eight million litres of biodiesel per annum and will utilise jatropha oil as its main feedstock. D1 believes it can maintain low production costs and produce consistent, high volume quality output through sourcing existing feedstock supplies, cultivating new yields of jatropha on existing plantations and setting up D1 20 refineries regionally. D1 is working with highly regarded agronomy and biotechnology research and development facilities in India and South East Asia and is participating in the establishment of nurseries in a variety of locations in the Asia Pacific region. These nurseries will test imported jatropha seeds against indigenous varieties to determine which will grow best under a region's climatic conditions. In addition, D1 has recently acquired the rights to a proprietary growing media which targets the specific nutritional requirements of jatropha.

The global market demand for biodiesel is growing. International energy and environmental policies have helped to create a demand for biodiesel which is estimated to reach at least 10.5 billion litres by 2010 in the European Union alone. Based on current capacity, feedstock availability and positioning in the market, the global production of biodiesel is expected to reach approximately
3 billion litres by 2010, less than one third of the projected demand in the European Union.

D1 Oils aims to become a global, sustainable, low cost producer of biodiesel and supplier of crude vegetable oil used in the production of biodiesel. To reach this objective, D1 will manage its operations regionally, securing plantation rights and establishing refinery operations in each region, thus controlling aspects of the supply chain from seed selection through to the sale of biodiesel to end customers.

To this end, D1 has established four regional operations:
UK (Teesside and London) South Africa (Johannesburg) Asia Pacific (Manila, the Philippines) and India (New Delhi).

Even so, a 4 bid would be very attractive, and a bid sometime in the future could be likely.

Wish i was this good at advising myself and acting on same! ...... sp now 275 mid having suggested risk was much greater than likely reward after sp had bolted to about 320 only 2/3 days ago ...... But if it falls much further, the reverse may well apply

Based on forecast revenues for year ended dec 2006 and applying prospective PE ratio of 11( Chemical Industry PE 17.95 but discounting for DOO I have allowed it to 11), I feel the DOO is worth around 4.50 and the bidding company will have to pay a premium of at least 10-15% which roughly amounts to 5.

IMHO, the price will go even higher if DOO is talking to more than 1 party. Let's see what happens in the next couple weeks.

Revenue = turnover not profit ..... so what PROFIT is DOO forecast to make?
Current P/E is -(minus)6.19

cynic
I know the difference between sales and profit. When you sell a business which is a new upstart company which DOO is with a proven product, then you need to value the business using the revenue f'cast numbers (12.9m) x the PE ratio but in this case we do not have any profit as the company is in the development stage and so the next best would be to use the sector PE and discount this PE for DOO which on a fair basis I would say 11 is reasonable compared to PROSPECTIVE SECTOR PE OF NEARLY 18.

So the calculation is 12.90*11=141.9 divide this by 31.60m shares and add on a small premium======5.

I have made some assumptions here.

no kidding! ..... i like the company and may buy a few (as I said, reluctantly sold them in the bloodbath), but I would be more than pleasantly surprised if someone offered even more than 4.00, and that is assuming any bid at all materialises.

Cynic

Do not take my word for it. DYOR I have given my opinion. Do not be surprised, Oil companies are loaded with money with crude at 70+ dollars! and DOO are talking and that is for sure to more than one party!Biofuels is the future!

agree with all you say except except the quantum if/when there is an offer tabled

cynic
Lets hope there is some news in the weekend papers

cynic

This article may be of interest! you can see why BP has been linked to D1.


Release date: 02 February 2006
BP announced today that it is to fund a $9.4 million project by The Energy and Resources Institute (TERI) in the Indian state of Andhra Pradesh to demonstrate the feasibility of producing biodiesel from Jatropha Curcas, a non-edible oil bearing crop.

The project, which is expected to take 10 years, will cultivate around 8,000 hectares of land currently designated as wasteland with Jatropha and install all the equipment necessary seed crushing, oil extraction and processing - to produce 9 million litres of biodiesel per annum. A full Environmental and Social Impact Assessment of all elements of the supply chain and life cycle analysis of greenhouse gas emissions will be completed as part of the project.
In some parts of the world there is only limited availability of land to produce food crops and therefore no surplus which can be used for energy crops. Because Jatropha is drought resistant and can grow on marginal land, it offers the possibility of an economically, socially and environmentally sustainable contribution to energy security challenges in India, explains Phil New, senior vice president of BPs fuels management group. We are particularly pleased to be working in partnership with The Energy and Resources Institute, whose authority and expertise we hold in the highest regard, and with whom we look forward to forming a highly complementary relationship.
TERI will be responsible for the day -to-day management and execution of the project.
Recent developments have made green fuels economically attractive in view of the resource potential of this option and the environmental benefits associated with it, along with employment generation and empowerment of the rural population, said TERI Director-General, Dr RK Pachauri. We at TERI are very pleased to join forces with BP and are confident that integrating the strengths of the two organizations will provide a significant breakthrough for the country in this field, which is full of promise.
Further information:
Name: Vineet Handa
Location: TERI
Phone : +91 (0 11) 2468 2100

Name: Sanjeev Lowe a
Location: BP India
Phone : +91 (0 11) 2375 5344

Name: Wendy Silcock
Location: BP London
Phone : +44 (0) 207 496 4358

The Mail on Sunday says they could be in talks BP has denied this.

BP may be a bit preoccupied for the coming week or two with their possible participation in the Rosneft float ...... In fact, if this and the heavy fall on Wall Street on Friday night may preciptitate further significant falls in the market in general and DOO in particular, for no other reason that there has been a recent and obvious surge in "lemming" interest ..... That could then prove to be a time to buy on fundamentals, with the very reasonable possibility of a t/o thrown in for nothing.

the mail on sunday says a lot, mainly shit. The times usually report well placed rumours and I think a joint partnership between D1 and BP could well be a possibility,

Ooh er. Going south.

KEAYDIAN
It must have been some thing Potts has said.

What a cracker driver.
I've just added a few more.

bought a few at 278.25 cos i think the share and the company is intrinsically good ..... with hindsight could have bought even cheaper, but think the med/long term prospects are very good

i think, however ill wait for the contract note, that I added at around 270.
however Was it not for an error with my trading service cynic I would be in at the same price as you.

D1 Oils plc

Update BUY Expected increase > 15%

D1 Oils confirmed yesterday that it is in talks with a number of interested parties. This does not come as a surprise as the business has been successful in meeting its initial planting targets, while spot prices on vegetable oils continue to rise due to continued refinery capacity build up and a positive regulatory framework for biofuels. Additionally the attractiveness of 8000 metric tonne (MT) refining units (D1 20) allow for greater flexibility and is cheaper to owner operate. D1 has interim refining capacity of 32,000 MT and is forecast to have 72,000 MT capacity by the year end. D1 has agreements with contract farmers for the supply of Jatropha oil at approximately $300-$330 per MT.
D1 is committed to pay the contract farmers market rate in order to incentivise further planting.
With Rapeseed Oil trading at $670-$700 MT and Soy at $620 MT landed in the UK we are confident that D1 can substantially undercut the edible feedstocks of choice. Our forecasts do not include the potential for D1 20 unit sales. D1 has a contract for the supply of 16 D1 20s (4 units each year from 2006 through to 2009) to its franchisee (D1 Australia) for refining capacity of 128,000 MT at a cost of 23.2mln and a royalty of 32mln over ten years to D1 oils (total contract value to D1 is 55.2mln).
We have not included this in our forecasts nor have we included the opportunities for carbon sinks and fuel switch in our forecasts. We remain buyers as the current valuation fails to reflect the potential for upgrades in our current modelling.

Other operators evaluating the use of Jatropha include BP, Indian Oil/Indian Railways, Tata Motors
and Reliance Industries. It is likely that interested parties will come from the Oil and Gas sector as they posses in the necessary infrastructure for transportation and storage of fuels while they attempt to offset their carbon footprint.
Current off take agreements for its planting programme amount to 42,100 hectares which equates to approximately 42,000 tonnes of oil, moving forward (post year 3) we expect 1.8 MT of oil per hectare from mature plantations. We are optimistic that the company is likely to reach a 2006 planting programme of approximately 189,000 hectares. Plantations are concentrated in three main regions Southern Africa, India and South East Asia. D1 Mohan has around 30 agents actively working in the Tamuil Nadu area securing additional contract farmers in the 1 to 5 hectare sized plantations. D1 has
also secured planting arrangements (contract farming) with Williamson Magor Group (tea plantation company) for initial planting on 25,000 hectares with mature harvest in 2009. Seed/Oil purchase contracts of note have also been concluded with PManek Biofarms (40,000 hectares), the State Government of Mizoram (100,000 hectares), RPMC in India (155,000 hectares) and in Zambia with the support local farming communities and the government amount to 174,200 hectares
The recent UK budget confirmed the level of Road Transport Fuel Obligation (RTFO) as 2.5% in 2008-09 and 3.75% in 2009-10, reaching 5% by 2010-2011 (as a % of biofuel versus fossil). The biofuel duty incentive of 20p per litre continues to at least 2008-09. The RTFO buy-out price will be 15p per litre in 2008-09. This will be reduced to 30p per litre in 2010-11. Germany does not plan to tax biodiesel fully until 2011, although we expect that a 9 euro cent tax per litre on biodiesel (tax on fossil is 45 euro cents). Additionally the government is likely to impose mandatory blending of biodiesel from January 2007.
The critical financial driver for D1 is its ability to produce cheap sustainable crude vegetable oil at a price which can undercut the current feedstock of choice, namely rapeseed, soy, and sunflower seeds (all priced at edible consumption levels). Jatropha can be grown on marginal/waste land, thereby removing the issue of planting energy crops on arable food producing land. The output (oil) from jatropha plantations is significantly higher than alternative feedstocks. D1 successfully processed the
CJO to meet EN14214 standard, by utilising their proprietary degumming units.
We expect D1 Oils to process approximately 13,000 tonnes of biodiesel this year (153,000 tonnes in 2007) using alternative feeds stocks such as soy, before we reach the point of first meaningful commercial harvests in 2008. Additionally, we expect the company to sell D1 20 refineries to third parties at net margins of approximately 20% in order to meet its target of 2007 profitability.
Yea-End Sales EBITDA PBT EPS Cash EPS DPS Div Cover PER 31-Dec 1000s 1000s 1000s (p) (p) (p) (x)

2005 416 -8,077 -7,405 -28.00 -28.00 0 n/a -10.79
2006f 6,968 -8,419 -8,964 -27.00 -25.00 0 n/a -11.19
2007f 88,853 987 -514 -2.00 1.00 0 n/a -151.00
2008f 153,973 27,629 23,905 58.00 64.00 0 n/a 5.21

Source: Bell Lawrie

AIM Basic Materials

06 July 2006

303p (priced as at 05/07/06)

Year Price Range:

450p-154p
Market Cap:
100.4m

NAV:
75p
EPIC:
DOO

FTSE All Share:

Barefoot1 - 10 Jul'06 - 22:06 - 3344 of 3352 edit

BUY @ 303p.....:0)

So they expect the sp to increase more than 15% from 303p....which is over 350p....and thats without the Auz/NZ deal and BP on board....can see at least 5 in the near future....dyor etc...;0)