With both WTI and Brent crude hovering close to $85 per barrel, OPEC+ refusing to increase production and the American shale patch appeasing shareholders with extreme discipline, the world’s oil sands could start to become more attractive.
By Oil Price – Charles Kennedy
Nov 10, 2021
Except for two serious issues: They’re expensive to extract and far too dirty to consider as the pressure mounts to address climate change.
But one enterprising high-tech company has come up with a patented way to extract oil sands without leaving an environmental footprint for an average price of $25/barrel. They’ve already started doing it in Utah, and the success of the new technology has most recently led to a hostile takeover bid.
Petroteq Energy Inc (OTCMKTS: PQEFF), the company behind the new clean oil sands technology, has received an unsolicited takeover offer from Viston United Swiss AG for C$0.74 per share—a figure that represents a nearly 280% premium over share prices right before the takeover offer.
Since the $500-million takeover bid, Petroteq’s shares have experienced high volume trading, with share prices nearly doubling.
The hostile takeover bid is all about CORT, Petroteq’s proprietary “Clean Oil Recovery Technology” for turning locked oil sands into a viable source of high-quality crude oil while mitigating soil contamination.
How CORT Could Change Oil Sands Forever
Petroteq is first and foremost a remediation company, and CORT is groundbreaking technology.
Part of the attraction is CORT’s versatility. It can be applied to oil-wet deposits as easily as it can be applied to water-wet deposits. In both cases, it has proven to produce high-quality oil and clean sand. Presently, CORT is used for oil sands extraction, but it can also be used in remediation for other natural resources.
With climate change and clean energy the central focus points across industries right now, CORT is moving into the limelight rather quickly, as made clear by the hostile takeover bid.
Led by R.G. Bailey, a chemical engineer who served five years as President of Exxon in the Arabian Gulf region, CORT makes it possible to extract oil from oil sands without using water. That means no wastewater and no toxic trailing ponds, both of which have been severe environmental hurdles for oilsands. CORT operates as a closed-loop system, recovering over 95% of the solvents it uses in extraction and recycling them. The remaining 5% stays within the extracted oil.
Petroteq (OTCMKTS: PQEFF) is, first and foremost, an eco-friendly company with an underlying technology that fits today’s ESG investment climate.
Once the ore is washed of oil in with CORT technology, the sand has been remediated and it becomes environmentally clean soil. And the land itself is then viable for use rather than turned into a toxic trailing pond. The sand can remain or it can be moved and sold to generate additional revenue.
And CORT is not a speculative technology; it’s already proven and already up and running.
The COVID-19 pandemic did not keep Petroteq from advancing, despite difficulties through 2020 for the entire oil and gas industry.
During that time, Petroteq completed the construction of a 500/bpd oil extraction plant at Asphalt Ridge in Utah, a U.S. state with resources estimates of up to 32 billion barrels of oil-in-place comprised largely of “oil-wet” oil sands deposits.
This demonstration plant has 2500 acres under lease and an 87M bbl near-surface oil resource. By 2023, Petroteq plans to be producing 5,000 bpd, ramping up to 10,000 bpd in 2024.
The company has already received a FEED (Front End Engineering Design) study for a 5,000 bpd oil extraction plant, along with a third-party technical evaluation.
This isn’t just a unique growth opportunity straddling two sectors – E&P and technology – it’s also a highly attractive one in terms of numbers:
The facility’s CAPEX is estimated at $19,000-$2,000 per daily bbl, with production costs averaging $250$30 per barrel, depending on the scale of production. Netback margins come in between $23 and $28 per barrel.
Beyond Extraction: Remediation Runs Deep
The narrative here isn’t just about clean oil sands extraction. Petroteq’s technology can be applied to other natural resources as well.
And this isn’t just about a plant in Utah, either. The patenting and licensing potential is what the hostile takeover is all about.
A U.S. patent and corresponding foreign patents in both Russia and Canada have been issued covering the key features of this system and process for extracting oil cleanly from oil sands.
Petroteq (OTCMKTS: PQEFF) has also sold its first commercial license for $2 million-plus a 5% continuing royalty to Greenfield Energy LLC.
There is a very attractive market opportunity here, especially with WTI trading near $85 per barrel.
Oil sands deposits around the world could benefit from Petroteq’s technology, and it is this opportunity that has led to the unsolicited takeover bid. The $2-million licensing deal with Greenfield Energy LLC is likely only just the beginning: Other groups with oilsands resources could seek to license the technology or engage in a JV deal to gain access to CORT.
The Calm Before the Takeover
The hostile takeover offer on Petroteq is a clear signal that this little-known company is on to something big.
Its patented technology, CORT, could unlock yet another American oil bonanza, but its applications are much further-reaching – and global.
And it’s all happening at a time of soaring oil prices and skyrocketing investor interest in clean solutions for the fossil fuels industry.
It’s not about Utah’s oil sands, though the attraction there is clear and the planned ramp-up of production should entice investors. This is a much bigger story about global licensing of a breakthrough technology that could transform oilsands from the dirtiest and most expensive form of crude oil … into a fossil fuel that suddenly becomes a much cleaner story in line with today’s climate change narrative.
Trillions of dollars in oil sands could benefit around the world, from Canada’s 100 billion boe to China, Venezuela, and even the American West.
Investors have until February to make their move on Petroteq (OTCMKTS: PQEFF) before the hostile takeover is concluded.
Other oil companies to watch as the sector continues to heat up:
Continental Resources (NYSE:CLR), the shale driller owned by one of the richest and most prominent shale wildcatters, Harold Hamm, has reported strong Q3 numbers that, nevertheless, failed to meet Wall Street’s expectations.
Continental Resources has reported Q3 revenue of $1.34B, good for 93.5% Y/Y growth but $70M below the Wall Street consensus. Adjusted net income clocked in at $437.2 MM while GAAP EPS of $1.01 missed by $0.20.
With oil prices consolidating above $80 per barrel, the majority of shale producers are solidly profitable, and many are returning excess cash to shareholders in the form of hiked dividends. Continental Resources has followed suit by hiking its dividend 33% to $0.20, but has also gone off the beaten path–the company is finally taking a stake in North America’s biggest oil field.
Continental has announced plans to acquire 92,000 net acres in the Permian Basin from Pioneer Natural Resources Co. for $3.25 billion. The company will pay cash for the assets in the Delaware Basin, a subregion of the massive Permian.
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