Capstone Turbine Corporation (NASDAQ:CPST) said Tuesday it has expanded its long-term microturbine rental fleet with the addition of another 1 megawatt (MW) C1000 Signature Series microturbine in the Permian Basin for one of the world’s largest oil and gas companies.
The new long-term rental contract was secured by Lone Star Power Solutions, Capstone’s exclusive distributor in Arizona, Texas, and the Gulf states. The microturbine is expected to be delivered later this summer and commissioned in the fall of 2020.
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"Capstone's long-term rental program, multi-year service contract business, and innovative distributor support system (DSS) program all continue to grow according to plan despite the COVID-19 pandemic and are the driving forces behind our adjusted positive EBITDA initiative," CEO Darren Jamison said in a statement.
“Like most companies, we are seeing a downturn in new product shipments as a result of the (coronavirus) COVID-19 virus pandemic, but that should be offset by the reduction in expenses keeping the company on track for a potential positive Adjusted EBITDA result in the upcoming June quarter,” he added.
Capstone said the new C1000S order increases its existing microturbine long-term rental fleet from 7.6 MWs to 8.6 MWs.
During fiscal 2020, Capstone’s rental fleet revenue grew by 230% compared to fiscal 2019 as the company continues to expand the current factory long-term rental fleet to a target of 10 MW as part of its focus to achieve sustainable positive adjusted underlying earnings (EBITDA) in the June quarter and beyond.
Capstone pointed out that its microturbines align perfectly with the needs of the oil and gas industry and are currently used in all phases of oil production, including upstream, midstream, and downstream operations in both onshore and offshore applications. Capstone rentals provide oil and gas customers low operational cost, high availability, and high reliability.
“Despite lower oil prices, our customers still need reliable on-site power, and in partnership with Capstone Turbine, we are able to provide our customers with one of the most reliable on-site power generation units available today,” said Douglas Demaret, president of Lone Star Power Solutions.
“Customers today are extremely focused on lowering capital expenditures and maximizing free cash flows in which long-term rentals are a good solution. The overall energy industry has slowed, but we are still seeing significant activity with midstream customers.”
Capstone, based in Van Nuys, California, offers a product line-up of microturbines that can produce anywhere from 30 kilowatts to 10 megawatts 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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