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Monday, December 5, 2022

Petroteq Energy Inc (OTCMKTS: PQEFF) Steady March Northbound as Investors Eye Viston United Swiss AG’s Tender Offer of $0.58 USD Now Set to Expire April 14

Petroteq Energy Inc (OTCMKTS: PQEFF) continues its steady march northbound making higher highs and higher lows as shareholders await the tender offer from Viston United Swiss AG of $0.58 USD to close. Shortly after the board voted to recommended Shareholders ACCEPT the Viston Offer and TENDER their Common Shares, Petroteq reported it had received from Canadian legal counsel to Viston Swiss United AG, a copy of an advice issued by Royal Bank of Scotland on February 7, 2022 confirming that UNIExpress Investment Holdings PLC , as the sending bank acting on behalf of its client Viston, is holding cash funds in the amount of 420,000,000EUR in favor of the receiving bank’s client, Kingsdale Advisors. Kingsdale Advisors has been retained by Viston as the Information Agent and Depository in connection with the tender offer. The offer was set to expire on February 28, but has been extended until April 15. 

Viston United Swiss AG offer of $0.58 USD per common share represents a significant premium over PQEFF current price which has been moving northbound from under $0.20 to mid $0.30s since Viston’s offer. Peak Value IP’s valuation study of Petroteq’s CORT indicated a fair market value (FMV) ranging from $229 Million to $326 Million. The analysis of investment value (IV) ranging from $598 Million to $850 Million. The analysis has also considered a proposed production facility to be operated in Utah that will produce 5,000 barrels of oil per day. Petroteq also completed a third-party economic evaluation report dated February 10, in relation to sands anticipated to be produced as by-products of petroleum products from oil sands at the Asphalt Ridge NW Leases in Uintah County, Utah. The Report is on the “Indago Lease,” which consists of approximately 3,458 acres of oil sands leases that the Company recently acquired from Valkor, LLC in exchange for the Company’s Temple Mountain Leases. Broadlands noted that an extraction plant producing 5,000 bpd is estimated by Petroteq to be capable of yielding 6,000 tons of sand per day or 1,860,000 tons per year. The cash flow analysis shows potential economic benefit in the base case of a Net Present Value (NPV) of $1,285, $602, and $341 million, respectively. The base case cash flow used a selling price of $40 per ton for the unprocessed dry, clean by-product sand.

Petroteq Energy Inc (OTCMKTS: PQEFF) is a Canadian-registered holding company with its executive offices located in Toronto, Ontario, Canada, and Los Angeles, California. Petroteq is engaged in the development and implementation of its patented, proprietary environmentally friendly heavy oil processing and extraction technologies called Petroteq’s environmentally-friendly Clean Oil Recovery Technology (“CORT”). CORT’s produces zero greenhouse gas, zero waste and requires no high temperatures. The Company is currently focused on developing its oil sands resources and expanding production capacity at its Facility at Asphalt Ridge, Utah. Petroteq believes that its technology can produce a relatively sweet heavy crude oil from deposits of oil sands at Asphalt Ridge without requiring the use of water, and therefore without generating wastewater which would otherwise require the use of other treatment or disposal facilities which could be harmful to the environment. Petroteq’s process is intended to be a more environmentally friendly extraction technology that leaves clean residual sand that can be sold or returned to the environment, without the use of tailings ponds or further remediation. The Company owns an intellectual property portfolio of patents covering its technology in the US, Canada & Russia. 

CORT is the proprietary technology behind Petroteq’s remediation energy efforts. The versatile technology can be applied to both water-wet deposits and oil-wet deposits — outputting high-quality oil and clean sand. Furthermore, CORT possesses significant environmental advantages over historical production methods. The technology enables production from oil sands without using water during the extraction process. As a result, neither wastewater nor tailings ponds are created. It’s a closed-loop system, which means that over 95% of the solvents used in the extraction process are recovered, recycled, and reused while roughly 5% remain within the oil that is extracted. While CORT is currently being used for production from oil sands, the technology is versatile enough to remediate a variety of natural resources. 

The current assets consist of Petroteq’s active patents, patent applications, and associated trade secrets and know how, related to the extraction of crude oil from oil sands. The Peak Value valuation conclusions in this report are based on accepted practices using fair market value (FMV) and investment value (IV) standards, while utilizing widely recognized and internationally accepted methods valuing business enterprise, such as Cash, Market and Income Approaches. Peak Value utilized data provided by Petroteq, along with public information and industry knowledge of intellectual property licensing. In addition, Peak Value reviewed the historical costs as well as expected future revenue as it relates to the assets. This effort involved a team of financial advisory experts who have a broad experience valuing asset of this nature. 

In relation to the offer management initiated a Peak Value IP’s valuation study of Petroteq’s CORT indicated a fair market value (FMV) ranging from $229 Million to $326 Million. The analysis of investment value (IV) ranging from $598 Million to $850 Million. The analysis has also considered a proposed production facility to be operated in Utah that will produce 5,000 barrels of oil per day. The valuation also encompasses the value of the separated sand as salable to third-parties, providing additional value to the IP beyond the market of oil. The deployment of the IP into multiple oil sand fields is a critical milestone in achieving Petroteq’s goals for IP adoption. 

Petroteqalso also completed a third-party economic evaluation report dated February 10, in relation to sands anticipated to be produced as by-products of petroleum products from oil sands at the Asphalt Ridge NW Leases in Uintah County, Utah. The Report is on the “Indago Lease,” which consists of approximately 3,458 acres of oil sands leases that the Company recently acquired from Valkor, LLC in exchange for the Company’s Temple Mountain Leases. Broadlands noted that an extraction plant producing 5,000 bpd is estimated by Petroteq to be capable of yielding 6,000 tons of sand per day or 1,860,000 tons per year. The cash flow analysis show potential economic benefit in the base case of a Net Present Value (NPV) of $1,285, $602, and $341 million, respectively. The base case cash flow used a selling price of $40 per ton for the unprocessed dry, clean by-product sand  

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In October Viston United Swiss AG tendered a C$0.74 in cash per common share offer to buyout the Company. The offer represents a premium of 279% over the most recent TSX-V closing price. The Offer to Purchase and Circular and related documents were mailed to Petroteq shareholders on October 25, 2021 and the Offer commenced the same day. Under the terms of the Offer, Shareholders will receive C$0.74 in cash for each Common Share. The Offer is open for acceptance until 5:00 p.m. (Toronto time) on February 7, 2022, unless the Offer is extended, accelerated or withdrawn by the Offeror in accordance with its terms. Viston United Swiss AG believes that the Offer is compelling, and represents a clearly superior alternative to continuing on the course set by the current Petroteq board of directors and management team. 

PQEFF engaged Haywood Securities Inc. on November 6, 2021 to act as financial advisor to Petroteq and the Petroteq Board in order to assist the Petroteq Board in advising Shareholders whether to reject or accept the Viston Offer‎. Haywood commenced its review by conducting due diligence in respect of Petroteq to assist in assessing its valuation, in considering any potential strategic alternatives, and in determining whether the Cash Consideration proposed by the Viston Offer is reasonable. On December 10, 2021, Haywood presented its findings and analysis to the Petroteq Board, and based on a review of a number of strategic alternatives, its valuation of Petroteq, and any potential upside in continuing to operate and grow Petroteq’s business organically, recommended that the Viston Offer be accepted. Among the reasons discussed, Haywood indicated that the Viston Offer would result in immediate value creation for Shareholders, is at a significant premium to the market price, reduces inherent business risks, and provides for relative certainty of outcome.  

Shortly after the board voted to recommended Shareholders ACCEPT the Viston Offer and TENDER their Common Shares, Petroteq Energy made some important changes to its BOD, announcing the appointment of Michael Hopkinson and Robert Chenery ‎to its board of directors, and the appointment of Vladimir Podlipsky as the Interim Chief Executive Officer, and Michael Hopkinson as the Chief Financial Officer. R G Bailey retired as the Interim Chief Executive Officer and a director of the Company and will remain as a valuable resource to the Company as a consultant providing his expertise in the oil and gas industry. In addition, Ron Cook resigned as the Chief Financial Officer of the Company and will remain with the Company as an employee/consultant assisting with accounting and financial. 

On February 10, Petroteq reported it had received from Canadian legal counsel to Viston Swiss United AG, a copy of an advice issued by Royal Bank of Scotland on February 7, 2022 confirming that UNIExpress Investment Holdings PLC , as the sending bank acting on behalf of its client Viston, is holding cash funds in the amount of 420,000,000EUR in favor of the receiving bank’s client, Kingsdale Advisors. Kingsdale Advisors has been retained by Viston as the Information Agent and Depository in connection with the tender offer. The offer was set to expire on February 28, but has been extended until April 15. 

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Petroteq Energy Inc continues its steady march northbound making higher highs and higher lows as shareholders await the tender offer from Viston United Swiss AG of $0.58 USD to close. Shortly after the board voted to recommended Shareholders ACCEPT the Viston Offer and TENDER their Common Shares, Petroteq reported it had received from Canadian legal counsel to Viston Swiss United AG, a copy of an advice issued by Royal Bank of Scotland on February 7, 2022 confirming that UNIExpress Investment Holdings PLC , as the sending bank acting on behalf of its client Viston, is holding cash funds in the amount of 420,000,000EUR in favor of the receiving bank’s client, Kingsdale Advisors. Kingsdale Advisors has been retained by Viston as the Information Agent and Depository in connection with the tender offer. The offer was set to expire on February 28, but has been extended until April 15. Viston United Swiss AG offer of $0.58 USD per common share represents a significant premium over PQEFF current price which has been moving northbound from under $0.20 to mid $0.30s since Viston’s offer. Peak Value IP’s valuation study of Petroteq’s CORT indicated a fair market value (FMV) ranging from $229 Million to $326 Million. The analysis of investment value (IV) ranging from $598 Million to $850 Million. The analysis has also considered a proposed production facility to be operated in Utah that will produce 5,000 barrels of oil per day. Petroteq also completed a third-party economic evaluation report dated February 10, in relation to sands anticipated to be produced as by-products of petroleum products from oil sands at the Asphalt Ridge NW Leases in Uintah County, Utah. The Report is on the “Indago Lease,” which consists of approximately 3,458 acres of oil sands leases that the Company recently acquired from Valkor, LLC in exchange for the Company’s Temple Mountain Leases. Broadlands noted that an extraction plant producing 5,000 bpd is estimated by Petroteq to be capable of yielding 6,000 tons of sand per day or 1,860,000 tons per year. The cash flow analysis shows potential economic benefit in the base case of a Net Present Value (NPV) of $1,285, $602, and $341 million, respectively. The base case cash flow used a selling price of $40 per ton for the unprocessed dry, clean by-product sand. We will be updating on PQEFF when more details emerge so make sure you are subscribed to Microcapdaily so you know what’s going on with PQEFF.

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Disclosure: we hold no position in PQEFF either long or short and we have not been compensated for this article.

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