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The next generation in proppants

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Publicada em

Objective Capital's Proppants Investment Forum
Siegfried Koenig, LWP Technologies
City of London - April 21, 2016

Publicada em: Economia e finanças
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The next generation in proppants

  1. 1. PROPPANTS INVESTMENTPROPPANTS INVESTMENT FORUM The next generation in proppants Siegfried Koenig – Executive Chairman, LWP Technologies GRANGE CITY HOTEL, CITY OF LONDON ● THURSDAY, 21 APR 2016 www.ObjectiveCapitalConferences.com
  2. 2. LWP Technologies Limited (ASX:LWP) - Next-Generation Fly-Ash Based Proppants www.lwptech.com 1 MASTER'INVESTOR'PRESENTATION' ' ' 22'APRIL'2016'
  3. 3. LWP Technologies Limited (ASX:LWP) - Next-Generation Fly-Ash Based Proppants www.lwptech.com 2 This%disclaimer%forms%part%of%and%is%incorporated%in%the%accompanying%material% %% The%informa4on%in%this%presenta4on%is%an%overview%and%does%not%include%all%informa4on%necessary%for%investment%decisions.%In%making%investment%decisions,% investors%should%rely%on%their%own%examina4on%of%LWP%Technologies%Limited,%(LWP)%or%consult%with%their%own%legal,%tax,%business%and/or%financial%advisors%in% connec4on%with%any%acquisi4on%of%securi4es.%%This%informa4on%has%been%prepared%in%good%faith%by%LWP.%However,%no%representa4on%or%warranty,%express%or% implied%is%made,%in%rela4on%to%the%accuracy%or%completeness%of%the%informa4on%provided%in%this%document%or%any%other%informa4on%by%LWP%otherwise% provided%to%the%recipients.%Whilst%every%care%has%been%taken%with%prepara4on%of%the%informa4on%contained%in%this%document,%no%responsibility%is%accepted%by% LWP% or% any% of% its% representa4ves,% directors,% partners,% employees% or% professional% advisers% for% any% informa4on% provided% in% this% document% or% otherwise% provided%to%the%recipients%or%for%any%ac4on%taken%by%the%recipients%on%the%basis%of%such%informa4on.%In%par4cular,%no%representa4on%or%warranty%is%given%as% to%the%accuracy,%likelihood%of%achievement%or%reasonableness%of%any%forecasts,%prospects%or%returns%contained%in%the%informa4on.%Such%forecasts,%prospects% or%returns%are%by%their%nature%subject%to%significant%uncertain4es%and%con4ngencies.%Each%recipient%of%the%informa4on%should%make%its%own%independent% assessment%of%the%informa4on%and%take%its%own%independent%professional%advice%in%rela4on%to%the%informa4on%and%any%ac4on%taken%on%the%basis%of%the% informa4on.%% % This%presenta4on%includes%forward%looking%statements%within%the%meaning%of%the%Corpora4ons%Act.%These%forward%looking%statements%may%be%iden4fied%by% words%such%as% may, will,% expect, intend, an4cipate, believe, es4mate, plan, project, could, should, would, con4nue, seek, target, guidance, outlook, forecast %and%other%similar%words.%These%forward%looking%statements%are%based%on%LWP’s%current%objec4ves,%beliefs%and% expecta4ons,%and%they%are%subject%to%significant%risks%and%uncertain4es%that%may%cause%actual%results%and%financial%posi4on%and%4ming%of%certain%events%to% differ%materially%from%those%described%in%the%forward%looking%statements:%failure%of%a%proposed%transac4on%to%be%implemented;%the%challengers%of%cost%and% closing,%integra4ng,%restructuring%and%achieving%an4cipated%synergies;%the%ability%to%retain%key%employees;%and%other%economic,%business,%compe44ve,%and/ or%regulatory%factors%affec4ng%the%business%of%LWP%generally,%including%those%set%forth%in%LWP’s%business%plan,%in%par4cular,%the% Risk%Factors %sec4on.%%Any% forward%looking%statements%speak%only%as%of%the%date%hereof%or%as%of%the%dates%indicated%in%the%statements.%LWP%assumes%no%obliga4on%to%publicly%update%or% supplement%any%forward%looking%statement%to%reflect%actual%results,%changes%in%assump4ons%or%changes%in%other%factors%affec4ng%these%forward%looking% statements%except%as%required%by%law.% © LWP Technologies Limited
  4. 4. LWP Technologies Limited (ASX:LWP) - Next-Generation Fly-Ash Based Proppants www.lwptech.com 3 LWP Technologies (ASX: LWP) is an Australian oil & gas technology firm that has developed a next generation, flyash based, proppant for use in hydraulic fracturing of oil & gas wells globally. KEY'FINANCIALS' ASX%TICKER:%%LWP%% HIGH%LIQUIDITY% MARKET%CAPITALISATION:%$12%MILLION% CASH%:%$5%MILLION% NO%DEBT% $3.5%MILLION%BRISBANE%PLANT:%FULLY%PAID%FOR% R&D%TAX%GRANTS%DUE:% %$600,000%Q2%2016% $700,000%Q3%2016% $1%Million%Q4,%2016% SHARES%ON%ISSUE:%3.92%Bn.% %
  5. 5. LWP Technologies Limited (ASX:LWP) - Next-Generation Fly-Ash Based Proppants www.lwptech.com 4 KEY MILESTONES MARCH 2015: Reverse merger completed MARCH: ' 'Acquired%100%%ownership%of%flyash%proppant%technology%% MAY: % %Target%$400,000%capital%raising%and%SPP%raised%$4.0%million% MAY: ' 'Pilot%plant%construc4on%completed%on%4me%and%on%budget% JUNE: ' 'Engaged%EAS%Advisors%as%US%Corporate%advisor% JULY: ' 'Target%raising%4%million,%raised%$6.6%million%@%1.0%to%1.1%cents/share% JULY: % %Entered%into%60/40%Hallmark%JV%to%acquire%12,000%tpa%factory%in%Pune,%India% AUGUST:' 'Brisbane%pilot%plant%commissioned% DECEMBER: 'Proppants%sent%to%US%Expert%laboratories%for%tes4ng% JANUARY: %Outstanding%Expert%test%results%received% JANUARY: %US%CEO%appointed% FEBRUARY: 'Interna4onal%promo4on%commenced' ONGOING:' 'Discussions%with%several%par4es%for%addi4onal%commercializa4on%and% % % %%%%%%%%%%%%%% % %mone4za4on%opportuni4es.%Produc4on%of%proppants%at%pilot%plant%tes4ng%flyash%proppants% % %from%various%sources.%
  6. 6. LWP Technologies Limited (ASX:LWP) - Next-Generation Fly-Ash Based Proppants www.lwptech.com 5
  7. 7. LWP Technologies Limited (ASX:LWP) - Next-Generation Fly-Ash Based Proppants www.lwptech.com 6 How%much%longer%will%countries%with%a%low%oil%produc4on%cost,%but%a%high% social%cost%con4nue%to%bear%the%pain%of%low%oil%prices?% 0 50 100 150 200 250 300 TotalCostPerBarrel $USD World'Oil'Producers'–'ProducHon'Costs' Countries of Production Cost of Production $USD Social Cost of Oil $USD Current World Oil Price $USD Sources:%Knoema%&%CNBC%
  8. 8. LWP Technologies Limited (ASX:LWP) - Next-Generation Fly-Ash Based Proppants www.lwptech.com 7 CERAMIC'PROPPANT'MARKET'OUTLOOK' •  Will%Global%shale%oil%&%gas%be%an%integral%part%of%global%energy%needs%in%the%future?% •  Will%the%US%retain%its%energy%security%and%not%revert%to%being%%a%major%oil%importer?% •  Will%other%countries%con4nue%to%exploit%their%oil%and%gas%resources?% •  Will% the% oil% and% gas% industry% con4nue% to% seek% the% lowest% cost% /% highest% quality% proppants%to%maximize%yield?% •  Will%the%es4mated%5,000%US%wells%that%have%already%been%drilled,%but%not%completed% [so%the%E&P%companies%don’t%lose%their%land]%get%fracced%some4me%in%the%future?% ' Conclusion:''Future%prospects%for%the%proppant%market%and%LWP’s%proppants%in% par4cular,%are%excellent.%
  9. 9. LWP Technologies Limited (ASX:LWP) - Next-Generation Fly-Ash Based Proppants www.lwptech.com 8 Source:%IEA% RIG'COUNT'HAS'DECREASED,'HOWEVER'OUTPUT'PER' RIG'IS'UP'SIGNIFICANTLY,'AND'INCREASING'
  10. 10. LWP Technologies Limited (ASX:LWP) - Next-Generation Fly-Ash Based Proppants www.lwptech.com 9
  11. 11. LWP Technologies Limited (ASX:LWP) - Next-Generation Fly-Ash Based Proppants www.lwptech.com 10 HISTORICAL'PROPPANT'ANNUAL'MARKET Total Proppant Market Ceramic Proppant Market Courtesy,%Proptester%Kelrick%
  12. 12. LWP Technologies Limited (ASX:LWP) - Next-Generation Fly-Ash Based Proppants www.lwptech.com 11 Source: Marketresearchstore January 2016
  13. 13. LWP Technologies Limited (ASX:LWP) - Next-Generation Fly-Ash Based Proppants www.lwptech.com 12 LWP’s%Flyash%Proppants%will%become%the%dominant% Ceramic%Proppant%and%the%Standard%for%the%Industry.% LWP’S'VISION'
  14. 14. LWP Technologies Limited (ASX:LWP) - Next-Generation Fly-Ash Based Proppants www.lwptech.com 12 LWP’s%Flyash%Proppants%will%become%the%dominant% Ceramic%Proppant%and%the%Standard%for%the%Industry.% LWP’S'VISION'
  15. 15. LWP Technologies Limited (ASX:LWP) - Next-Generation Fly-Ash Based Proppants www.lwptech.com 13 CERAMIC'PROPPANTS' Current'Market' Uses%bauxite%or%kaolin%clay%to%make%proppants% LWP'recycles'fly'ash' LWP%recycles%the%abundantly%available%byqproduct%of%coal%fired%power%plants,%oren%close%to%shale%oil%and%gas%reserves% Benefits'of'using'flyash'to'make'proppants' •  % ≈%40%%stronger%than%kaolin%clay%% •  % ≈%40%%lighter%than%bauxite% •  % Reduced%deployment%costs% •  % Low%(or%no)%transporta4on%and%logis4cs%costs% •  % High%margin%poten4al%due%to%Low%manufacturing%costs%
  16. 16. LWP Technologies Limited (ASX:LWP) - Next-Generation Fly-Ash Based Proppants www.lwptech.com 14 ConducHvity' 14K%30/50%LWP%ceramic%proppants%crushed%at%15K% Conduc4vity%con4nues%arer%crushing%at%high%pressure,%albeit%reduced%
  17. 17. LWP Technologies Limited (ASX:LWP) - Next-Generation Fly-Ash Based Proppants www.lwptech.com 15 ConducHvity' 6K%30/50%Northern%White%sand%crushed%at%7K%% Conduc4vity%considerably%reduced%
  18. 18. LWP Technologies Limited (ASX:LWP) - Next-Generation Fly-Ash Based Proppants www.lwptech.com 16 COMPETING'AS'THE'LOWXCOST'PRODUCER' TransportaHon'and'LogisHcs' %%%%%%%Transport%and%logis4cs%are%major%cost%factors%of%proppants% %%%%%%Proppants%are%oren%transported%thousands%of%kilometers%from%factory%to%consumers% Benefits'of'using'flyash'to'make'proppants' %%%%%%%Fly%ash%is%abundantly%available%near%many%shale%oil%and%gas%resources%% %%%%%%Factories%can%poten4ally%be%located%at%those%power%plants% %%%%%%That%means%Low%(or%no)%transporta4on%and%logis4cs%costs% %%%%%%Low%manufacturing%costs%contributed%by:% •  Low%feedstock%costs%% •  Low%feedstock%prepara4on%costs% •  Low%energy%costs% OPPORTUNITY:%ability%to%compete%on% price%with%mined%frac%sand%
  19. 19. LWP Technologies Limited (ASX:LWP) - Next-Generation Fly-Ash Based Proppants www.lwptech.com 17 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.%
  20. 20. LWP Technologies Limited (ASX:LWP) - Next-Generation Fly-Ash Based Proppants www.lwptech.com 18 US$'1.59'million''''''''''''''''''''''''''''''''US$'1.16'million'
  21. 21. LWP Technologies Limited (ASX:LWP) - Next-Generation Fly-Ash Based Proppants www.lwptech.com 19 PROJECT'PORTFOLIO' Brisbane'Pilot'Plant' •  Located%in%Brisbane,%Eastern%Australia% •  Produc4on%capacity:%3,000%tons/year% •  Construc4on%completed%May%2015,%commissioning%completed%August%2015% •  Produc4on%of%fly%ash%proppants%commenced%scale%up%manufacture%Q3%2015%%
  22. 22. LWP Technologies Limited (ASX:LWP) - Next-Generation Fly-Ash Based Proppants www.lwptech.com 20 HALLMARK'JOINT'VENTURE' Pune •  LWP%has%entered%into%a%jointqventure% (“JV”)%with%Hallmark%Minerals%Pvt%Ltd% to%produce%LWP%flyash%proppants.% •  Produc4on%facility%is%located%in%Pune,% Maharashtra,%India.% •  Capacity:%12,000%tons%per%annum.% •  LWP%holds%a%60%%stake%in%the%JV,% Hallmark%40%.% •  LWP%nego4ated%US$1%million%for%the% technology%license%for%the%State%of% Maharashtra%in%India,%plus%10%%of% gross%revenues%in%royal4es.%
  23. 23. LWP Technologies Limited (ASX:LWP) - Next-Generation Fly-Ash Based Proppants www.lwptech.com 21 BENEFITS'TO'LWP'OF'INDIAN'JOINT'VENTURE' •  Early%costqeffec4ve%entry%to%proppants%market.% •  LWP%proppant%produc4on%requires%15q30%minutes%sintering%4me%@%2300°F.% •  Hallmark%bauxite%proppants%required%2%hours%sintering%4me%@%3200°F.% •  Acquired%60%%interest%in%assets%with%replacement%value%of%US$15%million%for%US$2% million.% •  Commercial%produc4on%allows%showcasing%LWP%technology%to%poten4al%licensees.% •  Opportunity%to%automate%produc4on%to%24/7%opera4ons%to%produce%up%to%20,000% tons%annually.%
  24. 24. LWP Technologies Limited (ASX:LWP) - Next-Generation Fly-Ash Based Proppants www.lwptech.com 22 COMMERCIALISATION'AND'MONETISATION'OPPORTUNITIES' •  Secure% owake% agreements% for% Indian% JV% plant.% On% 20,000% tons/year% produc4on,%% indicated%revenues%US$5.28%million,%EBITDA%US$3%million.% •  License%LWP’s%technology%to%exis4ng%proppant%manufacturers%to%modify%exis4ng%plants.% Poten4al%prospects%in%USA%and%China.% •  One%off%License%fee%=%$2.5%to%$5%million%depending%on%geographical%area.%PLUS%ongoing% royal4es%of%10%%of%revenue.%Indicated%annual%royalty,%100,000%tons/year%plant%=%US4.4% million/year.% •  Partnerships%and/or%Joint%Venture%arrangements%with%interested%par4es%to%build%new% commercial% scale% plants% to% produce% LWP% proppants.% Poten4al% prospects% in% Australia,% Canada,%Middle%East,%US%and%Mexico.% •  LWP%are%also%examining%opportuni4es%that%will%u4lise%our%strong%shareholder%base%and% cash%posi4on.%
  25. 25. LWP Technologies Limited (ASX:LWP) - Next-Generation Fly-Ash Based Proppants www.lwptech.com 23 LWP MANAGEMENT TEAM MANAGEMENT'TEAM% SIEGFRIED'KONIG' DR.'DAVID'HENSON' SEAN'CORBIN' Chairman% Execu4ve%Director% Execu4ve%Director%&%Company% Secretary% Entrepreneur%and%Ecopropp%Coq Founder.%30qyears%experience%in% business%management,%Successful% lis4ng%of%3%startqup%companies%on%ASX.% Global%rela4onships%in%capital%markets% &%public%company%sector.%% Ecopropp%CoqFounder%based%in% Houston%TX,%former%CEO%of%Siemens% conceptual%engineering%services%&% project%manager%at%$3.8%Bn.%Gas%to% liquids%export%facility.%PhD%in% Chemical%Engineering.%% % Sean%has%worked%as%an%execu4ve%at% CEO%and%CFO%level%in%a%wide%range%of% industries%in%various%stages%of%each% business.%% % JIM IRVINE BILL SCHOCH DR. RALPH ENDERLE %%NonqExecu4ve%Director% %%Chief%Financial%Officer% Chief%Scien4st% Founder%and%President%of%%%%%%Fly%Ash% Direct%based%in%Cincinna4,%OH.%% Director%of%subsidiaries%LWP%LLC%&% Epropp%LLC% Extensive%experience%in%accoun4ng,% tax,%audit%and%in%CFO%roles%in%listed% and%unlisted%companies.%% % Principal%of%Drend%Solu4ons%which% provides%conceptual%designs%for% thermal%processing%and%associated% equipment%&%materials%development.% %
  26. 26. LWP Technologies Limited (ASX:LWP) - Next-Generation Fly-Ash Based Proppants www.lwptech.com 24 CONTACT'' % SIEGFRIED'KONIG' CHAIRMAN,%LWP%TECHNOLOGIES%LIMITED% % MOBILE: ''+61%411%111%193%or%+61%424%048%888% US'CELL:' '+1%201%238%9080% EMAIL:'' 'sb.konig@lwptech.com%%

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