NBT Equities Research: Initiating Coverage on Propell Technologies Group, Inc. (PROP)
Game Changing Disruptive Technology for Oil Enhanced Recovery in the United States
The Company:...
Game Changing Disruptive Technology for Enhanced Oil Recovery in the United States
Propell Technology Group, Inc. - Unlocking America’s Petroleum
Oilprice.com reported on the Russian billionaire Roman Abramovich investing $15 million into Houston-based Propell Technologies Group, Inc. (OTC:PROP) and its new fracking technology from wholly owned subsidiary Novas Energy.
It appears that Abramovich…who made most of his billions investing in Russian oil company Sibneft (now Gazprom)…is excited about what PROP’s patented Plasma Pulse Technology means for “clean” hydraulic micro/nano fracturing of oil reservoirs—that is, without injecting huge amounts of water and polluting chemicals.
First, who is Roman Abramovich? He is Russian oil & metals magnate now living in London/New York/Miami who also happens to also own the Chelsea football club (soccer ok?). He is the 143rd wealthiest person in the world and is worth about $9 billion, according. He is the main owner of UK-registered Millhouse LLC, a private investment company whose assets have included major stakes in stakes in Sibneft, which is now Gazprom Neft. In 2005, Millhouse sold a 72% stake in Sibneft to Gazprom for more than $13 billion.
Key Point: His investment vehicle Cyprus-registered Ervington Investments Limited does NOT do small deals. When you are worth $9 billion you need $billion deals to move the needle.
So why does Abramovich mess with a (relatively) puny $40M market cap company like Propell? His two homes in NYC (he is buying the house in the middle too) and his mega-yacht Eclipse investments make the PROP deal look like pocket change.
As Oilprice.com reported, “This will not merely be a $15 million investment,” said one source close to the deal. “You have to read between the lines here. Abramovich doesn’t do anything small. He’ll get the infrastructure in place and then look to acquire a significant position in the US oil sector at today’s fire sale prices. We’ll probably be looking at hundreds of millions in investment at the end of the day.”
For Abramovich, this deal is not merely a whim: The billionaire is a strategic investor who has quite profitably invested in a number of energy technology companies. Abramovich—again through Ervington--is the largest shareholder in AIM-listed AFC Energy , which is working to commercialize clean fuel cell technology. He has also invested in Oxford Catalysts, which is close to commercializing the GreenSky London Project to supply renewable jet fuel made from London’s household waste. The system is to be used by British Airways to create fuel for its planes. London-based Weedingtech—which makes herbicide-free weed killer—and AIM-listed Clean Air Power are also among Abramovich’s strategic energy investments.
As Oilvoice.com reports this “ Propell investment may be his most strategic—on two fronts.
On the first front, we have increasing controversy surrounding fracking in the US.
While Denton, for instance, is just a small town and the ban on fracking is only within the city limits, this small-town vote has much larger implications. This was where the shale revolution kicked off, and banning fracking here could snowball and empower other anti-fracking movements and efforts.
The state of California is also gearing up for stringent new regulations that are set to take effect in July. Plasma Pulse Technology foregoes toxic chemicals and harnesses plasma pulses that would once have been reminiscent of science fiction weaponry. It may indeed be a weapon of sorts—one that could bring the industry and environmentalists together finally."
PROP’s Plasma Pulse Technology (PPT) is deemed to be an environmentally friendly way to clear clogging sedimentation from well drainage areas to allow the oil and gas to flow. The technology uses vibrations, or electrically generated plasma impulses to reduce viscosity, increase permeability and improve the flow of oil and gas to the surface for extraction.
And this is where we find the ‘second front’: The Plasma Pulse technology is not only designed to be environmentally friendly; it is also designed to increase production and reduce.
As reported by PROP the average increase in production for the initial 27 US wells treated with plasma pulse technology is 295%. The company is also reportedly working versions of its plasma pulse tool for horizontal shale wells and much shallower water wells as well.
Abramovich will be getting in very early in this game, which would allow him—for instance--to comply with California’s new anti-fracking bill and its tight restrictions on acid washing for injector wells. The regulations will have a profound effect on key producers in the area, such as Chevron Corp. (NYSE:CVX), ExxonMobil (NYSE: XOM) and Occidental Petroleum (NYSE:OXY), who will have to go through a long and costly permit process for each individual acid wash procedure.
If they employ PROP’s plasma pulse technology, however, they comply with the water-injector cleaning restrictions that kick in July 1. In California, PROP has reported that multiple major oil and gas companies are already paying $20,000 a pop for PPT pilot tests.
Bottom-line: when Abramovich makes a new investment, everyone pays attention. Many will be asking why a Russian is investing in this Houston-based technology. The answer is simple and all about the bottom line: as OilPrice.com reports, “This ‘clean’ fracking technology could storm the market. Abramovich thinks so, and he has been a wildly successful investor in the oil patch.”
How much value can be created with this Abramovich investment for PROP shareholders?
My guess is Abramovich will use PROP to amass a very large oil reserve position in the United States that uses Plasma Pulse technology to get 2-3 times MORE oil out of the ground. That is AFTER oil prices return to >$60…stay tuned.
Can Abramovich’s team and money turn PROP into a $billion oil company?
I would not bet against them…that is for sure.
Read our latest research report and the Propell investor presentation.
Founder and Editor-in-Chief for NBTEquitiesResearch.com. Contributor and Anchor for the Fox News Channel and Fox Business Network 2000-2013. Chairman & CEO of NBT Group, Inc., a boutique private capital investment bank and investor relations organization.
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