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Research: Industrials
Quadrise has announced a phased commercial development agreement with energy services company Valkor Technologies to commercialise Quadrise’s MSAR and bioMSAR technology at Valkor’s projects in Utah. The agreement provides a framework for the potential delivery of the first commercial revenues from bioMSAR/MSAR in calendar (CY) Q322 and for multiple deployments of the technology within Utah longer term.
Quadrise Fuels International |
Moving forward in Utah |
Commercial development agreement |
Alternative energy |
12 April 2022 |
Share price performance Business description
Analyst
Quadrise Fuels International is a research client of Edison Investment Research Limited |
Quadrise has announced a phased commercial development agreement with energy services company Valkor Technologies to commercialise Quadrise’s MSAR and bioMSAR technology at Valkor’s projects in Utah. The agreement provides a framework for the potential delivery of the first commercial revenues from bioMSAR/MSAR in calendar (CY) Q322 and for multiple deployments of the technology within Utah longer term.
Year end |
Revenue (£m) |
EBITDA (£m) |
PBT* |
EPS* |
DPS |
P/E |
06/18 |
0.0 |
(3.3) |
(3.5) |
(0.37) |
0.00 |
N/A |
06/19 |
0.0 |
(2.8) |
(3.0) |
(0.32) |
0.00 |
N/A |
06/20 |
0.0 |
(3.0) |
(3.3) |
(0.32) |
0.00 |
N/A |
06/21 |
0.0 |
(2.8) |
(2.8) |
(0.23) |
0.00 |
N/A |
Note: *PBT and EPS are normalised, excluding amortisation of acquired intangibles, exceptional items and share-based payments.
Valkor is involved in multiple tar sands projects in Utah. It has a stake in TomCo Energy, the parent company of Greenfield Energy, which is drilling three exploratory wells at its Tar Sands II site in the Uinta Basin in Utah. Quadrise has already demonstrated it can convert oil from this area into MSAR and bioMSAR. One of Valkor’s other interests in the Uinta Basin, which we infer is likely to be Heavy Sweet Oil LLC, has started exploration drilling at its site and expects to begin production drilling there this summer, assuming it receives the necessary permits. As discussed in our March note, this would result in oil being available for on-site trials converting oil to bioMSAR and MSAR during CY H222, potentially resulting in commercial sales by the end of CY 2022.
The commercial development agreement with Valkor provides a framework for realising revenues within this timeframe. Under Phase 1 of the agreement, by the end of June 2022 Quadrise is to check that oil from the heavy sweet oil site is suitable for production of MSAR and bioMSAR and Valkor and Quadrise are to negotiate supply agreement with potential customers, who have already been identified, and finalise the technical and operational requirements for licence and supply of Quadrise’s technology. The two partners should then agree full commercial terms for an MSAR and/or bioMSAR licence and supply agreement by October 2022.
Phase 2 of the agreement will relate to other sites in Utah where Valkor could potentially deploy Quadrise’s technology. Quadrise intends to grant Valkor exclusive terms over the deployment of MSAR/bioMSAR production technology in the state after successful grant of the first licence arising from Phase 1.
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Research: Industrials
Lookers’ FY21 adjusted PBT was even more of a record than we had anticipated. Revenue growth in all the main segments was augmented by strong used car margins and improvements in the new car segment, which drove group gross margins up 180bp to an exceptional 12.8%. The positive demand and supply dynamics look set to continue for the time being. Used car prices may stay high for some time but as they plateau margins may moderate, compounded by inflationary cost factors. In addition, high energy prices are pressurising household and business budgets with increasing vehicle usage costs, which may start to reduce demand. However, FY22 looks set to return to at least the level of pre-pandemic highs while not matching the exceptional FY21 performance.
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