LWP Technologies (ASX:LWP) is focused on the multi-billion dollar global market for proppants - which are the single largest cost item in the fracking process.
Proppants are a sand-like commodity used to ‘prop’ open fractures in shale rocks which allows oil and gas to flow.
The company is seeking to commercialise its proppant as a cost effective, superior alternative to bauxite and clay based proppants, which are currently widely used in oil and gas wells.
Proactive Investors is joined exclusively by LWP Technologies' chairman, Siegfried Konig.
PROACTIVE INVESTORS: Welcome Siegfried.
First of all, can you outline the pathway to commercialisation for the company’s proppants?
Siegfried Konig: Certainly. Having invested considerable time and capital in developing and validating our proppant technology, commercialisation is our core focus in 2016 and beyond.
This will ramp now that independent ISO testing results on our proppants have been received.
This allows LWP to market our proppants with certainty around the quality and suitability of the product for commercial-scale use.
How does LWP’s proppants differ from those currently used in the fracking process?
Siegfried Konig: We see the opportunity for our unique fly-ash based proppant to become the dominant ceramic proppant and the industry standard due to:
- Ultra-light weight – ±40% lighter than bauxite ceramic proppants currently used in fracking operations;
- High strength, able to withstand the high pressure and temperature of deep wells;
- Low manufacturing costs; and
- Abundant availability of fly-ash proximal to oil and gas shale resources.
What is the timeline for the current testing results to be revealed, and what are the key expected outcomes?
Siegfried Konig: The ISO 12503-2 test results of our proppants are outstanding.
The ISO 13503-5 test tests assess conductivity and permeability in a crush strength, and are expected to replicate the outstanding results achieved internally (which have showed that LWP proppants exceed ISO and American Petroleum Institute standards) and validate the suitability of our proppants for commercial use.
Once results are published, what is the target market for LWP to showcase these?
Siegfried Konig: LWP has multiple options to commercialise, and monetise our technology and we will be aggressively pursuing each one.
They include:
- Licensing LWP technology to the major proppant companies to either modify existing plants or construct new commercial scale fly-ash engineered plants;
- Sub-license LWP’s technology to geographical areas; and
- Seek partnerships or joint venture arrangements with third parties to produce LWP proppants from existing plants – as the company has done with its first commercial arrangement, with Hallmark in India.
What is the size of the proppants market currently, and how has it been impacted by the falling oil price?
Siegfried Konig: Shale oil and gas (and fracking) remains an integral part of global energy needs now and in the future, and proppants are a key component of fracking operations – representing a multi-billion dollar global market annually in its own right.
As oil and gas prices continue to soften, fracking companies have an increased focus on seeking the lowest cost and highest quality proppant in order to maximise yields.
Also, output per rig in the US is at historically high levels, as more innovative drilling technology is adopted to generate additional production at lower costs – all positive factors for LWP’s disruptive proppant technology.
Finally, can you update investors on the company’s next roadshow?
Siegfried Konig: The company is conducting a national roadshow in early February to update investors on LWP’s progress and commercialisation plans moving forward, in all Australian capital cities.
The International roadshow will then commence. Australian dates are as follows:
- Monday 1st February – Brisbane
- Tuesday 2nd February – Melbourne
- Wednesday 3rd February – Sydney
- Thursday 4th February – Adelaide
- Friday 5th February – Perth
Please email Jenny Thompson (CLICK HERE) on to confirm your attendance in your city.
PROACTIVE INVESTORS: Thank-you Siegfried.
Proactive Investors Australia is the market leader in producing news, articles and research reports on ASX emerging companies with distribution in Australia, UK, North America and Hong Kong / China.
LWP Price at posting:
0.4¢ Sentiment: Buy Disclosure: Held
