Here is the way I see it:
Currently we have CKK with a
potential product that has been tested in small scale lab tests and has been shown to be superior in compressive strength and is cheaper to manufacture than other proppants. I hesitate to call this a ;game changer' rather an improvement on the current state-of-the-art. A game changer would be something like negating the need for a proppant because of an improved fracking technique, for example.
EAS has shown an interest and this can't be ignored, based purely on EAS past history.
A pilot plant in Brisbane is on the cusp of being commissioned to prove the large scale production ability.
CKK will, at some stage be looking for JV partners, timeline for this is debatable.
These are the 'known knowns'
The following are the 'known unknowns'
- Does the CKK proppant work to the same extent in a well? If so, then the major oilers will likely adopt this product to some extent.
- Will a JV partner be found? Is the risk of a new, somewhat unproven, product worth the risk?
Driving factors for share price increase:
- Price of oil is near its low (likely to have bottomed and now recovering??) Hence oilers will be looking at cost saving wherever they can find them, the impetus to adopt CKK proppants is at its highest.
- EAS will provide exposure to the right people, the oilers will know about the CKK product (if they don't already). This is the 'big sell'
- Announcement of JV partner for down well testing - if this is a major like Exxon, BP, Chevron etc then the sp will appreciate just because of the association.
- If the JV partnership can prove the CKK propppant is superior down a hole then the JV partner will likely start buying the CKK proppant for use, another sp appreciation.
Possible drawback:
- the proppant fails - this is probably the worst outcome.
- the proppant is on par with the next best proppant currently on the market (the CKK lower price will still make it attractive, but less so)
- the pilot plant works, but a JV partner is hard to find. Unlikely but possible.
Anyway, these are some thoughts. I've probably missed something, don't chastise me for it.
