Petroteq issues shares to insider, dilutes the common stock again

[Jan van Eck + 7,558]

It looks like Petroteq, that oil-sands mining and extraction company using solvents instead of steam to separate the heavy oil from the sand material it is trapped in, in Utah, USA, has issued a ton of new equity at share prices running at $0.19 a share, plus warrants at 35 cents for additional common shares.  The Company has also converted some debt into equity for shares (at the nineteen cent level).   Now what this means is that the previous investors, who bought shares at much higher prices up to $37.20 in November 2014, are heavily diluted to the point they will never, ever, see their investment back.  They are effectively wiped out. 

The man orchestrating these new stock issues is our old friend Mr. Blyumkin, the Ukrainian oil distributor (wholesale and retail) operating in the Ukraine.  Is this a "pump and dump"?  That is not clear.  What does come out of this is that Mr. Blyumkin has now effectively diluted the original investors to one-half of one percent of their purchase investment!   Yup, you buy the shares and not 95%, not 99%, but dilution to one two-hundredth of your capital. The entire new mass of old stock plus new stock, plus all the warrants, will have to increase two-hundred-fold before you break even.  Is that ever going to happen?   Well, you just might hit the lottery, too, but those odds are 270 million to one. 

I am not impressed with this turn of events.  On the surface, it smacks of insider dealing, and abuse of outside investors, both of which are not very nice.  Stock buyers beware.  A heavily diluted stock pool is not a good sign. 

https://ir.petroteq.energy/press-releases/detail/320

[ceo_energemsier + 1,818]

5 hours ago, Jan van Eck said:

It looks like Petroteq, that oil-sands mining and extraction company using solvents instead of steam to separate the heavy oil from the sand material it is trapped in, in Utah, USA, has issued a ton of new equity at share prices running at $0.19 a share, plus warrants at 35 cents for additional common shares.  The Company has also converted some debt into equity for shares (at the nineteen cent level).   Now what this means is that the previous investors, who bought shares at much higher prices up to $37.20 in November 2014, are heavily diluted to the point they will never, ever, see their investment back.  They are effectively wiped out. 

The man orchestrating these new stock issues is our old friend Mr. Blyumkin, the Ukrainian oil distributor (wholesale and retail) operating in the Ukraine.  Is this a "pump and dump"?  That is not clear.  What does come out of this is that Mr. Blyumkin has now effectively diluted the original investors to one-half of one percent of their purchase investment!   Yup, you buy the shares and not 95%, not 99%, but dilution to one two-hundredth of your capital. The entire new mass of old stock plus new stock, plus all the warrants, will have to increase two-hundred-fold before you break even.  Is that ever going to happen?   Well, you just might hit the lottery, too, but those odds are 270 million to one. 

I am not impressed with this turn of events.  On the surface, it smacks of insider dealing, and abuse of outside investors, both of which are not very nice.  Stock buyers beware.  A heavily diluted stock pool is not a good sign. 

https://ir.petroteq.energy/press-releases/detail/320

From some technical experience in these kinds of heavy oil etc investments and engagements for over 20+ years, I have a feeling that their proprietary solvent isnt doing its job.

[Ward Smith + 6,615]

I told you I'd had dealings with these folks. Didn't want to rain on your parade Jan but, yeah, pump and dump indeed. 

Now if you want to look at a real company doing real work with solvents, look at Cenovus. However my inside info on them is pretty similar in that they're not recovering more than 60% of their solvent. They are adding the solvent to their steam and dramatically reducing their SOR, which is a good thing. The bad thing is the cost of unrecoverable solvent. 

[Jan van Eck + 7,558]

Just now, Ward Smith said:

I told you I'd had dealings with these folks. Didn't want to rain on your parade Jan but, yeah, pump and dump indeed.

Ward, you may do parade-raining all day long, fine by me.  If you have guys in the past buying stock over $35 a share and then you, as the Company Director, go sell yourself a ton of shares at nineteen cents, and another ton of shares with warrants at 35 cents, then you are not looking out for the shareholders, you are diluting their ownership interest to put money into your pockets (and keep control forever), which is not very nice, and is opposed to  the concept of shareholder capitalism.  

The representation seems to be made that, since the Company is so short of funds it needs to raise whatever it can, however it can, that therefore self-dealing is acceptable, falls short.  There is no independent effort to raise funds, for example by private placement.  The Company also spent a ton of cash on those oil leases.  Did you really need to go do that, at this stage of the Company's development?  

If you have this new technology and you can really make it work, then go demonstrate that to the world and let outside investors buy in.  To be some pig and hog these shares at 19 cents is not nice, in my (outsider) view.  I sure would not do that.  Very bad Form, as they say in England. 

[ceo_energemsier + 1,818]

7 minutes ago, Jan van Eck said:

Ward, you may do parade-raining all day long, fine by me.  If you have guys in the past buying stock over $35 a share and then you, as the Company Director, go sell yourself a ton of shares at nineteen cents, and another ton of shares with warrants at 35 cents, then you are not looking out for the shareholders, you are diluting their ownership interest to put money into your pockets (and keep control forever), which is not very nice, and is opposed to  the concept of shareholder capitalism.  

The representation seems to be made that, since the Company is so short of funds it needs to raise whatever it can, however it can, that therefore self-dealing is acceptable, falls short.  There is no independent effort to raise funds, for example by private placement.  The Company also spent a ton of cash on those oil leases.  Did you really need to go do that, at this stage of the Company's development?  

If you have this new technology and you can really make it work, then go demonstrate that to the world and let outside investors buy in.  To be some pig and hog these shares at 19 cents is not nice, in my (outsider) view.  I sure would not do that.  Very bad Form, as they say in England. 

I think the buying up the leases was a way to prop up their so called "assets" . It was totally unnecessary to lease all that, they could have leased a small acreage and obtained options on the rest or obtained options or had the mineral owners sell them a certain amount of the material under certain terms till their tech was proven out and then they could have leased additional to show commercial production.

They could have tried the PE route but I dont think that it would have worked because of their solvent problem. The PE investors would have seen the results.

[Jan van Eck + 7,558]

2 minutes ago, ceo_energemsier said:

They could have tried the PE route but I dont think that it would have worked because of their solvent problem. The PE investors would have seen the results.

Yet Petroteq seems to have found a licensee for their technology willing to put up some big bucks for that license of the proprietary technology.   I am not convinced that Ward Smith (posted above) is fully accurate when he indicates, or at least implies, that the solvent approach results in substantial loss of solvent material, and its recovery is likely so pricey that it makes the whole approach unfeasible.  I have looked at the patents and it seems to me that these technical guys, who are Canadian oil engineers out of the Suncor oilpatch in Alberta, have got an intriguing approach.  Let's assume that the engineers actually have figured it out.  At that point the costs of the operation would be quite a bit lower than the steam approach done by Suncor.  Now, granted there are differences in the quality of the oil, and possibly Utah oilsands has an advantage also.  Still and all, there is an awful lot of oil locked up in those sands, and trying new approaches is the name of the game. 

I would not be closing the doors on the solvent approach just yet.  But I must say the giving away of vast blocks of stock to the Director is Not Good Form. 

[Ward Smith + 6,615]

21 minutes ago, Jan van Eck said:

Ward, you may do parade-raining all day long, fine by me.  If you have guys in the past buying stock over $35 a share and then you, as the Company Director, go sell yourself a ton of shares at nineteen cents, and another ton of shares with warrants at 35 cents, then you are not looking out for the shareholders, you are diluting their ownership interest to put money into your pockets (and keep control forever), which is not very nice, and is opposed to  the concept of shareholder capitalism.  

The representation seems to be made that, since the Company is so short of funds it needs to raise whatever it can, however it can, that therefore self-dealing is acceptable, falls short.  There is no independent effort to raise funds, for example by private placement.  The Company also spent a ton of cash on those oil leases.  Did you really need to go do that, at this stage of the Company's development?  

If you have this new technology and you can really make it work, then go demonstrate that to the world and let outside investors buy in.  To be some pig and hog these shares at 19 cents is not nice, in my (outsider) view.  I sure would not do that.  Very bad Form, as they say in England. 

A CEO friend of mine in the gold industry explained years ago to me that there was two ways to make money in gold. One was to actually do the hard work of acquiring acreage, mine it and get it to market. The other, easier way was to mine the public. He told me this in sadness, because, fool that he was, he thought mining the ore was the responsible thing to do…

[Ward Smith + 6,615]

4 minutes ago, Jan van Eck said:

Yet Petroteq seems to have found a licensee for their technology willing to put up some big bucks for that license of the proprietary technology.   I am not convinced that Ward Smith (posted above) is fully accurate when he indicates, or at least implies, that the solvent approach results in substantial loss of solvent material, and its recovery is likely so pricey that it makes the whole approach unfeasible.  I have looked at the patents and it seems to me that these technical guys, who are Canadian oil engineers out of the Suncor oilpatch in Alberta, have got an intriguing approach.  Let's assume that the engineers actually have figured it out.  At that point the costs of the operation would be quite a bit lower than the steam approach done by Suncor.  Now, granted there are differences in the quality of the oil, and possibly Utah oilsands has an advantage also.  Still and all, there is an awful lot of oil locked up in those sands, and trying new approaches is the name of the game. 

I would not be closing the doors on the solvent approach just yet.  But I must say the giving away of vast blocks of stock to the Director is Not Good Form. 

Jan I could run the numbers for you, but it's a bit of a nuisance on a mobile device and I don't ever blog on my computers anymore. Suffice to say, patents often make things look easier than they are in practice, and I know because I have several I've written myself. 

Here's a little basic chemical engineering for you. Let's say I have a test tube with tar sands in it and some solvent. I shake it up nice and neat and wait awhile and it magically separates out. Now, what happens when you scale that to thousands of gallons instead of milliliters? How fast, to scale, do you have to "shake it up" to equate to what I did in the lab? 

[Jan van Eck + 7,558]

7 hours ago, Ward Smith said:

Jan I could run the numbers for you, but it's a bit of a nuisance on a mobile device and I don't ever blog on my computers anymore. Suffice to say, patents often make things look easier than they are in practice, and I know because I have several I've written myself. 

Here's a little basic chemical engineering for you. Let's say I have a test tube with tar sands in it and some solvent. I shake it up nice and neat and wait awhile and it magically separates out. Now, what happens when you scale that to thousands of gallons instead of milliliters? How fast, to scale, do you have to "shake it up" to equate to what I did in the lab? 

Hi, Ward, and what you have described is exactly the technical issue faced with uranium enrichment and the use of centrifuges.  The classic solution is to place lots of units in parallel.  The Iranians I recall have several thousand industrial centrifuges running in parallel, in some deep bunker to keep the Americans from blowing them up.  Using an analogous approach, you would have several thousand "shakers,"  all loaded and operated in parallel, in batch segments of ten each.  

Now, the above is just my musing.  When you look at the photos of that Petroteq installation, the one running at a few thousand gallons a day, it seems to use a large horizontal cylinder as some sort of retort. My guess is that the size limits are what can be moved by a road lowboy carrier over the roads, from whatever factory built it. Does the shell rotate?  Or are the contents "shaken up" by some other internal mechanism?  Or do those guys simply load some cannon balls inside to act as stirring sticks?   I dunno.  Rather than let my imagination run wild, let's assume the technical guys, those Canadian engineers on the payroll, have it figured out. So their prototype system works.  If that "shaker" is the limiting factor, why not simply duplicate them in parallel?  If you need a hundred of them in a row, who cares?  As long as it works.  Cheers.

[Ward Smith + 6,615]

6 hours ago, Jan van Eck said:

If that "shaker" is the limiting factor, why not simply duplicate them in parallel?  If you need a hundred of them in a row, who cares?

Now let's say that "shaker" costs $5 million per. Let's say it produces 24 bbls per day. Never minding the fines problem (which will cause refiners to reject your crude), just how profitable are we now? Remember, there's a cost also to dig up those tons of dirt to get to those gallons of tar. By mass figure 8-10% bitumen per ton in Utah's best locations. Remember also that bitumen can't be pipelined so must either be trucked, railed or mixed with diluent, all to sell at roughly what they're getting for Western Canada Select, which is typically $15 or so less than WTI. Oh, and don't forget what the diluent and solvent costs are, and the electrical power. 

Much as I love (some) Canadian engineers, there's no way to make up in volume what you're spending per barrel for product. Now you see why the only real profit is in mining the public. Those leases weren't that expensive, not even orders of magnitude of Permian prices, but at least they have sort of assets they can point to, while they line up the next con. 

[ceo_energemsier + 1,818]

5 minutes ago, Ward Smith said:

Now let's say that "shaker" costs $5 million per. Let's say it produces 24 bbls per day. Never minding the fines problem (which will cause refiners to reject your crude), just how profitable are we now? Remember, there's a cost also to dig up those tons of dirt to get to those gallons of tar. By mass figure 8-10% bitumen per ton in Utah's best locations. Remember also that bitumen can't be pipelined so must either be trucked, railed or mixed with diluent, all to sell at roughly what they're getting for Western Canada Select, which is typically $15 or so less than WTI. Oh, and don't forget what the diluent and solvent costs are, and the electrical power. 

Much as I love (some) Canadian engineers, there's no way to make up in volume what you're spending per barrel for product. Now you see why the only real profit is in mining the public. Those leases weren't that expensive, not even orders of magnitude of Permian prices, but at least they have sort of assets they can point to, while they line up the next con. 

Thats exactly what in my opinion Petroteq had in mind when they bought these "leases", used the leases as a prop and use them to prop up their value, that they have tons of soaked dirt in the ground.

[ceo_energemsier + 1,818]

50 minutes ago, Ward Smith said:

Now let's say that "shaker" costs $5 million per. Let's say it produces 24 bbls per day. Never minding the fines problem (which will cause refiners to reject your crude), just how profitable are we now? Remember, there's a cost also to dig up those tons of dirt to get to those gallons of tar. By mass figure 8-10% bitumen per ton in Utah's best locations. Remember also that bitumen can't be pipelined so must either be trucked, railed or mixed with diluent, all to sell at roughly what they're getting for Western Canada Select, which is typically $15 or so less than WTI. Oh, and don't forget what the diluent and solvent costs are, and the electrical power. 

Much as I love (some) Canadian engineers, there's no way to make up in volume what you're spending per barrel for product. Now you see why the only real profit is in mining the public. Those leases weren't that expensive, not even orders of magnitude of Permian prices, but at least they have sort of assets they can point to, while they line up the next con. 

I am evaluating a new potential tech , solvent based for removing (eliminating) sulphur and upgrading "dirtier" fuels and crude oils to zero or low sulphur and cleaner fuels . So far the results are very good, awaiting large scale in line blending results from several tests conducted at tank farms in the US, EU , Singapore, China , India, Brazil, UAE, KSA and Japan, very large scale tests.

97% of the solvent is recovered. This was developed by 2 chem engineers, 1 from India and 1 from Houston who worked together.

 

 

[ceo_energemsier + 1,818]

14 hours ago, Jan van Eck said:

Yet Petroteq seems to have found a licensee for their technology willing to put up some big bucks for that license of the proprietary technology.   I am not convinced that Ward Smith (posted above) is fully accurate when he indicates, or at least implies, that the solvent approach results in substantial loss of solvent material, and its recovery is likely so pricey that it makes the whole approach unfeasible.  I have looked at the patents and it seems to me that these technical guys, who are Canadian oil engineers out of the Suncor oilpatch in Alberta, have got an intriguing approach.  Let's assume that the engineers actually have figured it out.  At that point the costs of the operation would be quite a bit lower than the steam approach done by Suncor.  Now, granted there are differences in the quality of the oil, and possibly Utah oilsands has an advantage also.  Still and all, there is an awful lot of oil locked up in those sands, and trying new approaches is the name of the game. 

I would not be closing the doors on the solvent approach just yet.  But I must say the giving away of vast blocks of stock to the Director is Not Good Form. 

The tech may very well work but the costs for the solvent and other related processes may not be feasible, maybe the licensee could make it work with the funds and be able to scale it and also solve some issues with the tech of the solvent if possible and the licensee has the technical capability to take on this task.

 

[Enthalpic + 1,496]

On 7/8/2019 at 8:20 AM, Jan van Eck said:

It looks like Petroteq, that oil-sands mining and extraction company using solvents instead of steam to separate the heavy oil from the sand material it is trapped in, in Utah, USA, has issued a ton of new equity at share prices running at $0.19 a share, plus warrants at 35 cents for additional common shares.  The Company has also converted some debt into equity for shares (at the nineteen cent level).   Now what this means is that the previous investors, who bought shares at much higher prices up to $37.20 in November 2014, are heavily diluted to the point they will never, ever, see their investment back.  They are effectively wiped out. 

The man orchestrating these new stock issues is our old friend Mr. Blyumkin, the Ukrainian oil distributor (wholesale and retail) operating in the Ukraine.  Is this a "pump and dump"?  That is not clear.  What does come out of this is that Mr. Blyumkin has now effectively diluted the original investors to one-half of one percent of their purchase investment!   Yup, you buy the shares and not 95%, not 99%, but dilution to one two-hundredth of your capital. The entire new mass of old stock plus new stock, plus all the warrants, will have to increase two-hundred-fold before you break even.  Is that ever going to happen?   Well, you just might hit the lottery, too, but those odds are 270 million to one. 

I am not impressed with this turn of events.  On the surface, it smacks of insider dealing, and abuse of outside investors, both of which are not very nice.  Stock buyers beware.  A heavily diluted stock pool is not a good sign. 

https://ir.petroteq.energy/press-releases/detail/320

Hmm, I might buy some of that cheap stuff as a higher than normal risk investment (like most everything on the venture exchange).

Private placements feel bad when you bought at market rates but sometimes the company is in dire need of cash to keep operating.  A greatly devalued share is better an a worthless one.  

PQE has a market cap of only $35,583,596 CND which is nothing in the oil sands field - they are broke.

Compare that to like Suncor ($66,429,788,254) or even the small players without refinery access (MEG:  $1,609,071,654 BTE:  $1,057,772,161).

Ideally, a big player buys them (and me) out at a big share premium.

 

[Jan van Eck + 7,558]

2 hours ago, Enthalpic said:

Private placements feel bad when you bought at market rates but sometimes the company is in dire need of cash to keep operating.  A greatly devalued share is better an a worthless one.  

Not really.  To understand this, I invite you to read, study, and ponder the fat lawsuit filed in the US District Court for the Eastern District of New York  (that is Manhattan), SIlverberg v. Dryships and George Eonomou, et al.  It runs to 121 pages, and here is a pdf link:

http://securities.stanford.edu/filings-documents/1062/DI00_02/2018629_r01c_17CV04547.pdf

What Economou did was harvest the investor cash by doing a deal with Kalani Investments, then reverse-splitting the stock until the public investor shares were well below one cent on the dollar.  IN these cases, if the principals are so convinced of their ultimate success, they can protect their outside investors by placing their personal cash as a loan to the Company, and then eventually repaying the loan.  That is a lot cleaner than issuing a flood of shares at peanut values.  Offering a $37 stock share to yourself for nineteen cents is not Good Form!

If the principals demonstrate no sterling character, then getting involved will lead you to disaster.  Reverse splits of 7 to 1 will wipe out your investment.  High risk, indeed!

[Enthalpic + 1,496]

2 hours ago, Jan van Eck said:

Not really.  To understand this, I invite you to read, study, and ponder the fat lawsuit filed in the US District Court for the Eastern District of New York  (that is Manhattan), SIlverberg v. Dryships and George Eonomou, et al.  It runs to 121 pages, and here is a pdf link:

http://securities.stanford.edu/filings-documents/1062/DI00_02/2018629_r01c_17CV04547.pdf

What Economou did was harvest the investor cash by doing a deal with Kalani Investments, then reverse-splitting the stock until the public investor shares were well below one cent on the dollar.  IN these cases, if the principals are so convinced of their ultimate success, they can protect their outside investors by placing their personal cash as a loan to the Company, and then eventually repaying the loan.  That is a lot cleaner than issuing a flood of shares at peanut values.  Offering a $37 stock share to yourself for nineteen cents is not Good Form!

If the principals demonstrate no sterling character, then getting involved will lead you to disaster.  Reverse splits of 7 to 1 will wipe out your investment.  High risk, indeed!

Some private placements are not fraud.

I didn't buy any yet, and may not; it's very risky but if it turns around huge reward.