Capstone Turbine continues to convert major oil and gas customers to long-term service contracts

Capstone Turbine Corporation (NASDAQ:CPST) continues to convert major oil and gas customers using its clean-energy microturbines to long-term service contracts.

The company on Thursday announced that Cal Microturbine, its exclusive distributor for California, Idaho, Oregon, and Washington, has signed a Factory Protection Plan (FPP) long-term service contract covering 2 megawatts of its microturbines installed at a single location in California.

Capstone earlier this month said another major oil and gas company in California agreed to a long-term service contract on it microturbines that generate 1.6 MWs. 

READ: Capstone Turbine raises $5.1 million in registered direct offering

“The continuing conversion of oil and gas customers to the Capstone Factory Protection Plan is driving our aftermarket business to new highs,” said CEO Darren Jamison in a statement. “With this latest contract, our FPP coverage is now 248 MWs, which is another new record for Capstone.”

The company has said that its aftermarket business is a big revenue driver and key component to help meet its long-term profitability goals. In fact, the aftermarket business comprised about 47% of Capstone’s fiscal first-quarter 2020 revenue. 

Due to California’s strict air quality regulations, Capstone noted, the large oil and gas customer was not authorized to flare their waste gas and was required to find an alternate means of burning the gas. The two Capstone Signature Series C1000’s allows them to burn this gas while simultaneously generating and providing electricity to their oil field. 

Additionally, the microturbines are configured as Dual Mode, allowing them to continue to produce power in the event of a grid outage or utility blackout.

Capstone said the FPP will provide 10 years of complete service coverage, including scheduled and unscheduled maintenance.

“As Cal Microturbine continues to aggressively grow their FPP fleet, with recent multiple additions of large established oil and gas end-users, the growth in our FPP backlog is also seeing continued positive tailwinds in other geographies and market segments,” said Jeff Foster, Capstone’s senior vice president of customer service and product development. 

“We are optimistic that in the coming months, we could again see more large FPP awards and new records for our FPP coverage, which may support further top-line growth of our high margin aftermarket business sector moving forward.”

Capstone, based in Van Nuys, California, offers a product line-up of microturbines that can produce anywhere from 30 kilowatts to 10 MWs 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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Story by ProactiveInvestors