Capstone Turbine Corporation (NASDAQ:CPST) has secured a new long-term rental for one of its C600 Signature Series microturbines in the southwestern Permian Basin.
The Van Nuys, California company’s microturbines are well suited for all phases of production in the oil and gas industry in the Permian basin, which sits in West Texas and New Mexico.
Its latest customer was secured by its exclusive regional distributor in Arizona, Texas and the Gulf states, Lone Star Power Solutions.
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"The demonstrated performance of Capstone Turbine products has proven to be an integral part of our customer's operational requirements," Lone Star Power President Doug Demaret said in a statement. "Capstone products allow Lone Star Power to provide its customers with 100% uptime, low emissions and infrequent service visits, allowing our customers to focus on their core energy business," added Demaret.
The rental expands Capstone’s rental fleet from 7 megawatts (MW) to 7.6 MW — and closer to its long-term goal of 10 MW.
"Developing a 10 MW long-term rental fleet is a critical component of management's plan to achieve not only positive adjusted EBITDA in the June 2020 quarter, but the long-term high margin source of revenue is critical to enable us the opportunity to sustain positive adjusted EBITDA beyond our June target," CEO Darren Jamison said. "The continued growth of our long-term rentals, long-term service contracts and expanded lower cost spare parts remanufacturing program are significant drivers of future margin expansion," concluded Jamison.
Demand for rental units has grown amid instability in the oil markets and as companies look to conserve capital and focus on increasing free cash flow, the company said.
Capstone offers a line-up of microturbines that can produce anywhere from 30 kilowatts (kW) to 10 MW of power, operating on a variety of gaseous or liquid fuels. To date, Capstone has shipped over 9,000 units to 73 countries.
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