• 15 hours PDVSA Booted From Caribbean Terminal Over Unpaid Bills
  • 17 hours Russia Warns Ukraine Against Recovering Oil Off The Coast Of Crimea
  • 19 hours Syrian Rebels Relinquish Control Of Major Gas Field
  • 20 hours Schlumberger Warns Of Moderating Investment In North America
  • 21 hours Oil Prices Set For Weekly Loss As Profit Taking Trumps Mideast Tensions
  • 22 hours Energy Regulators Look To Guard Grid From Cyberattacks
  • 23 hours Mexico Says OPEC Has Not Approached It For Deal Extension
  • 1 day New Video Game Targets Oil Infrastructure
  • 1 day Shell Restarts Bonny Light Exports
  • 1 day Russia’s Rosneft To Take Majority In Kurdish Oil Pipeline
  • 1 day Iraq Struggles To Replace Damaged Kirkuk Equipment As Output Falls
  • 2 days British Utility Companies Brace For Major Reforms
  • 2 days Montenegro A ‘Sweet Spot’ Of Untapped Oil, Gas In The Adriatic
  • 2 days Rosneft CEO: Rising U.S. Shale A Downside Risk To Oil Prices
  • 2 days Brazil Could Invite More Bids For Unsold Pre-Salt Oil Blocks
  • 2 days OPEC/Non-OPEC Seek Consensus On Deal Before Nov Summit
  • 2 days London Stock Exchange Boss Defends Push To Win Aramco IPO
  • 2 days Rosneft Signs $400M Deal With Kurdistan
  • 2 days Kinder Morgan Warns About Trans Mountain Delays
  • 2 days India, China, U.S., Complain Of Venezuelan Crude Oil Quality Issues
  • 3 days Kurdish Kirkuk-Ceyhan Crude Oil Flows Plunge To 225,000 Bpd
  • 3 days Russia, Saudis Team Up To Boost Fracking Tech
  • 3 days Conflicting News Spurs Doubt On Aramco IPO
  • 3 days Exxon Starts Production At New Refinery In Texas
  • 3 days Iraq Asks BP To Redevelop Kirkuk Oil Fields
  • 4 days Oil Prices Rise After U.S. API Reports Strong Crude Inventory Draw
  • 4 days Oil Gains Spur Growth In Canada’s Oil Cities
  • 4 days China To Take 5% Of Rosneft’s Output In New Deal
  • 4 days UAE Oil Giant Seeks Partnership For Possible IPO
  • 4 days Planting Trees Could Cut Emissions As Much As Quitting Oil
  • 4 days VW Fails To Secure Critical Commodity For EVs
  • 4 days Enbridge Pipeline Expansion Finally Approved
  • 4 days Iraqi Forces Seize Control Of North Oil Co Fields In Kirkuk
  • 4 days OPEC Oil Deal Compliance Falls To 86%
  • 5 days U.S. Oil Production To Increase in November As Rig Count Falls
  • 5 days Gazprom Neft Unhappy With OPEC-Russia Production Cut Deal
  • 5 days Disputed Venezuelan Vote Could Lead To More Sanctions, Clashes
  • 5 days EU Urges U.S. Congress To Protect Iran Nuclear Deal
  • 5 days Oil Rig Explosion In Louisiana Leaves 7 Injured, 1 Still Missing
  • 5 days Aramco Says No Plans To Shelve IPO
Alt Text

Russia’s Nuclear Sector Is Surging

With a long-standing nuclear tradition,…

Alt Text

New Tech Is Transforming Japan’s Energy Sector

The tech that built bitcoin…

Alt Text

This OPEC Strategy Could Boost Uranium Prices Next Year

Kazakhstan, the world’s largest uranium…

Michael McDonald

Michael McDonald

Michael is an assistant professor of finance and a frequent consultant to companies regarding capital structure decisions and investments. He holds a PhD in finance…

More Info

Investing In Nuclear Power Just Got More Interesting

Investing In Nuclear Power Just Got More Interesting

The shift in nuclear power from developed nations to third-world countries is an important trend for investors to understand because it is largely redefining the entire nuclear industry.

Even as nuclear firms in France find themselves in deep financial distress¸ new opportunities are emerging. One of China’s two national nuclear reactor builders (China National Nuclear Power Co. Ltd.) went public recently with an explosive IPO, while long-time nuclear powerhouse Babcock & Wilcox announced earlier this year that it would split in two. Babcock and Wilcox’s split creates a company that is ideal for investors looking at the future of nuclear power.

In particular, Babcock & Wilcox (trading under ticker BWC currently and under tickers BWXT and BW after the split), a nuclear supplier for reactors, is ideally positioned to build on a breakthrough deal announced by the U.S. and India earlier this year. In that announcement, U.S. President Obama and Indian Prime Minister Modi put forward a new deal that will enable India to buy reactor technology from the U.S. Related: New Silk Road Could Open Up Massive Investment Opportunities

BWX Technologies is the primary company that will benefit from that deal, and India is a critical market for the technology. BWXT is the only pure play nuclear reactor building stock in the U.S., and it stands to benefit from a new focus on nuclear power and the perception of high US quality products throughout much of the world. India is a reliable customer - the country needs a lot more power, it’s geographically stable compared to many other regions, and it is eager to cut carbon emissions going forward which could make nuclear energy a top contender for electricity generation in a nation with such limited available space.

The rationale behind Babcock & Wilcox’s split makes a lot of sense. The old BWC focused on two distinct nuclear businesses – building reactors for U.S. naval warships, and building reactors for power plants. The company always had to consider the U.S. government’s reaction in any decisions it made given the importance of the Navy as a customer. Related: Key Points For Investing In Global Mining Sector

As a result, part of the business was always run sub-optimally. For example, many corporations take advantage of various tax loopholes to lower their tax burden. B&W never did that, because even though the loopholes are legal, it could open the firm up to public criticism (justified or not) and possibly jeopardize the firm’s naval business in some small way.

With the two sides of B&W’s business now separating, those tax loopholes are back on the table for BW. This should help the company lower its effective tax rate from the 30-35% percent territory it has been at historically. Jim Ferland, the CEO of the new B&W (and CEO of the combined current company) emphasized the value of this tax benefit in a recent interview. Similarly, with B&W no longer primarily a government contractor, foreign firms may be more willing to do business with the company in ways they were not before.

China, India, Pakistan, and many other third-world countries are moving towards greater use of nuclear power as a key fuel source. India is paramount among these potential customers for both BWX Technologies and the new Babcock & Wilcox. Related: So What Exactly Have Fossil Fuels Done For Us?

Options here could include nuclear power (BWXT products), coal power (BW products), and possibly waste-to-energy plants (BW products).

India harbors ambitions about becoming a major force in the nuclear power industry. The country has a severely inadequate electrical infrastructure, and the new Prime Minister Modi is a big supporter of nuclear power. Modi visited France, Canada, and the U.S. earlier this year shopping for reactors and parts from firms like France’s Areva.

India plans to ramp up its nuclear power supply by a whopping 14 times over the next two decades. This is exactly the type of customer that the US industrial firms are courting and with the impending split and both sides of B&W have some interesting options ahead. Investors considering what to do with the spin-off after it is completed should keep this macro environment in mind.

By Michael McDonald of Oilprice.com

More Top Reads From Oilprice.com:




Back to homepage


Leave a comment
  • Guest on June 26 2015 said:
    Here is what everyone should know about nuclear energy, IMO, in a nutshell--->

    (1) Nuclear energy is NOT carbon-emission-free. Nuclear power plants release 90 – 140 g of CO2 per kwh. AND, each nuclear power plant releases massive amounts of Carbon-14 which is CONVERTED TO CO2 in the atmosphere!

    Nuclear Energy = Carbon-14 = CO2 = Climate Change

    (2) Nuclear power plants also release dangerous radiation into the air and water during their daily operations.
    This radiation is linked to all kinds of cancers, heart disease, diabetes, birth defects, miscarriages, thyroid problems, leukemia, the list goes on and on

    (3) Each nuclear power plant uses up to 30 MILLION gallons of water per HOUR.

    (4) During refueling, nuclear power plants can release up to 1,000X the amount of radiation, and Dr. Ian Fairlie believes this is what causes the increases in childhood leukemias around nuclear power plants.

    (5) Let's discuss the childhood leukemias and cancer deaths that researchers say are caused by nuclear energy:

    Quote from Dr. Ernest Sternglass --->

    “…The official measurements carried out by the Office of Radiological Health, and by the government, and the Public Health Service, they measured the radiation doses around the first big reactors in Dresden near Chicago, and they found that indeed there were doses almost as high as half of the normal background, and according to Dr. Stewart’s finding, that would mean an increase of 40-50% in childhood cancers and leukemias around the fence of every nuclear plant.”

    SOURCE: youtube /watch?v=hN7rcjSnxZs

    (6) Dr. John Gofman's research states that EACH nuclear power plants causes up to 1,600 cancer DEATHS per YEAR.

    (7) There is NO solution for the nuclear waste, and the cost to maintain nuclear waste, guard it, and store it is INFINITE.

    The caring for nuclear waste is the largest form of LONG-TERM DEBT that any country with nuclear energy will have.

    (8) To learn what happens when nuclear energy goes WRONG, go to the highly recommended website ENENEWS dot com

Leave a comment




Oilprice - The No. 1 Source for Oil & Energy News