LOS ANGELES - Cadiz Inc. (NASDAQ: NASDAQ:CDZI), a water solutions company, and RIC Energy, a renewable energy firm, announced an agreement to establish California's largest green hydrogen production site at Cadiz Ranch in the Mojave Desert. The facility aims to produce 100% green hydrogen using solar power.
The collaboration entails Cadiz providing land and water, while RIC Energy will utilize solar energy to produce industrial quantities of green hydrogen. The facility is strategically located at the juncture of major transportation routes, including rail lines, pipelines, and highways, facilitating the distribution of hydrogen to Southern California markets. This initiative aligns with California's mandate to achieve 90% clean electricity by 2035.
Cadiz CEO Susan Kennedy highlighted the site's advantageous position for green hydrogen production, noting its access to significant solar resources and water from an aquifer system. The green hydrogen produced will be used to fuel zero-emission trucks and cars and may also contribute to the electric generation sector.
RIC Energy selected Cadiz Ranch for its first U.S. green hydrogen facility after a comprehensive evaluation process. The facility will span up to 3,000 acres and is expected to generate 50,000 kilograms of hydrogen per day at full capacity. It will also feature on-site electricity storage and equipment for hydrogen compression and liquefaction.
Jonathan Rappe, CEO of RIC Energy North America, expressed enthusiasm for the project, emphasizing the site's self-sufficiency and proximity to essential infrastructure.
The Cadiz project is a Tier 2 project under the ARCHES initiative, which is part of the Department of Energy's Regional Clean Hydrogen Hubs program. ARCHES aims to create over 200,000 green jobs in California and is projected to generate $2.95 billion annually in economic value from 2030, along with significant health and healthcare cost savings from reduced pollution.
The information for this report is based on a press release statement.
In other recent news, Cadiz Inc. has been making significant strides in its water supply initiatives. The company's subsidiary, ATEC Water Systems, recently secured three new contracts valued at $1.6 million for the provision of filtration systems. These systems, designed to remove arsenic, iron, and manganese from groundwater supplies, are expected to serve nearly 100,000 people across rural and suburban communities in California, Washington, and Oregon by 2025.
The company also announced a series of water supply agreements, which have led to near full capacity deals for its Northern Pipeline. Cadiz's agreement with Cucamonga Valley Water District, for instance, is expected to generate approximately $170 million of net revenue over 40 years. Similarly, contracts with Solstra Communities California LLC and Golden State Water Company will support the development of over 4,000 homes and provide water for the City of Barstow, respectively.
On the personnel front, Cadiz appointed Cathryn Rivera as its new Chief Operating Officer. Rivera's extensive experience in senior management is expected to drive the execution of Cadiz's groundbreaking groundwater banking project and scale the deployment of water treatment technologies.
In terms of analyst ratings, B.Riley has reiterated a Buy rating on Cadiz shares, highlighting the company's potential for a significant positive shift if it successfully establishes a master limited partnership (MLP). These are recent developments in Cadiz's commitment to sustainable water supply.
InvestingPro Insights
Cadiz Inc.'s (NASDAQ: CDZI) ambitious green hydrogen project with RIC Energy comes at a time when the company's financial metrics paint a complex picture. According to InvestingPro data, Cadiz has a market capitalization of $213.19 million, reflecting investor interest in its potential. Despite the company's revenue growth of 27.18% over the last twelve months, it's important to note that Cadiz is not currently profitable, with a negative gross profit margin of -47.17%.
InvestingPro Tips highlight that analysts anticipate sales growth in the current year, which aligns with the company's strategic move into green hydrogen production. This expansion could potentially address Cadiz's profitability challenges, as another tip indicates that analysts do not anticipate the company to be profitable this year.
The company's stock has shown volatility, with a significant price uptick over the last six months (40.18% total return), contrasting with a 17.8% decline over the past three months. This fluctuation may reflect market reactions to Cadiz's evolving business strategy, including the announced green hydrogen project.
Investors should note that Cadiz is trading at a high Price / Book multiple of 7.73, suggesting that the market is pricing in substantial growth expectations. The company's liquid assets exceeding short-term obligations provide some financial flexibility as it embarks on this capital-intensive project.
For those interested in a deeper analysis, InvestingPro offers 12 additional tips for Cadiz Inc., providing a more comprehensive view of the company's financial health and market position.
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