Plexus Regulatory News (POS)

Plexus Holdings PLC / Index: AIM / Epic: POS / Sector: Oil equipment & services

10 November 2020

This announcement contains inside information  

Plexus Holdings PLC ('Plexus' or 'the Company')

Licence Agreement with Cameron, a Schlumberger Group company

Plexus Holdings PLC, the AIM quoted oil and gas engineering services business and owner of the proprietary POS-GRIP® friction-grip method of wellhead engineering, is pleased to announce that the Company has entered into a licence agreement (the "Agreement") with Cameron International Limited ("Cameron"), a Schlumberger group company, the world's leading oilfield services provider.

The Agreement grants a non-exclusive licence to enable Cameron to use the Company's POS-GRIP and HG® metal-to-metal seal method of wellhead engineering for the development of conventional and unconventional oil and gas surface wellheads.

Pursuant to the Agreement, Cameron shall pay a royalty to the Company based on the number of wellheads sold, leased, rented or otherwise supplied in each calendar year in the range of 3% to 6%, which shall apply up to the end of the 2029 calendar year, subject to the terms of the Agreement.

The Agreement provides for a modest minimum performance requirement with respect to wellhead sales in a market that historically has consumed tens of thousands of production wellheads per annum. If Cameron does not reach the minimum performance requirement, it can elect to pay a "top up" royalty fee.

In addition to royalty fees, Cameron shall pay the Company a capital licence fee payment of US$500,000 in exchange for the non-exclusive licence rights.

If Cameron wishes to initiate additional projects, the parties have committed to work together to agree the scope, terms, objectives, territory and royalty rates and royalty duration of each additional project.

The Company has a general obligation to provide Cameron with comprehensive guidance as to how to apply the specified intellectual property, including a specific obligation in relation to how to apply the POS-GRIP friction grip method of engineering for a period of two years from the date of the Agreement.

The Agreement is for an initial term of three years with the option for Cameron to extend the agreement for a further six years. The Agreement contains customary provisions permitting either party to terminate the Agreement upon the occurrence of other events, including upon a material breach of the Agreement.

As the industry pivots away from coal and oil to natural gas as the preferred future hydrocarbon energy source, as well as for the production of hydrogen, it is essential that a choice of dependable technology is available for application throughout the supply chain. At the wellsite, this certainly applies to wellheads where leak proof performance, particularly for natural gas, is important throughout the life of a field, and where wellheads have historically required maintenance to maintain integrity.

POS-GRIP wellheads are "by design" capable of delivering life-cycle integrity by employing integral metal seals, which are externally pre-loaded, against permanent wellhead fixtures. This alternative method of engineering is achieved with a rigid assembly, for which critical actuation forces are accurately controlled, monitored and verified, to simultaneously energise multiple seal bumps, which maintain gas-tight integrity throughout the life of a well.

Plexus' CEO Ben van Bilderbeek commented:

"I am very pleased that we have entered into a non-exclusive intellectual property licence agreement with Cameron, a Schlumberger company.

"The first of what we hope will be many joint development projects between our two companies, will be the design and development of competitive and technically differentiating surface production wellhead systems, which incorporate our proprietary POS-GRIP friction-grip technology.

"The POS-GRIP method of wellhead engineering has over the years demonstrated that it delivers life-cycle integrity for critical seal systems, particularly for gas applications.

"The project will focus on the application of scientifically configured and actuated proprietary sealing methods, which can guarantee leak-proof and maintenance-free performance, throughout the life-cycle of a well. Such features are particularly relevant as the move towards net-zero emissions is demanded by ever more informed investors, and the environmental lobby.

"The resulting wellhead products will be marketed under the Cameron trademark, whilst in the meantime Plexus continues to offer its own proprietary wellhead technology, with focus on special applications and technically challenging projects, as well as innovations.

"Our joint aim is to demonstrate that with the right technology, our industry can achieve Totex savings, whilst at the same time addressing Capex issues, which are generally associated with the provision of the higher standards needed, whilst helping to responsibly develop oil and gas reserves."

Paul Sims, Global Business Director - Surface Production at Schlumberger, commented:

"We are looking forward to working with Plexus to explore the use of friction-grip technology in our wellhead systems."

ENDS

For further information please visit www.posgrip.com or contact: