I’m not against 100,000% stock winners, but I am against finding my pot of gold in a uranium mine seeking to fill the needs of countless nuclear plants that are yet to be built, or perhaps even to be designed. These stock touts emerge whenever new ominous forebodings of global warming are issued. In the perspective of meaningful and lasting stock appreciation, these opportunities are still a long way off, while other equally enticing energy situations are closer at hand offering similar or better potential. One such stock, which I recently became aware of, is a small promising company with a patented technology capable or raising the API of heavy oil, and greatly reducing the sulphur content of high sulphur crude by a factor of 99%, so that it can meet the specs of sweet light crude. What this would mean in terms of stock appreciation is discussed below.
Recoverable oil reserves are estimated at 1.2 trillion barrels of oil (TBO), of which 400 billion (BBO) consists of lite or sweet oil, which is currently being depleted at the rate of 80 million barrels per day, or 29 million barrels per year. This is the oil that is refined for use as gasoline, diesel and jet fuel. The remainder of the world’s estimated reserves, or 900 BBO, exists in the form of heavy oil and high sulfur oil. Heavy oil with a low sulfur content (>1%) is mainly found in Africa, while heavy oil with a high (1% to 3.5%) sulfur content is to be found mainly in North & South America and the Middle East.
There are four grades of oil: (1) Very light oil – volatile and easily transported through pipelines. It is the type oil used for gasoline, jet fuel and kerosene. (2) Light oil – slightly more viscous, in the form of diesel, domestic fuels and marine gas. (3) Medium crude – the most highly produced crude. Low volatility. The oil involved in the highly publicized oil spills. (4) Heavy fuel oils – heavy crude, bunker oil, intermediate and heavy marine. Toxic. The sulfur content of these oils may vary from 0.5% (light) and from 0.5% to 3.5%, or more (heavy), and is responsible for much of our air pollution and is also corrosive. To summarize, light crude has an API of 31 or more, medium crude measures between 22-31 API, heavy is anything between 10-22 and extra heavy, such as bitumen and the Canadian and Venezuelan oil sands measures under 10 and has to be diluted before processing. The world’s largest reserves are considered heavy oil, which hold the huge resources for the future. Because it is a thick crude, viscous with a low API rating, it is difficult to process with conventional refining methods and therefore sells at a significantly lower price.
This brief overview brings us to Genoil (GNOLF), a small R & D company, which was spun off from a medium sized Canadian exploration and development company approximately ten to fifteen years ago. It boasts of an advanced technology for heavy oil processing called the Genoil Hydrogen Upgrader, or GHU, which employs hydrogen for the upgrading and desulfurization of heavy oil. It developed and tested the GHU on its 146 acre property in Canada, where it operates a ten barrel per day pilot plant, which the company states has been successful in greatly lowering the API of heavy oil, as well as reducing sulfur content to under 0.5%. This, in itself, would be remarkable, as the refining of heavy oil is very costly, as well as being one of the world’s major sources of air pollution due to its CO2 emissions.
As Genoil has not yet built a full scale operational facility, I felt impelled to dig deeper, because at a current price under $0.10/share, this appeared to have the trappings of what could be a true multi-multi banger, and I never hear of those too often. I will now disclose what I learned and you can make your own determination.
(1) Genoil has entered into a joint venture, Genoil Emirates, with Sheikh Sultan bin Khalifa’s SBK Corp of Abu Dhabi. The Sheikh is the eldest son of Abu Dhabi’s ruler, Khalifa Bin Zayed Al Nahyan. Abu Dhabi produces in excess of 2.5 million barrels of oil per day.
(2) Genol and O.W. Bunker of Denmark have signed an MOU for the building of an upgrader for which Bunker will supply the feed and has agreed to purchase a minimum of one million tons of low-sulfur crude per year from Genoil at a set price.
(3) Technip Stone & Webster, I am told, will be doing EPC work for the company and will warrant its technology, but I still have to find out what this refers to.
(4) On May 8, 2014, Slavo Scepanovic joined the company as Sr V-P of Engineering. Previously, for 6 years, he was 1st Deputy Director & Director Advisor of the Optima Group.
I cannot believe that these events would have occurred without a high degree of optimism and assurance with respect to Genoil’s technology on the part of engineers and executives with far more knowledge and experience regarding GHU’s effectiveness on heavy oil than I.
Genoil has 400,000,000 shs I & O and sells at a price in the three to seven cent range, giving the company a valuation of around $15-25 million. If only a portion of its potential is realized, this could be my winner of the decade. If they manage to put a full scale plant into operation within the next couple of years, there’s no doubt the line will form to the right. This potential seems far more reasonable and feasible than toying with uranium stocks in the hopes that a multi billion dollar nuclear plant will be coming on stream in the foreseeable future. At least it seems so to me.
As I am a disciple of Travis, I have not started to accumulate a position prior to disclosing this to the Gumshoe readership, but I intend to remedy this very shortly. As I learn more of what is happening with Genoil (GNOLF), the news will be disclosed here, if it’s not on the stock ticker first.