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Petroteq Energy Inc. (TSXV: PQE) (OTC: PQEFF)

Petroteq Energy Inc. (TSXV: PQE) (OTC: PQEFF) is a Canadian-registered, publicly traded company engaged in the development and implementation of proprietary technologies for the environmentally safe extraction of heavy oils from oil sands, and shallow oil deposits. Headquartered in Los Angeles, California, Petroteq Energy is focused on oil sands exploration and production on mineral leases in Utah’s Uinta Basin, as well as six U.S. Federal Oil & Gas Leases located in P.R. Springs and the Tar Sand Triangle in Utah.

The company’s primary goal is to become a significant bitumen oil producer in Utah by advancing its proprietary, patented, closed loop, environmentally friendly Clean Oil Recovery Technology (CORT) system. As of 2015, Petroteq has constructed and operated a 250-bpd pilot plant which has produced almost 10,000 barrels of bitumen oil. The company has recently completed work on upgrading and expanding its production facilities, with plans to scale up production over the coming years.

Asphalt Ridge

According to the Utah Geological Survey, the state’s oil sand deposits contain 14 to 15 billion barrels of measured-in-place oil with an additional inferred resource of 23 to 28 billion barrels. Utah hosts 74 known oil sands deposits containing a mixture of sand and a dense, extremely viscous form of petroleum referred to as bitumen or tar.

Petroteq Energy controls 2,541.76 acres of mineral leases at Asphalt Ridge, a significant oil sands deposit located within the Uinta Basin, Utah, for which a NI 51-101-compliant contingent resources report (published in May 2018) established a best estimate of discovered bitumen equivalent to 87,495,000 stock tank barrels (STBs). The deposits were determined to average 6-15% oil by weight and are estimated to be a multi-decade production asset. Meanwhile, the U.S. Government’s Department of Energy has estimated the surrounding region (~29,000 acres) to contain in excess of 1 billion barrels of bitumen.

Having initially begun test production on the site in August 2015 via a 250 barrel per day (bpd) pilot plant, Petroteq Energy has recently completed a facility upgrade as of March 2021 which will allow the company to deliver on a peak capacity of up to 500 bpd by April 2021.

The company aims to complete work on a new-build, 5,000 bpd plant in 2023, building upon lessons gleaned from the construction of the original pilot plant. The project, which will require approximately $110 million of project financing, is anticipated to be completed in 2023 and will generate an estimated annual EBITDA of $41.25 million based on 5,000 bpd of bituminous oil production.

The construction of a parallel 5,000 bpd plant is projected to expand the company’s production capacity to 10,000 bpd by 2024 and is forecast to deliver an estimated annual EBITDA of $83 million at peak capacity. The extracted product is expected to be sold in its entirety to local Utah refineries.

P.R. Springs and Tar Sands Triangle

In January 2019, Petroteq Energy arrived at an agreement with Momentum Asset Partners I LLC for the acquisition of 50% of the operating rights to six U.S. Federal Oil & Gas Leases for a total consideration of $10.8 million. The operating rights comprised of approximately 8,480 gross acres of territory, with one located in P.R. Springs and a further five located within the Tar Sands Triangle in Utah. Petroteq Energy subsequently acquired the remaining 50% interest on the sites in April 2019 for a total consideration of $13 million.

A report carried out by Chapman Petroleum Engineering dated December 31, 2018, estimated the P.R. Springs lease to contain gross contingent resources of 45 million barrels of mineable oil/bitumen in place, with the Tar Sands Triangle leases estimated to contain gross contingent resources amounting to a further 41.3 million barrels of in situ oil/bitumen.

Clean Oil Recovery Technology (CORT)

Petroteq Energy’s proprietary and patented Clean Oil Recovery Technology (CORT) is an Enhanced Oil Recovery (EOR) technology that enables the extraction of bitumen oil from a broad range of bituminous sands. CORT possesses disruptive features which greatly reduce the emission of greenhouse gases and reduce the environmental impact commonly associated with traditional oil sands production methods.

For starters, the bitumen extraction process, itself, does not require the use of water, high temperatures, high pressure or tailings ponds – thus allowing for the technology to be employed in areas with little to no water resources. In addition, the technology does not emit excessive levels of carbon dioxide (CO2) or utilize corrosive chemicals such as chlorine. Rather, through the use of a proprietary solvent and patented process, CORT allows for up to 99% of bitumen to be extracted from oil sands in an eco-friendly manner, with up to 95% of solvents being recovered and recycled within the closed-loop system. The process produces only two end products: bituminous oil and dry, cleaned sand.

Petroteq Energy’s management intend to file provisional patents on the company’s technology (having already gained patents in the U.S., Canada and Russia) in over 30 countries boasting significant oil sands reserves and anticipate pursuing opportunities to license CORT technology to producers in countries with heavy oil resources, such as Canada and China.

Leadership Team

Alex Blyumkin, Chairman of the Board and CEO of Petroteq, has over 20 years of a wide range of experience in the energy industry. After achieving significant success in downstream operations on several energy projects in Azerbaijan, Ukraine and the U.S., he recognized a worldwide need for safe, environmentally friendly oil sands extraction technology. Mr. Blyumkin and his team discovered the origins of what is now Petroteq’s extraction technology.

George Stapleton, the company’s Chief Operating Officer, brings to Petroteq over 40 years of experience in all aspects of design, construction, fabrication and project management for onshore and offshore plant and energy infrastructure related projects. Mr. Stapleton spent over 20 years of his career with McDermott Inc., a premier international engineering, procurement and construction (EPC) firm. Most recently he held the position of Senior Director for all fabrication operations for McDermott Inc. in North, Central and South America.

Mark Korb, Chief Financial Officer of Petroteq, has over 20 years’ experience with high growth companies, serving as the CFO or Financial Consultant across several industries.

Dr. Donald Clark, the company’s Chief Geologist, utilizes his knowledge of geological resource assessments to assist Petroteq in its oil sands leases and future resource property acquisitions. He also provides counsel on reviewing hydrocarbon reserves and resource reports, feasibility studies and NI 43-101 reports. Dr. Clark develops financial models and analyzes commodity price fluctuations, as well as operational and transportation costs of oil and natural gas leases.

Dr. R Gerald Bailey, a Director of Petroteq, has over 40 years of experience in the international petroleum industry in all aspects, both upstream and downstream, with specific Middle East skills and U.S. onshore/offshore sectors. Dr. Bailey formerly served as CEO of Petroteq.

Investment Considerations
  • Petroteq is focused on oil sands exploration and production at Asphalt Ridge, Utah.
  • The company also possesses full operational rights to six U.S. oil & gas leases in Utah’s P.R. Springs and Tar Sands Triangle.
  • Petroteq’s proprietary, closed-loop Clean Oil Recovery Technology (CORT) extraction process significantly lowers capital expenditure and reduces environmental impact.
  • Petroteq’s management team plans to license its CORT technology in other geographies boasting oil sand deposits.
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