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Quadrise Fuel takes 16.4% stakes in two Canadian energy sector businesses

Quadrise Fuels International (LON:QFI) said that resulting from its 19% holding in Quadrise Canada Corp (QCC), it now holds a 16.4% interest in each of two new Canadian energy sector companies, Sparky Energy Corp and Porient Fuel Corp, becoming the largest single shareholder in these companies.

At the recent annual general meeting in Calgary QCC shareholders approved the plan of arrangement by which they were allocated shares in the both of new energy sector companies on a pro rata basis in line with its fully diluted holding in QCC. The shareholdings were allocated at no cost to QFI.

Sparky will focus on enhanced heavy oil recovery (EOR) initially in Alberta, in a 50:50 joint venture with a Canadian oil production company which owns primary  heavy oil assets, land, wells and associated facilities in the Lloydminster area. The licensed QCC EOR technology has the potential to increase the percentage of oil recovered from discovered and developed heavy oil reservoirs. According to the tersm of the JV (joint venture), Sparky will participate in the value of the incremental oil production.

Porient will apply QCC derived technology to create Synthetic Fuel Oils from oil sands bitumen and sell this product on the Canadian west coast as marine fuel oil, power station fuel or as high value intermediate feedstock export for Pacific Rim refineries. The company aims to export marine fuels made from Alberta bitumen to the extensive Pacific Rim markets.

Both companies, which intend to raise additional funds in near future, will pay royalties to QCC and will have research support contracts with QCC.

“QFI's 16.4% shareholdings in Sparky and in Porient are significant additions to the QFI asset base with potential for material future value in their own right. Licensing of QCC proprietary technologies and providing related services to these and other companies will also enhance the value of QCC itself,” said chairman of QFI Ian Williams.
QCC's role in the marketplace will now include operating, incubation, licensing, manufacturing and research support to its licensees.

QFI holds 3.68 million shares in QCC.

Back in March, the group announced that pretax losses for the six months ended 31 December 2009 narrowed to £1.87 million from £2.42 million a year earlier, with the figures including non-cash charges for amortisation and impairment of intangible assets of £1.49 million and £2.97 million respectively. Quadrise has no debt and cash reserves of £2.27 million as at 31 December 2009, down from £4.24 million a year earlier. Cash burn excluding project costs remains at £1.5 million per annum.