Singapore company seeking financial partner for Global Expansions of its Gas-to-Liquid process tech

Singapore company seeking financial partner for Global Expansions of its Gas-to-Liquid process tech

Project Cost: <$5M

Amount Invested : n/a

Amount Required : yes, ~$25M

Knowledge / Experience Required: other (Operations/Engineering)

Proposed Investor’s Role: others (Advisor)

Industry:
energy / natural resources
engineering
manufacturing
industry products

Project Stage:

early expansion

EXECUTIVE SUMMARY:

Company History:

Single step Gas to Liquids process for oil and gas producers to monetise stranded natural gas. Parent company established in 2004, now commercialising the GTL plant after decade of R&D with recent appointment of Singapore Managing Director to head ASEAN sales. Rated as preferred technology for mitigating gas flaring by a regional National Oil Company. Expansion capital sought for rest of ASEAN.

Product / Service Description:

Direct conversion of gas to liquid oxygenates
Lower CAPex than peers & higher IRR
Rough field capable = early production system
Smaller footprint, mobile and redeployable
Liquid oxygenates, biodegradeable

Business Opportunity:

The target market is stranded gas in ASEAN, much of which is currently flared/vented. (roughly 2 billion cubic metres in each of China, Indonesia, Malaysia, rest of Asia-Pacific). By converting the gas to a liquid, volume is reduced by ~500x with consequent storage and handling savings, making it viable to transport. USGS estimates 300 trillion cubic feet gas in unexplored reservoirs (greenfield) 90% of which is offshore. These are either small, acidic or complex geophysics making them marginal. The GasTechno process enables extra revenue giving additional margin against oil price fluctuations.

Revenue Model:

Each gas site will have 3 components from sale of products

– CostGas = Operation expenses incl royalties
– CAPex = Project Finance via leasing of GTL-plant
– ProfitGas = free cashflow – split among JV partners incl dividends

Investors can enter at different risk-return points ranging from secured %ownership of GTL plant to equity.

Management Team:

The Singapore operations will be headed by C.S. Balaji, with further engineers and sales reps to be appointed. 25 years of rich experience in various functions such as Supply Chain Distribution, Business Partner Management, Business Operations, Sales, Marketing, Product Management, Project Management, and Application Engineering. Most notably 15 year GE Oil & Gas – creating the APAC customer application centre for measurement & control.

Current Status:

Technology deployed for US shale plays (2Q2015), now aggressively expanding (2015-16) worldwide via licensing partnerships & JV. Recently passed Phase 1 Technology Qualification of DNV-GL (necessary for marine insurance). Traction to date:

2013 – Field Demonstration Plant
Early Adopter Program
Ocean Tomo Top Michigan Patent

2014 –US subsidiary + sales office
Private Placement Memorandum
GasTechno® Diesenol patents filed
N. Dakota Grant (commercial)

2015 – UK Holding company
Singapore Managing Director
Preferred technology (NOC)

current revenue from pre-FEED studies, discussions with various O&G owner/operators in SEasia.

Funding Milestone:

Aiming to establish a reference site which can serve as hands-sales demo + training site. (<$5M)
Technology Qualification Phase 3 for full Design-Operate-Transfer of a commercial GTL plant (~$25M) including product delivery/sales.

Business Valuation:

Independent valuation of Intellectual Property (transfer pricing study) have estimated worldwide patents worth ~$80M. Split among countries for projects up to 25% will be available for < $5M (site specific)

Expected Return On Investment:

Aiming for a x3-5 revaluation on completion of Technology Qualification (marinisation, scaling up, de-risking). A secured interest in the GTL plant will yield ~10%, with equity investment aiming for 30% IRR (depending on project financing).

Investment Risk and Mitigation:

R&D risk is absorbed by parent but residual engineering/deployment risk to reach health/safety/environmental standards of national oil companies. This can be reduced by a pre-qualification regime.

Scaling risk – currently designed for US shale operations < 1MMscfd but larger GTL plants needed. Address through DNV technology qualification (issed Statement of Feasibility).

Marinisation risk – additional cost of adapting for harsh environment will add 20-30% to existing costs making economic viability marginal in some cases. Hedge against product price fluctuations and minimum feedstock volumes.

Exit Strategies:

Either tradesale or listing on UK AIM market within 5 years.

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