Corporate Presentation - Proactiveinvestors NA...-Frac sand is the industry’s primary proppant,...

LWP Technologies Limited (ASX:LWP) - Developing a Next-Generation, Fly-Ash Based, Proppant

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Corporate Presentation September 2015


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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


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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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50,000,000

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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


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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.


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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


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Proppant Market Annual Consumption

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140

160

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Proppant Market: Total Consumption (billion lbs.)

Sand Ceramic Resin Coat

135.5 billion

lbs.


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2014

Ceramic Proppant Consumption (Total consumption billion lbs.)

Ceramic Proppant Consumption

2009-2014 CAGR = 25.06% 2004-2014 CAGR = 18.82%


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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


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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

4,000 3,000 1,500

600 3,500

2,000 800

300

1,500 700

150

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100

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2K 4K 6K 8K

Co

nd

uct

ivit

y (m

d-f

t)

Closure Stress

Conductivity Comparison

20/40 Tier 1 20/40 Tier 2 20/40 "Fit-for-Purpose"



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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


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LWP Flyash Proppants will become the

dominant Ceramic Proppant and the

Standard for the Industry

LWP’s Vision


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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


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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


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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


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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.


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- 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


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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


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- 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


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- 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


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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.


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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]

mailto:[email protected]


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Appendix


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Oil & Gas Rigs and Output - Bakken


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2025

$/b

bl

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

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North America Rig Count

Rig Count

*Source: World Bank


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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


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LWP Share Volume at Milestone Events


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Coal Fired Power Process and Fly Ash Generation

Corporate Presentation - Proactiveinvestors NA...-Frac sand is the industry’s primary proppant,...

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Transcript of Corporate Presentation - Proactiveinvestors NA...-Frac sand is the industry’s primary proppant,...