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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.
I suspect it is more likely that Valkor would buy TomCo outright. TomCo's market value is 7.4 million, but it's enterprise value (from Yahoo) is only 6.76 million. It's far cheaper to buy TomCo than it is to build a plant at this stage.
Valkor already owns rights to huge amounts in Utah, and appears to be more liquid and much better funded.
https://www.reddit.com/r/Petroteq/comments/pkbkkx/valkor_energy_holdings_secures_another_3458_acres/
https://www.docdroid.net/wSeATs2/ml54066oba-srp-2-pdf
What needs to happen is for TomCo to be able to show that their leases and rights have tangible value, so they can be shown as assets on the balance sheet. If that happens, borrowing becomes much easier, and their enterprise value will skyrocket, making a takeover far more expensive. We'll see.
Sorry forgot the link: https://www.valkor.com/current_projects/
This is (at best) only tangently related to TomCo, but since it appears that not everyone is aware of Valkor's business and current projects, this link may be useful.
Since Valkor is in a position to end up owning 29% of TomCo (and may end up with "Valkor people" on the TomCO BOD as a result), and they now have a history of working together, the knowledge may be useful.
Thanks Crownos!
I have been following the Petroteq/Valkor/TomCo (and Greenfield) situation for some time. Petroteq spent years spinning wheels until Valkor's people came in and made the successful conversion from theoretical to practical. Valkor is by far the most successful part of this combination of companies, but since they are a private LLC, the only way to invest in the situation was via Petroteq or TomCo. At first the Valkor exit from Greenfield made me very nervous - without Valkor, TomCo looks like a bankruptcy/receivership waiting to happen. However, the saving grace for me is the following:
1. Valkor has invested time, energy, and expertise into the whole project.
2. As compensation, Valkor has accepted shares in Petroteq and TomCo in lieu of cash.
3. Valkor has been in the middle of it all, and they are a very successful engineering concern, so they have a unique vantage point to understand and value what is going on.
If Valkor values Petroteq and also TomCo enough to accept compensation in the form of shares, then that is a good sign. There are still lots of unanswered questions, but it does give me a certain confidence to know that the Valkor folks see enough to "be long", so to speak.
I stand corrected. Thank you for the correction!
@Craggs- they also gave up some funds in paying $3 million to Valkor, although we do not know the details in terms of timetable for payment. I don't think they have the funds, but I really hope I am wrong!
1 September 2021
TOMCO ENERGY PLC
("TomCo" or the "Company")
TSHII Update
TomCo Energy plc (AIM: TOM), the US operating oil development group focused on using innovative technology to unlock unconventional hydrocarbon resources, is pleased to provide an update with respect to the Company's now 100% owned subsidiary Greenfield Energy LLC's ("Greenfield") potential acquisition of up to 100% of the ownership and membership rights and interests in Tar Sands Holdings II LLC ("TSHII") (the "Membership Interests"), as announced on 9 June 2021 (the "Agreement").
Pursuant to the terms of the Agreement, Greenfield paid a non-refundable deposit of US$200,000 to secure a 90 day period to undertake due diligence and an exclusive option for up to 120 days to acquire an initial 10% of the Membership Interests for US$2 million, payable on or before 1 September 2021. The Agreement has been amended such that Greenfield can now exercise its right to acquire an initial 10% of the Membership Interests for cash consideration of US$2 million on or before 1 October 2021. A further non-refundable deposit of US$100,000 has been paid to secure this amendment. The total deposit of US$300,000 can be credited against the US$2 million cost of acquiring 10% of the Membership Interests, should Greenfield elect to proceed with the potential acquisition of the initial 10%.
Assuming a successful completion of the acquisition of the initial 10%, Greenfield will then have an exclusive option, at its sole discretion, to acquire the remaining 90% of the Membership Interests for additional cash consideration up to 31 December 2022, as detailed in the 9 June 2021 announcement.
TSHII owns approximately 760 acres of land and certain non-producing assets (the "Site") in Uintah County, Utah, USA. Subject to securing the requisite funding and satisfactory due diligence, Greenfield plans to use the Site, if ultimately acquired via TSHII, for the future mining of oil sands and construction of a commercial scale processing plant utilising the findings of the FEED study, and other knowledge and experience gained from Greenfield's operation of Petroteq Energy Inc's existing oil sands plant at Asphalt Ridge, Utah. (the "POSP"). The Site has existing infrastructure, plant and equipment, together with an existing Large Mine Permit No. M0470032, that could facilitate any future development by Greenfield.
Greenfield is in advanced discussions with potential off-takers of both oil and sand from the Site and the results from the due diligence exercise, that is substantially complete, have so far has been positive. However, there can be no certainty that the due diligence exercise will ultimately be concluded or that Greenfield can secure the required funding to complete the acquisition of a 100% Membership Interest.
Additionally, in parallel with working to secure the required funding, Greenfield has recently begun working with Stantec Inc, a global design and delivery
I should have said "...net present VALUE OF FUTURE cash flows..."-- my original post was rather inexact in terms of financial analysis language. Figuring out the net present value of future cash flows from TomCo's mineral leases would be a good start towards estimating what a fair price for TomCo would be.
That's easy to say, but at the moment there is no clear, confirmed data that definitively shows that TomCo is going to generate any cash flow at all if they can't build anything, so estimating a price is not much above guesswork at this point.
Nevertheless, if a large enough company has the resources to get the oil, they can do much sharper calculations, and then arrive at a price for TomCo that would make an acquisition profitable. We still don't know what that price would be, but an offer from a big player would at least answer the "lowball" figure for us very quickly.
@Torreaguas- I certainly hope you are right, but do you have any particular reason to expect some kind of TomCo rns this week? If you are simply speculating, that's fine, but your post is written as though you know something tangible or concrete.
The internet and other sources are rife with people speculating all sorts of possibilities, but nailing down anything firm is very challenging, and TomCo itself mostly issues "sunshine, feel good, style-over-content" type press releases, and getting them to answer simple correspondence has been a dead end for me for almost a year now.
Thanks either way, as your posts are always informative in some form!
@elir71. Valkor would accept shares from TomCo because there is no downside risk, but an easy upside gain if TomCo finds a way to be productive, and a HUGE gain of someone acquires TomCo. They risk nothing, but stand to gain big if things take a turn for the better. They were liable under the JV, but now they have cash, and all the liability lies with TomCo.
Valkor has some 15200 acres worth of mineral leases of its own, and they are focused on developing them independently. If the TomCo leases actually start to show a profit, then Valkor has it's hand in the till there as well, to the tune of 29%. Not a bad deal.
@parmxz. That is the big question, and I don't have a firm answer- at least one that I am comfortable enough sharing!
Getting a reasonable approximation to an answer to the question would, in my opinion, require estimating the net present cash flows from future earnings from TomCo's leased mineral rights, as that is the only reasonable potential revenue stream for them that I can see. Personally, I think that does represent true value, but each person has to do their own DD. I am inclined to think that TomCo will be acquired by a bigger player to get those leased rights, and that is why I am long. If TomCo could ever get their act together and actually show some independent production and revenue streams, so much the better, but their track record does not lean in that direction.
Actually, it appears the opposite is true. It is not clear that TomCo could arrange the funding, since they already have over a billion outstanding shares, and no revenue stream.
Since Valkor walked away with some of TomCo's scarce cash, and also with a contingent play to end up owning over a quarter of TomCo outright, they seem to have gotten the better end of the deal.
Basically, Valkor walked away with cash, dramatically reduced its risk, and stands to profit whenever TomCo profits- and is getting paid to do it. If TomCo goes into receivership, someone will buy their lease assets very cheap, and Valkor will lose the option but keep the cash.
TomCo hasn't been successful up to this point (they don't make any money, it's essentially a one-man operation, and after issuing over a billion shares are still struggling to raise capital), so de-risking makes sense.
TomCo's value at this point is in it's leases, and the value of the company is so low that it could be bought outright for not much money at this level.
With Valkor already owning 13% of Petroteq, and with the option to own up to 29% of TomCo, they seem to be in a good place to profit, and they have done so with their only investment being engineering expertise.- which Petroteq and TomCo have rewarded with cash, shares, and share options. Since we can't own Valkor outright, Petroteq and TomCo stock are our only play.
I had no idea that Plc's are forced to use a competitive bid process. Thank God US companies are not forcibly compelled to do so.
I was referring to Helpful's post, but they are all good!
What a great post! The point about Valkor is especially on the mark- they are energy industry service providers, not energy industry producers. They are service, not retail, and it makes sense for them to "stay in their lane".
At this point they would be the first choice contractor for anyone wanting to use Petroteq's process, and it makes sense for them to avoid being direct competitors with their own clients.
minimil, since you seem to be the only person uninformed about Valkor, I believe the burden is on you at this point. If you have researched Petroteq and still have not ascertained Valkor's critical value at this point, there is nothing else to do. Please feel free to continue to believe that the company is a charade and valueless, as on one else has a burden or compelling need to disabuse you of the notion. It's your money! Your other analysis adds value, so this particular blind spot is hard to understand. Good luck with your investments.
Does Turboshale actually work in practice? Perhaps Valkor engineering expertise can turn it into a reality the same way they re-designed and rebuilt the Petroteq plant after years of false starts. Since they are already partners in the JV (Valkor's engineering expertise and TomCo's obvious willingness to pay to partner up), it would make sense for them to continue. I'm long TomCo so I certainly hope so.
I've mostly just read this site, but someone was copying my Petroteq posts from Yahoo (under "Paul L") so I finally decided to sign up.
Valkor is the firm that brought in the engineering expertise to make Petroteq's idea a success. They had failed until Valkor became involved.
Of the 3 companies involved (Petroteq, TomCo, and Valkor), only Valkor is the "already successful" company in the mix.
I thought it was well-known in Petroteq/Greenfield circles that Valkor is the key piece that took Petroteq's concept to reality.
Valkor is a very successful and highly-regarded engineering firm in the oil industry. TomCo has to put money on the table because they had little else to offer. Valkor had the expertise, so much so that Petroteq has paid them in shares to keep them in the game. Petroteq did not know how to make the concept work in practice after years of trying, but it only took Valkor people a matter of months to turn it around to where we are now.
minimil, if you have not done the successful due diligence to understand this (try the petroteq reddit site, for starters), then it is on you. Feel free to disregard the key piece of Petroteq's sudden success after years of failure, but you are diminishing your credibility by doing so.