Coretrack Summary

WARNING : LONG POST

It's going to be a busy day today, so thought I would create one thread with the most recent research / information on Coretrack / Proppant Market / Siegfried - bit of a long read, but if you're new, it will give you a summary.

ABOUT THE FRACKING MARKET

In 2011 the worldwide fracking market was worth $20b, an increase of 4 times since 2003 when it was worth just $5b.(1)

Horizontal oil and gas wells require between 3m pounds (1.4m kg) and 10m pounds (4.5m kg) of ceramic proppants during fracking, costing anywhere from USD$1m to USD$3m per well. (2)

Horizontal wells require considerably more proppants than traditional vertical wells – in some cases up to 10 times more.

In 2013, 60% of all USA oil and gas drill rigs were engaged in horizontal drilling, compared to2003 when just 10% were horizontal and 90% were vertical drilling.(7)

So from the above we can start to see why the market has expanded so quickly - and why we would provide such an incredible cost saving. If 60% of rigs are engaged in horizontal drilling, which increases proppant usage by up to 10 times, no WONDER there is such a flurry of activity around CKK.

If the trend is moving more and more towards horizontal drilling, and proppants are the major commodity in deep oil and gas fracking - it doesn't take a scientist to work out why the mad rush is on.

Lastly,

"Ecopropp proppants are able to be produced anywhere in the world where a coal fired power station and related resources exist, many of which are adjacent to oil and gas fields. This strategy dramatically lowers the logistics costs of transporting proppants manufactured in traditional clay/bauxite proppant plants. These plants are typically located alongside their feedstock resource, hundreds or even thousands of kilometres from an oil and gas field."

I know @vontrader has touched on the logistics savings before, but it's clearly something which plays a role - especially given the huge numbers involved in the fracking process for deep horizontal wells (1-2km deep, using between 1-3m worth of proppants per well in the fracking process).

If we can cut costs of logistical supply, as well as the core cost of the proppant (which is the highest use commodity), and are more lightweight and withstand higher pressures ... what more could a major oil or gas player want?


WHO IS SIEGFRIED KONIG

Siegfried is an Entrepreneur and early stage investor with Global relationships in the capital markets & public company sector.

Over 30 years experience in business management, and in building companies from startup to IPO. Co-founded Telco Australia Limited in 1992 and listed on ASX in 1998, raised $55 million in the IPO of GPS Limited (later Industria Limited which was sold to GE for $750 million) and Technology Licensing Limited.

Siegfried co-founded Ecopropp Pty Ltd in 2010. Ecopropp is an R&D company focused on manufacture of ceramic proppants for the oil and gas services industry, utilizing flyash as its primary feedstock.

Flyash based ceramic proppants are lighter and stronger, compared to traditional ceramic proppants made from bauxite or kaolin clay.

In June 2014 Ecopropp agreed to be acquired by ASX Listed Coretrack Limited for $18.25 million in cash and Coretrack shares, subject to the successful completion of 3 performance milestones.

Current directorships:

• ASX Listed Coretrack Limited
• Ecopropp Pty Ltd
• Epropp, LLC
• American Proppants, LLC
• Integritas Corporate Pty Ltd
• Eagle One Holdings Pty Ltd

So from the above - he listed and raised $55m in an IPO for GPS Limited, and later sold to GE for $750 million.

He is also the non executive director of Integritas (cool name) - http://www.integritascorp.com/ - whose mission statement is as follows,

"Integritas Corporate is an independent, boutique corporate advisory firm that provides innovative solutions for micro-cap and mid-cap private and public companies. Our experienced team boasts 70 combined years in the capital markets, providing access to an extensive network of relationships with Australian, European and US private & institutional investors who are seeking investment opportunities in Australia."


A lot has been said about Eddie Sugar's influence and contacts, but maybe we're missing a trick in Siegfried's obvious skill set and exposure to "institutional investors who are seeking investment opportunities in Australia".

Last point - if a man of Siegfried's experience and knowledge is willing to buy shares to the value of 10%+ of the company, then that's "money" I'm happy to follow.

If anyone else digs up anything interesting, please feel free to add.

At the very least, Siegfried is an old hand at this as well, so coupling with Eddie Sugar could be a match made in heaven.





HOW BIG IS THE MARKET

Proppant Market worth $19,022.71 Million by 2019

The market size in terms of value of the proppant market (2013) was estimated to be about 45.12 million tons and is projected to reach 84.20 million tons by 2019, at a CAGR of 10.7% from 2014 to 2019. The high demand across the oil& gas industry is expected to increase the overall proppant consumption.

http://www.marketsandmarkets.com/PressReleases/proppant.asp

So the above highlights an almost 100% increase in the demand for proppants over a 6 year period - this is a tick for entering a high growth market.


Coretrack's "game changing" Fly Ash vs Traditional Proppants

Eddie Sugar stated Coretracks' fly ash proppant is potentially "game changing" for the oil and gas industry - and remember, this is the man who led LNG from it's low of 12c through to it's multi dollar high (currently trading at $4.45)

Coretracks' ceramic proppants are made from fly ash, which is a byproduct of coal combustion - it's cheaper to produce, whilst being stronger and more light weight.

The cost savings of our proppants over our competitors is between 25-50% per well ($400,000 - $1.3m per well).

On top of this, there is also a cost saving to bauxite producers.

- our proppant take 5 mins @ 800 degrees in kiln

- their product takes 15-20 mins @ 1000 degrees

So if we retrofit plants it offers reduced machine wear and tear, less electricity and increased production capacity.

The other important thing to note is our smallest competitor in the US is worth $700 million. With regards to return on investment, we are currently at $10m.

Eddie Sugar and EAS Advisors

Personally, if it wasn't for Eddie Sugar coming on board, I would have a much smaller holding in Coretrack - which is now weighted equal as my largest personal holding, and growing.

For those that don't know, a small bit of background into Eddie Sugar and his firm EAS Advisors.

Eddie Sugar was one of the few willing to finance Fortescue - and in the process, generated phenomenal returns for those early backers, and has been credited with creating a handful of billionaires - and has also ensured that the doors of those investors remain open to him.

Move on to LNG (Liquified Natural Gas) - from a high of $1.89 in 2009, shares plummeted to 12c - enter Eddie Sugar and his firm EAS Advisors, who manage to raise $660 million equity funding from US investors. Current share price is $4.30.

Sugar's firm, EAS Advisors, have brokered deals with a combined total of $2.5 BILLION dollars over the past 7 years. His name and reputation are, in itself, enough to draw in US investors (especially his inner circle). The simple fact that he is involved, as I stated before, is enough for me to buy in big; I don't want to look back and miss LNG Mark 2 - for this is exactly where I see Sugar taking Coretrack.

Where to now?

It's important to put it all into perspective.

1. Multi billion dollar industry - major players scrambling to reduce operating costs
2. Hugely expanding proppant market
3. Coretrack provides "game changing" product
4. Eddie Sugar appointed, to help lead the charge into the US
5. Day prior and day of appointment, over 100m shares traded, pushing to 52 week highs on volume, with substantial orders taken (Chinese / American buyers taking positions?)
6. Managing Director secures a blocking number of votes (10.28%)

And, last but not least, where are we presenting this Friday?

MD will present in Houston on Friday this week at 2.30pm

http://imformed.com/get-imformed/fo...inerals-markets-forum-houston-2015-programme/

14.30 Ceramic proppant development using fly ash as raw material