LWP Technologies Limited (ASX:LWP) - Developing a Next-Generation, Fly-Ash Based, Proppant
www.lwptech.com 1
Corporate Presentation September 2015
LWP Technologies Limited (ASX:LWP) - Developing a Next-Generation, Fly-Ash Based, Proppant
www.lwptech.com 2
This disclaimer forms part of and is incorporated in the accompanying material The information in this presentation is an overview and does not include all information necessary for investment decisions. In making investment decisions, investors should rely on their own examination of LWP Technologies Limited, (LWP) or consult with their own legal, tax, business and/or financial advisors in connection with any acquisition of securities. This information has been prepared in good faith by LWP. However, no representation or warranty, express or implied is made, in relation to the accuracy or completeness of the information provided in this document or any other information by LWP otherwise provided to the recipients. Whilst every care has been taken with preparation of the information contained in this document, no responsibility is accepted by LWP or any of its representatives, directors, partners, employees or professional advisers for any information provided in this document or otherwise provided to the recipients or for any action taken by the recipients on the basis of such information. In particular, no representation or warranty is given as to the accuracy, likelihood of achievement or reasonableness of any forecasts, prospects or returns contained in the information. Such forecasts, prospects or returns are by their nature subject to significant uncertainties and contingencies. Each recipient of the information should make its own independent assessment of the information and take its own independent professional advice in relation to the information and any action taken on the basis of the information. This presentation includes forward looking statements within the meaning of the Corporations Act. These forward looking statements may be identified by words such as “may,” “will, “expect,” “intend,” “anticipate,” “believe,” “estimate,” “plan,” “project,” “could,” “should,” “would,” “continue,” “seek,” “target,” “guidance,” “outlook,” “forecast” and other similar words. These forward looking statements are based on LWP’s current objectives, beliefs and expectations, and they are subject to significant risks and uncertainties that may cause actual results and financial position and timing of certain events to differ materially from those described in the forward looking statements: failure of a proposed transaction to be implemented; the challengers of cost and closing, integrating, restructuring and achieving anticipated synergies; the ability to retain key employees; and other economic, business, competitive, and/or regulatory factors affecting the business of LWP generally, including those set forth in LWP’s business plan, in particular, the “Risk Factors” section. Any forward looking statements speak only as of the date hereof or as of the dates indicated in the statements. LWP assumes no obligation to publicly update or supplement any forward looking statement to reflect actual results, changes in assumptions or changes in other factors affecting these forward looking statements except as required by law.
© LWP Technologies Limited
LWP Technologies Limited (ASX:LWP) - Developing a Next-Generation, Fly-Ash Based, Proppant
www.lwptech.com 3
LWP Technologies Limited LWP Technologies (ASX: LWP) is an
Australian oil & gas technology firm
focused on developing a next
generation, flyash based, proppant for
use in hydraulic fracturing (“fracking”)
of oil & gas wells globally
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LWP Technologies Share Price
Volume Share Price
Hallmark JV
Key Financials (AU$ MM)
Market Capitalization $31.3m
Cash $8.8m
Debt 0
Stock Information (ASX: LWP)
Shares on Issue (Billion) 3.92
Share price $ 0.008
LWP Technologies Limited (ASX:LWP) - Developing a Next-Generation, Fly-Ash Based, Proppant
www.lwptech.com 4
Key Milestones of 2015 - March: New board members appointed
- March: Acquired 100% of Ecopropp and flyash proppant technology
- April: Prior litigation settled & drill rig sold for $500,000
- May: Target $400,000 capital raising and SPP completed at 20% discount to
VWAP @ US$0.0032/share, raised $4.0 million
- May: Pilot plant construction completed on time and on budget
- June: Engaged EAS Advisors as US Corporate advisor
- July: 50% oversubscribed $6.6 million capital raising @ 1.0 to 1.1 cents/share
- July: Entered into 60/40 JV to acquire 12,000 tpa factory in Pune, India
- August: Brisbane pilot plant commissioned
- ONGOING:
- Discussions with several global parties for additional commercialization and
monetization opportunities
- Production of proppants at pilot plant.
LWP Technologies Limited (ASX:LWP) - Developing a Next-Generation, Fly-Ash Based, Proppant
www.lwptech.com 5
Proppants are pumped into an oil and gas well under pressure to ‘prop’ open the tiny fractures created in hydrocarbon-bearing shale during hydraulic fracturing (fracking), so oil & gas can flow
Proppant demand has increased recent years due to fracking
E&P firms are looking for more cost-effective proppants without sacrificing product quality
Ceramic Proppant Deployment
*Source: 2014 Proppant Market report by PropTester/Kelrick
LWP Technologies Limited (ASX:LWP) - Developing a Next-Generation, Fly-Ash Based, Proppant
www.lwptech.com 6
Proppant Market Annual Consumption
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160
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Proppant Market: Total Consumption (billion lbs.)
Sand Ceramic Resin Coat
135.5 billion
lbs.
*Source: 2014 Proppant Market report by PropTester/Kelrick
0.0
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Ceramic Proppant Consumption (Total consumption billion lbs.)
Ceramic Proppant Consumption
2009-2014 CAGR = 25.06% 2004-2014 CAGR = 18.82%
LWP Technologies Limited (ASX:LWP) - Developing a Next-Generation, Fly-Ash Based, Proppant
www.lwptech.com 7
Proppant Types
Maximum Well
Production
10%
of the
Market
5%
of the
Market
85%
of the
Market
Ceramic: High Strength, Manufactured Product Uniform size and shape High Conductivity Maximises Production High Thermal Resistance
Resin Coated Sand: Medium Strength Medium Conductivity Irregular size and shape
Mined Frac Sand: Low Strength Low Conductivity Irregular size and shape
US$450 -
$1000 ton
US$300 -
$450 ton
US$50 -
$100 ton
LWP Technologies Limited (ASX:LWP) - Developing a Next-Generation, Fly-Ash Based, Proppant
www.lwptech.com 8
Proppant Overview
- Frac sand is the industry’s primary proppant, due to its low cost
- Frac sand underperforms as well depth and pressure increases
- Ceramic proppants outperform Frac sand as well depth and pressure increases
- LWP proppants are Tier 1
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Closure Stress
Conductivity Comparison
20/40 Tier 1 20/40 Tier 2 20/40 "Fit-for-Purpose"
*Source: 2014 Proppant Market report by PropTester/Kelrick
LWP Technologies Limited (ASX:LWP) - Developing a Next-Generation, Fly-Ash Based, Proppant
www.lwptech.com 9
Ceramic Proppant Market Outlook
- LWP’s target market is the low-price, light-weight, high-strength segment which represents the majority of the ceramic proppant market
- The ceramic proppant market was 8.9 Billion Pounds in 2014, an increase of 12.9% over 2013
- Global shale oil & gas will be an integral part of global energy needs well into the future
- New US oil rig utilization peaked in November 2014
- Many firms have re-entered existing wells (refracking) to generate additional production and avoid the high costs of drilling new wells
- The industry is continually seeking lowest cost / highest quality proppant products to maximize yield
LWP Technologies Limited (ASX:LWP) - Developing a Next-Generation, Fly-Ash Based, Proppant
www.lwptech.com 10
LWP Flyash Proppants will become the
dominant Ceramic Proppant and the
Standard for the Industry
LWP’s Vision
LWP Technologies Limited (ASX:LWP) - Developing a Next-Generation, Fly-Ash Based, Proppant
www.lwptech.com 11
What is fly ash?
- Fly ash is a by-product of burning coal at electrical generating stations and is
abundantly available close to many US shale oil and gas reserves. LWP
recycles that industrial waste to make proppants
What are the benefits of using flyash to make proppants vs. bauxite or clay?
- ±40% stronger than ceramic proppants made from kaolin clay
- ±40% lighter than ceramic proppants made from bauxite
- Fly ash proppants feature outstanding conductivity
- Low (or no) transportation and logistics costs
- Low manufacturing costs due to:
• Low cost feedstock costs
• Low feedstock preparation costs
• Low energy costs
Fly Ash Proppants
LWP Technologies Limited (ASX:LWP) - Developing a Next-Generation, Fly-Ash Based, Proppant
www.lwptech.com 12
How 40% lighter proppants adds value (30+ stage well)
187 trucks of Bauxite Proppants 112 trucks of LWP Proppants
*Photo: Staging ground for 30-stage oil & gas well with fraccing supplies
LWP Technologies Limited (ASX:LWP) - Developing a Next-Generation, Fly-Ash Based, Proppant
www.lwptech.com 13
Competing as the Low-Cost Producer
Where does LWP fit in?
- Recent oil & gas prices have changed the status-quo for well economies
- Proppant selection is critical to maximizing oil and gas recoveries
- The majority of proppants in the market are either cheap and less effective or
efficient and expensive
- LWP minimizes transport and logistics costs by recycling an unwanted by-
product by building production facilities near disposal sites
- Minimizing transport and logistics costs means LWP is well positioned to
provide high-grade ceramic proppants at a price threshold normally associated
with inexpensive frac sand
LWP Technologies Limited (ASX:LWP) - Developing a Next-Generation, Fly-Ash Based, Proppant
www.lwptech.com 14
Potential Cost Savings per well
LWP’s disruptive technology challenges existing market dynamics
THE ABOVE ESTIMATES ARE PRELIMINARY AND BASED ON CERTAIN ASSUMPTIONS AND PROJECTIONS MADE ON BEHALF OF THE COMPANY IN GOOD FAITH. THEY ARE GIVEN HERE FOR ILLUSTRATIVE PURPOSES AND ARE NOT TO BE RELIED UPON FOR ANY PURPOSE. WHILE THE COMPANY’S MANAGEMENT CONSIDERS THEM REASONABLE, THESE ESTIMATES ARE SUBJECT TO SIGNIFICANT BUSINESS, ECONOMIC AND COMPETITIVE UNCERTAINTIES AND CONTINGENCIES. ACCORDINGLY, NO ASSURANCE CAN BE GIVEN THAT THESE ESTIMATES CAN OR WILL BE REALIZED, AND THE COMPANY’S ACTUAL PERFORMANCE MAY VARY FROM THE ESTIMATES AND SUCH VARIATIONS MAY BE MATERIAL. NO REPRESENTATION, WARRANTY OR GUARANTEE OF ANY NATURE IS BEING GIVEN BY OR ON BEHALF OF THE COMPANY REGARDING ITS FUTURE PERFORMANCE OR FINANCIAL RESULTS.
LWP Technologies Limited (ASX:LWP) - Developing a Next-Generation, Fly-Ash Based, Proppant
www.lwptech.com 15
- Licensing LWP’s technology to the existing proppant manufacturing companies to either modify existing plants or construct new fly ash engineered plants
- Sub-licensing LWP technology to geographical areas
- Seek partnerships and/or JV arrangements with interested parties to produce LWP proppants for existing plants or for licenses to build new commercial scale plants to produce LWP proppants
Commercialization and Monetization Opportunities
LWP Technologies Limited (ASX:LWP) - Developing a Next-Generation, Fly-Ash Based, Proppant
www.lwptech.com 16
Project Portfolio
Brisbane Pilot Plant
- Located in Brisbane, Eastern Australia
- Production capacity: 3,000 tons/year
- Construction completed May 2015, commissioning completed August2015
- Production of fly ash proppants set to commence scale up manufacture Q3 2015
LWP Technologies Limited (ASX:LWP) - Developing a Next-Generation, Fly-Ash Based, Proppant
www.lwptech.com 17
- LWP has entered into a joint-venture (“JV”) with Hallmark Minerals Pvt Ltd to produce LWP flyash proppants
- Production facility is located in Pune, Maharashtra, India
- Capacity: 12,000 tons per annum
- LWP holds a 60% stake in the JV, Hallmark 40%
- LWP negotiated US$1 million for the technology license for the State of Maharashtra in India, plus 10% of gross revenues in royalties
Joint Venture
Pune
LWP Technologies Limited (ASX:LWP) - Developing a Next-Generation, Fly-Ash Based, Proppant
www.lwptech.com 18
- Early cost-effective entry to proppants market
- LWP proppant production requires 15-30 minutes sintering time
- Hallmark bauxite proppants required 2 hours sintering time
- Acquired 60% interest in assets with replacement value of US$15 million for US$2 million
- Commercial production allows showcasing to potential technology licensees
- Opportunity to automate production for 24/7 operations to produce up to 20,000 tons annually
Benefits to LWP of Joint Venture in India
LWP Technologies Limited (ASX:LWP) - Developing a Next-Generation, Fly-Ash Based, Proppant
www.lwptech.com 19
LWP Management Team Siegfried Konig Dr. David Henson Ross Henden Sean Corbin
Executive Director Non-Executive Director Non-Executive
Director
Non-Executive Director &
Company Secretary
Entrepreneur and
Ecopropp Co-Founder.
30-years experience in
business management,
Successful listing of 3
start-up companies on
ASX. Global relationships
in capital markets & public
company sector.
Ecopropp Co-Founder
and Non-Executive
director based in
Houston TX, former CEO
of Siemens conceptual
engineering services.
PhD in Chemical
Engineering.
Extensive experience
in the capital markets
and corporate
financing. Ross has
previously worked as a
stock broker and
institutional adviser
with Bain & Co, Davies
& Dalziel.
Sean Corbin has worked as
an executive at CEO and
CFO level in a wide range
of industries in various
stages of each business.
Jim Irvine Bill Schoch Dr. Ralph Enderle
Non-Executive Director Chief Financial Officer Chief Scientist
Founder and President of
Fly Ash Direct based in
Cincinnati, OH
Extensive experience in
accounting, tax, audit
and in CFO roles in listed
and unlisted companies.
Ralph is the principal
of Drend Solutions
which provides
conceptual designs for
thermal processing
and associated
equipment, material
development.
LWP Technologies Limited (ASX:LWP) - Developing a Next-Generation, Fly-Ash Based, Proppant
www.lwptech.com 20
Contact
For further information please contact:
Siegfried Konig
Chairman of LWP Technologies Limited
Mobile: +61-411-111-193
US Cell: +1-201-238-9080
Email: [email protected]
LWP Technologies Limited (ASX:LWP) - Developing a Next-Generation, Fly-Ash Based, Proppant
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Appendix
LWP Technologies Limited (ASX:LWP) - Developing a Next-Generation, Fly-Ash Based, Proppant
www.lwptech.com 22
Oil & Gas Rigs and Output - Bakken
LWP Technologies Limited (ASX:LWP) - Developing a Next-Generation, Fly-Ash Based, Proppant
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Crude oil, $/barrel avg. spot price (Brent, Dubai, WTI)
Nominal US Dollars
REAL 2010 US Dollars
Status of Oil Market and Production
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# o
f R
igs
North America Rig Count
Rig Count
*Source: World Bank
LWP Technologies Limited (ASX:LWP) - Developing a Next-Generation, Fly-Ash Based, Proppant
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Global Shale: U.S. Energy Information Administration
Rank Country Shale oil (billion bbls) Rank Country Shale gas (trillion cubic feet)
1 Russia 75 1 China 1,115
2 U.S. 58 2 Argentina 802
3 China 32 3 Algeria 707
4 Argentina 27 4 U.S. 665
5 Libya 26 5 Canada 573
6 Australia 18 6 Mexico 545
7 Venezuela 13 7 Australia 437
8 Mexico 13 8 South Africa 390
9 Pakistan 9 9 Russia 285
10 Canada 9 10 Brazil 245
World
Total 345 World Total 7,299
*Annualized data from 2013
LWP Technologies Limited (ASX:LWP) - Developing a Next-Generation, Fly-Ash Based, Proppant
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LWP Share Volume at Milestone Events
LWP Technologies Limited (ASX:LWP) - Developing a Next-Generation, Fly-Ash Based, Proppant
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Coal Fired Power Process and Fly Ash Generation