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I think there is some confusion between tar sands and oil shale. Petroteq's patent is for tar sands, and the CORT process is for tar sands, which is very distinct from processes for oil shale. TomCo's main claim to fame is being the funding portion of Greenfield, essentially financing Valkor's work to make the Petroteq process viable. Greenfield was a success, so now Petroteq (which owns the patent and the process) can license it to anyone, and there is a big market.
Whether or not TomCo's oil shale processes (which are a different animal altogether) will every be successful is another story. I am long, and I hope so, but there is no doubt that TomCO is a far far riskier investment that Petroteq.
The commercial license was sold to Greenfield previously, at the terms disclosed. Now that TomCo owns 100% of Greenfield, they effectively have the license. If TomCo can manage to actually build a plant and produce oil, that's where Petroteq's 5% comes in.
Since Petroteq invented the technology and owns the patent, I think they have a more than reasonable claim to the credit. Valkor gets Engineering credit for translating theory into practice, and TomCo gets credit for providing funding.
dazzle1000- Thanks for the links!
Manu19- thanks for demonstrating the continuing link between TomCo and Petroteq.
Stating that TomCo has nothing to do with Petroteq is just plain false. Whether it is from ignorance or intentional fraud, it is extremely poor form to post something so egregiously inaccurate.
Valkor did all the work, and is responsible for its success. TomCo was merely a funding agent, as the original announcement attests.
You are certainly belatedly correct that it does not take an Einstein to work out that it was all funded by TomCo, as the very first announcement of the JV made that very clear- for anyone taking the time to actually read it.
And it appears you did not read my whole post, but it's still early if you are in the US like me.
The point of this post was to lay to rest the concerns of certain parties who clearly misunderstood the original JV. minimil was apparently confused about the terms, and hopefully this will permanently end his concerns in that context.
As an aside, you reversed the order of the companies in your statement, and it was a little loose in interpretation.
Valkor is NOT a part of TomCo. However, if certain conditions are met, Valkor will own 29% of TomCo- but that hasn't happened yet, and won't unless TomCo can get the funding.
You are correct (obviously) in stating that TomCo now owns 100% of Greenfield.
As much as I hate being an enabler for laziness, I am rationalizing that others may find value to this, or save them time for their own research:
https://newsnreleases.com/2020/06/17/tomco-energy-forms-joint-venture-with-valkor-to-develop-oil-sands-plant/
In particular, this is what each company was supposed to bring to the table:
"The results of the draft Pre-FEED study have provided the TomCo Board with sufficient comfort to enter into a binding joint venture agreement with Valkor (the “JV Agreement”) to form and regulate the operations of Greenfield, a newly incorporated Utah registered company that will seek to pursue the development of a plant utilising the Oil Sands Technology.
Under the terms of the JV Agreement, the Company will provide funding to Greenfield, subject to being satisfied as to the use of such funds, of up to US$1.5 million, to enable Greenfield to be able to complete, inter alia, the required upgrades to the POSP and to undertake the proposed test programme as detailed below, together with funding TomCo’s contribution to the FEED."
This is what Valkor was supposed to bring to the table:
"Valkor will provide the engineering knowhow pertaining to the Oil Sands Technology required to complete the changes and will undertake the work detailed in the Work Order. Valkor will provide the services for the completion of the pre-FEED and the FEED up to a value of US$375,000, along with their management and operating experience and any other information and other valuable resources owned by ?and/or controlled by Valkor. In addition, Valkor has granted to Greenfield a licence to the Quadrise MSAR® technology, for the processing of heavy sweet crude into heavy fuel oil for which it has a right to an exclusive licence, for the use on all future plants that are majority owned and operated by Greenfield in Utah."
It is very clear that it was NEVER the intention of the JV for Valkor to invest any funds at all, and suggesting they have been negligent in doing so is completely inaccurate. Valkor provided the Engineering expertise, and TomCo was supposed to provide a set amount of funding.
Both companies met their respective responsibilities, and they were successful, after which they dissolved the JV in an amicable and mutually-agreeable arrangement, where they will most like retain some form of serious working relationship.
I see no reason for anyone to "bad mouth" either company in the context of the JV or its results.
"Valkor had the licence agreement and then it was transferred to Greenfield." That statement is true, but the inference that Valkor does not have a current license is incorrect. The clarification is in the following news release:
https://ir.petroteq.com/news-presentations/press-releases/detail/351/petroteq-announces-management-and-operations-at-asphalt
In particular: "Valkor remains party to a non-exclusive technology licensing agreement with Petroteq dated July 2, 2019, as amended, in respect of the POSP."
Hi all- the creator and moderator of the Petroteq reddit put together this summary- I think some may find this useful:
https://www.reddit.com/r/Petroteq/comments/o4m0yb/petroteq_101_a_brief_introduction/
It is a very well put-together piece, but do you own diligence, of course!
TomCo did not have to "redirect" funds anywhere due to Valkor. That's just misinformation, and I have a hard time understanding why anyone would try to make such a glaringly false statement, especially in print.
I am not sure why some would want to paint the relationship as adversarial, when it is anything but.
Thanks parmxz- The analysis is based on NPV calculations, which is the right way to go in my book. Like they say in the report, the truth will be in the financing details.
I feel good about the future in general here, but I am a bit skeptical of projections or estimates unless they have some corresponding concrete analysis to accompany them, and this is one of those cases. Thanks again for sharing!
For us to get a solid estimate of future price, we need a solid estimate of future earnings per share, and an idea of what the industry price/earnings ratio should be.
For instance, is the P/E ratio for the industry is 10, then a price of 20 pence would 10 times earnings, meaning earnings of 2 pence per share.
At 1.45 Billion shares outstanding (ignoring for the moment that the exercise of all outstanding warrants could push the shares outstanding to well over 2 billion), 2p per share would come out to 2.9 billion pence, or 29,000,000 pounds in earnings, annualized.
This is earnings, not revenue, which would need to be higher, of course.
At the same time, the earnings haven't been made yet, so the share price would probably reflect a discount in the form of net present value of future earnings, which would either require higher future earnings, or a lower current share price.
Do we see the making those kinds of earnings in the near future? The answer to that question sets us on the road to estimating a future share price.
I am sure we all have ideas about future share price, and various methodologies for how we arrived at that price. I enjoy reading them all, but until they have an actual steady revenue stream that can result in positive earnings, we are all speculating on a future outcome. The nature of risk, such as it is!
Hi vauch- How did you arrive at the 5p figure? I am curious to know if it is inferred intuitively, or if you had a concrete calculation behind the number. Either way is OK- I just like to know the reason behind the numbers when people forecast future prices, earnings, etc. Thanks ahead of time- I always enjoy your posts.
Hi Helpful- I was thinking about the idea of Canadian producers needing to "write off" existing investments in infrastructure to use the new tech, but that may be the "business school approved" thing to do.
The current thinking in US Business School MBA programs is that sunk costs should never be considered when making a current or future investment decision.
The idea is that the "sunk cost" money is already spent, and usually can't be reversed (hence, "sunk"), so it should not be a consideration. The real question is "What are we trying to do now, and what is the best investment now to make it happen?"
Of course, it's never that simple- existing contracts are part of sunk costs, but they will still be in effect no matter what is done, short of bankruptcy- but it does allow for a principled case for Canadian producers to convert immediately.
And if the Canadian government offers financial incentives for environmental or other reasons, so much the better!
Hi Mcmikeyh- I think the primary reason for the dissolution of the JV was a rearrangement for financing- Valkor is a private LLC while TomCo is public, and it complicates financing.
The latest information now indicates that Valkor also has other projects going on in the same area (they have mineral rights to a huge tract of land in Utah- equivalent to the Island of Manhatten in surface coverage). The JV breakup merely changed the nature of the relationship between Valkor and TomCo, but they still have a huge common financial interest.
I suspect that Valkor's desire to develop their other tracts may have been compromised by the Greenfield financing, and that they would rather arrange financing for 100% of their own leases than 50% of Greenfield's, but that is just speculation on my part.
I am not sure Valkor would event WANT to acquire TomCo, but we definitely know that Valkor is in a position to profit immensely if TomCo is successful, so they are both pulling in the same direction.
Hi Helpful- I think you hit it on the head, as the public records of their acquisitions are definitely starting to add up. It seems they have multiple and huge options that they own solo, so they will reap everything after Petroteq gets it's cut.
In that context, it is now easier to see why they opted out of Greenfield. Why invest further in a venture worth 50% to the company (technically 47.5% when factoring in Petroteq's cut) when they can get 95% from their own holdings-- and at the same time with an option to pick up almost a third of TomCo if anything develops there?
I personally hope Valkor ends up owning some or all of TomCo, as their management seems sharper, and TomCo investors would benefit, in my opinion.
Hi JoeYangtze- The links in the previous post are the proof. I see that some other posters have also answered the question using the same references. Petromod, the founder and primary adminstrator of the Petroteq subreddit, noted that the total Valkor mineral lease rights are roughly the same area size as Manhattan Island.
In the overall scheme of things, TomCo is simply small potatoes compared to Valkor. That Valkor has an option to own almost a third of TomCo under certain conditions, and not the other way around, speaks volumes about the relationship between the two companies.