In a significant development, Quadrise Plc (LON:QED) has announced a pivotal update on its Utah project, operated in collaboration with Valkor Technologies. The project has recently secured the necessary funding and approval to commence drilling activities, marking a critical step forward in producing 20-40 barrels per day of heavy sweet oil. This production is not just a milestone for Quadrise but also a strategic move to obtain essential samples for the production of MSAR and bioMSAR—Quadrise’s flagship decarbonising emulsion fuel products.
The initiation of drilling is a part of a broader strategy to de-risk the path towards commercial-scale production. However, it is contingent on Valkor raising at least $15 million, a minimum threshold after which Quadrise will receive an initial $1.5 million in payments. Additionally, there will be subsequent quarterly transfer payments of $75,000 from Valkor. This funding structure is vital for scaling up the commercial production of Quadrise’s innovative fuel solutions.
This development is timely as Quadrise Plc also gears up for key upcoming trials with MSC, a major player in the commercial shipping industry. This partnership could potentially open up substantial market opportunities for Quadrise, leveraging MSC’s expansive global internal market. Quadrise is also bolstered by the support of other multinationals, including Cargill, enhancing its position in the competitive fuel production industry.
VSA Capital, in its latest analysis, has reiterated a “BUY” recommendation for Quadrise, reflecting a positive outlook on the company’s stock amidst these developments. This recommendation underscores the potential growth trajectory for Quadrise as it navigates through strategic partnerships and innovative product testing in its quest to penetrate the commercial shipping sector and beyond.
Oliver O’Donnell, CFA, Head of Research & Natural Resources Analyst at VSA Capital Said, “Quadrise (QED LN) has provided an update on its Utah project with Valkor. Valkor’s partner (Heavy Sweet Oil LLC) has received funding and approval to commence drilling enabling production of 20-40bopd of heavy sweet oil providing QED with samples for production of test scale quantities of MSAR and bioMSAR; the company’s key fuel decarbonising emulsion fuel products. This should derisk the commercial scale ramp up.
QED management has highlighted that Valkor has not yet raised the minimum of US$15m before QED will receive the initial US$1.5m in initial payments and transfer payments of US$75k per quarter. This funding will enable commercial production of QED products. Valkor comments indicate full project financing and final approvals will advance as a result of the announcement with initial drilling starting next week.
QED also has its key upcoming trials with MSC which offers a large-scale opportunity to break into the commercial shipping industry starting with their global internal market. In this effort QED has the support of other multinationals including Cargill.
We reiterate our BUY recommendation.
