Quadrise Fuels International Plc [LON:QED] the London-headquartered synthetic emulsion fuels developer, seems to have to some extent mitigated the hitch in the commercialisation of its proprietary synthetic transportation fuels, MSAR and bioMSAR (biomass multiphase superfine atomised residue) we reported upon last month.
As reported, the chemicals company was moving forwards on several fronts in its attempt to prove the commercial viability of its fuels, which are designed to replace the highly polluting heavy fuel oil that powers most commercial shipping and many power stations in developing nations.
Tests with Wärtsilä Corporation [NASDAQ Helsinki:WRT1V], a Finnish company which manufactures and services power sources and other equipment in the marine and energy markets, and with Mediterranean Shipping Company (MSC), the world’s largest container shipping company were ongoing and the AIM-listed company was in the process of undertaking a commercial trial with a client in Morocco with a view to enter negotiations to initiate commercial supply by the year-end, when a mechanical failure with one of the units using the synthetic fuel caused the trial to be suspended.
Quadrise share price knockback
Quadrise’s share price took a hit, and the company said that a replacement part had been located in the UK and was being shipped out to Morocco and the trial would commence as soon as a window in the Moroccan client’s scheduling has been identified.
The news was disappointing to investors who had been patiently waiting for Quadrise to take its products from the lab into the field and to start making some money for the first time in the company’s history.
Despite the setback, the sector retained its confidence in the Quadrise concept and subsequent to the delayed trial, the fuel producer signed a trio of commercial and development agreements.
At the end of May, Quadrise announced success with an engine test run by Aquafuel under a joint development agreement with Vertoro to integrate Crude Sugar Oil as a bio-feedstock for bioMSAR. The trial used a 18% to 20% blend of Crude Sugar Oil in the bioMSAR mix tested by Aquafuel with positive results. The partnership is now planning on upping the Crude Sugar Oil to a 40% mix.
Michael Boot, co-founder and co-CEO of Vertoro, said in a statement at the time: “We’re excited by the progress to date to accelerate the use, within the bioMSA formulation, of our crude sugar oil, which can be produced from sustainably sourced forestry and agricultural residues, as well as end-of-life paper and textile (cotton) fibers. Using sugars in engines directly, instead of fermenting them first to ethanol, opens up a completely new and competitive decarbonisation pathway for hard to abate sectors such as shipping. The increased engine efficiency and more favourable low emissions profile observed in recent engine tests further underlines the potential of this innovative fuel. We look forward to continue our already fruitful collaboration with our partners at Quadrise.”
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Biomass feedstock
Then last week Quadrise announced a new partnership with renewable biofuels specialists, BTG Bioliquids, a Dutch technology company developing pyrolysis solutions to turn biomass residues into a renewable fuel. The new partnership will look for ways of integrating the biomass fuels produced by BTG Bioliquids into Quadrise’s bioMSAR.
Quadrise’s CEO, Jason Miles said: “Quadrise is delighted to have signed this JDA with BTG Bioliquids. Advanced biofuels derived from woody biomass remain potentially the most price competitive net-zero biofuel solutions. This joint collaboration fits well with our plans to commercialise bioMSAR with MSC […] and others, as well as advancing our programme to supply net-zero bioMSAR by 2030. BTG Bioliquids’ fast pyrolysis bio-oils combined with Quadrise’s bioMSAR technology should provide a compelling solution for the marine sector to accelerate decarbonisation and emissions reduction efforts economically and safely.”
Potential commercial revenues
Today (12th June) Quadrise announced a Site License and Supply Agreement with Valkor, a Texan engineering services company operating in the Heavy Sweet Oil Uinta basin project in Utah, where testing was underway to licence Quadrise fuels in energy applications.
Quadrise announced that it had progressed Phase 1 testing to mutual satisfaction and, having identified the preferred primary project site managed by Valkor, signed a Site License and Supply Agreement for the licensing and supply of MSAR and bioMSAR technology at the Primary Project Site. This is excellent news for Quadrise, as if the loose ends are tied up satisfactorily, the company hopes that the agreement will lead to commercial revenues by August this year.
This would be Quadrise’s first commercial supply contact and would go a long way to healing the hurt of the failed test in Morocco.
Quadrise opened trading at 1.35p today and hit 1.73p within the first hour of trading. Quadrise has offered a -11% year-to-date return with a -11% one-year return. Shares have ranged between 0.9p and 2.8p over a 52-week period. The company has a market capitalisation of GBP17.9m.
Tom Fraine, industrial analyst for ShoreCap, a broker which has Quadrise under coverage said: “We are delighted to see this important milestone being reached. We continue to see huge potential for bioMSAR and MSAR for marine and industrial usage.”
He added: “The opportunity in the marine sector with MSC alone could be worth a multiple of Quadrise’s current enterprise value in potential annual revenues if only [a] small percentage of the shipping company’s overall fuel demand was switched to MSAR or bioMSAR. MSC currently consumes close to 10m tonnes of [heavy] fuel oil annually and we believe Quadrise could charge around USD50 per tonne for licensing its technology.”
Bridgewise recommends Quadrise as a ‘Hold’. The AI-driven analyst said: “Quadrise reported lukewarm financial results, lacking differentiation compared to its peers in the Energy sector. Additionally, being part of the Oil, Gas and Consumable Fuels also exposes the company to additional risks like a reduction in demand caused by recession and economic slowdown, high oil and natural gas prices, and geopolitical risks. In our view, investing in this company can still be a good diversification option for a portfolio, but not the top choice.”
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