Yet another Petroteq debt for equity deal

[Jan van Eck + 7,558]

Petroteq, the outfit incorporated in Toronto and running a tiny oil-extraction-from sand operation in Asphalt Ridge, Utah, is again very short of cash, and has undertaken two new refinance packages.  In the first, it has issued debt for $55,000, with a convertible warrant allowing conversion in one year into 357,000 common shares at 14 cents each.  Looks like the carrot on that deal is that if the shares miraculously rocket to a dollar each, the holder of the new equity will be $357,000 richer  (minus the $55,000 loan, of course).  

The second deal is to convert a trade debt of $6,000 into shares, apparently convincing the trade creditor that something is better than nothing.  This looks to me like an outfit that is really struggling, and needs to keep every penny it can on board, to meet the payroll.  Not a good sign. 

On the other hand, at one time if I remember correctly Bill Gates was paying his secretaries in shares of stock; all are now millionaires, at least.  So, you place your bets and you take your chances!

https://ir.petroteq.energy/press-releases/detail/343

[Gerry Maddoux + 3,627]

There are quite a few of the fringe players. Some of them will doubtless turn into giant successes. Many will go broke. 

Utah, as I'm sure you know, has had people scratching their heads for years--because it is oil-rich. But it always seems to be complicated.

MGX, a tiny Canadian company, merged with PurLucid to form a water reuse system from fracking while separating out minerals. They bought a 110,000-acre position in the Paradox Basin in Utah, known to be oil-rich but salty. MGX has a goal to draw "petrolithium" from their operation, while selling the oil and reusing the water. It's a great scheme, going after oilfield brines rich in lithium and other rare earth elements, but they haven't gotten off the ground. 

As shale oil is depleted, unless offshore takes up the slack, some of these fringe players will emerge . . . providing we run out of oil before renewables are ready (which I think is possible). I have been enamored with the MGX/PurLucid salt separation system for years and it has cost me a chunk of change. They are so scattered--zinc-air battery one week, lithium mines the next--that they need some steady-eddy direction. I wish you would give them some . . . and I mean that. 

[Jan van Eck + 7,558]

11 hours ago, Gerry Maddoux said:

They are so scattered--zinc-air battery one week, lithium mines the next--that they need some steady-eddy direction. I wish you would give them some . . . and I mean that. 

Gerry, these guys are chasing markets that don't exist.  Is there a market for zinc-air batteries?  no.  Is there a market for fresh lithium?  No (at least, not from Utah salt brine).  What most folks do not fully appreciate is that [for example] lithium is a very very small part of a lithium-ion battery.  And there is lots of lithium out there, from low-cost and reliable suppliers in South America.  Some extractor from oilsands oils in Utah?  How does that compare cost-wise?  I don't see that happening.  

Give these guys "steady-eddy direction"?  Those guys don't listen to me. Who am I to them?  An investor?  Nope.  I don't invest in fringe projects, the money is not in there.  If I am going to do philanthropy then I will go into CLT,  cross-laminated timber, a construction technique developed in Austria for fast building of solid homes, market them to the poor and the homeless with government and foundation backings.  Oil extraction?  there is lots and lots of oil out there, and some new guy from oilsands in Utah is going to make his dent?  No chance. 

Where is Utah going?  In this technology, it will eventually develop.  But you are looking at decades. Right now there are those gigantic reserves up the road in Canada - and the Canadians have a good handle on how to do that oilsands stuff.  What holds Canada back is not technical.  It is purely political, a function of the loony [pun intended] Canadian politics. Any rational people (and Canadians are not rational people)  would have developed that reservoir a very long time ago - like, about 50 years ago.  Canada is held back because it is Canada.  People outside Canada have real problems understanding that.  Does Quebec want to buy Alberta crude?  Nope.  they would rather buy the stuff from Angola.  Anywhere except from Canada.  

Look at all the big refineries on Montreal Island that have simply closed down.  BP?  Gone.  Texaco?  Gone.  Shell?  Gone. OK, I think Valero has one there, but Valero is owned by the Russians. Does Valero use Canadian crude as a feedstock?  Nope.   How about the Irving Oil refinery in New Brunswick?  Nope; they buy crude from North Dakota,  Bakken sweet. If they can't get that, then they buy from Saudi Arabia by tanker.  

The Canadians have established customers in the USA.  So they supply those customers.  Now along comes some Petroteq outfit and they want to bust into that trade?  How do you plan to get that to work?  It won't.  So, if you are serious about Utah crude, then you need to also set up a Utah refinery to process that crude into gasoline and diesel.  You could get into a specialty fuel such as 100LL aviation gas, but Shell is the big player there, unlikely to give up any market share to some upstart.  

So here is your steady-eddy direction:  go build yourself a diesel fuel refinery, make some kero, and sell the rest for asphalt. But those guys cannot pay a $6,000 bill to a trade vendor, and need him to take some stock instead.  Where is the capital for building a complete refinery?  Not coming out of cash flow, that's for sure.  Anybody got a spare two billion?  To get into bed with a producer that cannot pay the daily bills?  Not going to work. 

If you had the cash, could Petroteq be ramped up?  Sure it could - but then the current owner/manager has to go.  It turns out he is some fuel dealer in Ukraine.  He has the optics of unreliability.  And he listens only to himself. 

[Gerry Maddoux + 3,627]

20 hours ago, Jan van Eck said:

What most folks do not fully appreciate is that [for example] lithium is a very very small part of a lithium-ion battery

True, but the Gigafactory-1 ("Big Battery" factory) is apparently back to buying lithium from the Salton Sea geothermal unit (now owned by Berkshire Hathaway Energy). 

If the lithium-ion battery remains the one for EV's, as well as storage, it's going to require a lot of lithium Petrolithium from brine salts is a great source, providing you pick you basin. 

But you're right, it's impossible to tell those people anything. 

The NCM811 battery has been very slow in coming. May be due to the fact that nickel is mostly found in nature as a sulfide, and the off-gases are a potpourie of SOX. It would be pretty easy for the Big Battery business to get a black eye, if the smelters don't scrub the SOX more carefully, because 8 parts nickel to just one part cobalt is quite a bit of nickel.

I'm not very clever about the battery business. It just seems to me that the massive jump they're all pushing will--globally--result in a brand new environmental problem. 

[Jan van Eck + 7,558]

31 minutes ago, Gerry Maddoux said:

It just seems to me that the massive jump they're all pushing will--globally--result in a brand new environmental problem. 

Yup, it usually ends up that way.  

I am not a fan of current battery technology.  You end up lugging around all these heavy batteries in a car, not exactly an optimal solution. Then heaven help your wallet if you have to replace them.  A steam-powered car would be much more logical.  One fellow had a great design using a deltic-engine layout, but foundered as he could not get steam up in his target of less than three minutes.  But that was before key fobs and microchip controllers.  Click the key from your front porch, start up the boiler, go inside and finish breakfast, by the time you get your coat on, you have a full head of steam and all warmed up to boot!  Run it on cow dung, hey why not, the stuff burns fine.  Cheers.