Register for free to join our community of investors and share your ideas. You will also get access to streaming quotes, interactive charts, trades, portfolio, live options flow and more tools.
Register for free to join our community of investors and share your ideas. You will also get access to streaming quotes, interactive charts, trades, portfolio, live options flow and more tools.
How does that break down monetarily? Other than saying it's a lot of electricity, what can you tell us about actual cost?
I'm sorry, it was 10%, not 40%. That is a big difference however there was more to the purchase agreement than just the figures you quoted.
Pursuant to the terms of the Purchase Agreement, in exchange for the Assets Petrosonic Energy, Inc. has paid to Sonoro the following consideration: (i) $250,000, (ii) a convertible debenture in the principal amount of $250,000 (the "Debenture") and (iii) a 10% royalty interest in our realized net revenues for a period of 10 years from the time we commence commercial operations, which is defined as the date upon which we process an average of 50 barrels of feed stock per day over a period of 30 consecutive days utilizing the technology acquired.
New technologies go through developmental stages. The wright brothers crashed a few planes before they flew one. Have you considered who they purchased the technology from? It's my understanding that Sonoro energy gets a 40% cut of the profits for ten years and perhaps that is why they sold it off for such a low price. What makes you so sure the technology is a bust? And please don't quote "seeking alpha". They are a blog designed to sway opinions for their own personal profit.
But what if their little oil changing machine is legit? Have you considered that in the equation? I totally get your math. But if their patented machinery actually can convert heavy crude to light crude in 45 seconds instead of 12 hours, what's that worth? You could be right about it being junk. But why would they get invited to a prestigious small cap convention to present their technology if it wasn't real? I listened to the presentation live. They received a nice ovation when their demonstration was over. Just food for thought.
Still got your short position? Must not have been a good day. A house sitting on a big oil field just might be worth that much.
We bought Alaska for 17 million. Vincent Van Gogh's paintings were worth nothing when he died. Just because you get something for a cheap price does not mean it has no value. People find treasures all the time at yard sales.
Better not get on an airplane either. If it crashes you lose everything.
I misspoke , BNK petroleum , a company Mr. Agolli was a co-founder of has secured one of the largest shale gas land positions in Europe. It is in Poland, not Albania.
The key to PSON turning around the current direction due to short sellers is getting their operation in Albania open and successfully processing and selling oil. Art Agolli owns the largest heavy oil field in Europe . I think he knows what he is doing. The announcement that they are generating revenue will be a key moment for the company.
Do you suspect it is the group who provided the financing? I was also told no insiders were selling.
Those shares I have been told are locked up. Someone else is selling.
I guess time will tell. They have a legitamite technology. They are just beginning. Most small business startup s fail. I think this one will succeed . Small businesses are the lifeblood of our economy. That's where the jobs come from. In the midst of all of the doubt and short positions some investors choose to stay in the game. Laugh, ridicule, do as you please, I'll just keep buying low until the company announces progress is being made. If nothing happens it won't kill me. But if something big happens it was worth the risk.
Thank you for your very insightful analysis. It is indeed a speculative stock. I don't care where the pps is by next Tuesday, this is a buy and tuck it away for three years type of investment . It was encouraging to hear someone who has knowledge of the technology give their opinion. Appreciate it.
Ok, the CEO, I understand what a share of stock is. So now we are going to make Mr. Agolli look bad? Have you met him? Do you know him firsthand or only by what you read on a blog about him. Wreckless and self centered journalism hurts others. So go ahead smear someone else to make your point. It just seams like a sleazy way to make a buck.
So you don't think fidelity mutual fund managers sit down with company executives? I know they have and they still do. Have you ever attended a conference call? I have no beef with you. God bless you I hope you have a wonderful and successful career. It's just that before you slam something make sure you have checked all of the facts. If you are so sure about PSON at least call the owner and introduce yourself like a man and let him share the company vision. This man has turned previous companies into successful businesses. I challenge you to call Art Agolli. It might help you become a better writer and analyst. That's all I got. I'll shut up now. We can agree to disagree, that's what makes a market.
Great ones don't hang around penny stock message boards. I'm just trying to defend my position while you attack it. You haven't called the company. You haven't done your research . You wrote the article so you could profit from it. The company encourages you to call them. But you won't because that's not your style. That is the stocktruth.
You seem to write the same "canned" article for all of the companies you attack. Until you do proper research such as calling and talking to company executives like I have done your articles and your reputation will have no credibility.
I'm sure you had all of our best interests in mind when you wrote your article. Thank you for watching out for us.
That is the goal. Someone has to handle the oil. Let's hope it is them. It's a story just getting started.
This company takes heavy crude oil and makes it light crude oil. Heavy oil cannot flow through the pipelines. Once PSON treats the oil it is light enough to meet the standards to flow in the pipelines. Once they remove the asphalt from the heavy crude they can sell that as well. The technology they have reduces the current process from twelve hours to 45 minutes. All the oil out west and in the tar sands of Canada is heavy thick oil. PSON is in a position to grow in that environment. As far as the Keystone project is concerned PSON will speed up the rate and volume that can be pumped through any of our pipelines. One key component in their success will be their ability to defend their patent.
The stock will go up once they begin announcing contracts and selling barrels of oil. It shouldn't be too long.
Agree. They love to pick off the small guy who is working hard at making a living. Shouldn't be allowed.
I agree. However I think there may be more to it than that. PSON just received 3 million in financing from an outside source. Part of that deal involved stock offered at .50 ps. I think this financier is cashing in on some of their profit. I predict the selling stops at .50. The seller lets the price build and then dumps some more.
Nor did i
That was not my comment. However that individual was saying The article scared outsiders and weak hands out of their positions. I believe that is what he was getting at. PSON is a speculative stock with a promising future. That is why I will add shares on weakness and hold for the days ahead.
Really? You don't understand how an article can affect a share price? Ever heard of Citron research? They get rich by trash talking and scaring investors out of positions. But the short position is in place before the article. They drive the price down, cover, and then ride the price back up. How do you know the story behind this company is not legit? Have you called them? Why were they invited to an exclusive micro cap convention to demonstrate their product? Shell companies don't do that stuff. As of January they are producing revenue. Seeking Alpha articles by short sellers can't stop that.
Where have you been? That's how seeking alpha operates.
Is that all you got? Come on push it lower, I want more shares!
Thank you for giving us all a great entry point. You might stop a stock for a day but you can't stop the oil from flowing. This company is set to grow rapidly in the near future.
Plus, ZERO, a company in the same sector is holding strong as well. PSON is positioned for growth.
(Reminds me just a little of IVAN - I wonder exactly how the IP is different)
Summary:
1) This is a start up with an effective head count of less than ten people
2) Their IP was purchased from Sonoro Energy (IP = patents to "upgrade" heavy crude oil)
3) They have 2 offices (Canada and Albania. Helpful directors/partners have set the rent at zero)
4) One operating facility: Petrosonic Albania Sha in Albania (seems to a small pilot project)
5) Once "commercial operations" (as defined) are established, PSON will be liable for a 10% royalty interest payment on realized net revenues for a period of 10 years.
6) Much more financing is going to be required. Look for private placements, convertibles, warrants, etc)
7) The business model envisions deploying small heavy oil processing plants right in the field to upgrade heavy oil right where it is produced, in order for the upgraded oil to be cheaply transported by pipeline.
History
We were incorporated in the State of Nevada on June 11, 2008 under the name “Bearing Mineral Exploration, Inc.”, with authorized capital stock of 75,000,000 shares at $0.001 par value. We were organized for the purpose of conducting gold exploration activities on a mineral claim located in the Province of Newfoundland, Canada.
On April 17, 2012, we entered into an Assignment Agreement with Art Agolli, our President, Principal Executive and Principal Financial Officer, Treasurer, Secretary and director, pursuant to which Mr. Agolli agreed to convey to us, all of his right, title and interest in a letter of intent with Sonoro Energy Ltd. (“Sonoro”); a Canadian publicly traded company (TSX-V: SNV) based in Calgary, Alberta, Canada, who is the holder of all of the legal and equitable rights and entitlements to a sonic reactor and technology that Sonoro has developed to utilize the sonic reactor for the treatment and upgrading of heavy oil by sonicated solvent de-asphalting.
On May 16, 2012, we effected an 11.25-for-1 forward stock split of our Common Stock and an increase in our authorized number of common shares to 843,750,000. Additionally, on May 16, 2012, we changed our name to “Petrosonic Energy, Inc.” to better reflect the Company’s new business direction in anticipation of the purchase of certain rights in technology, assets and common shares owned by Sonoro Energy Ltd.
On July 27, 2012, we acquired certain assets (the “Assets”) from Sonoro , including (i) certain technology relating to the treatment and upgrading of heavy oil by sonicated solvent de-asphalting, (ii) 60,000 shares of Petrosonic Albania pursuant to a share purchase agreement (the “Share Purchase Agreement”), and (iii) sonic reactors located in Albania and Richmond, British Columbia and a solvent recovery system located in or around Turin, Italy (the “Transaction”), pursuant to the terms of the Asset Purchase and Sale Agreement, dated July 27, 2012 (the “Purchase Agreement”).
Pursuant to the terms of the Purchase Agreement, in exchange for the Assets, we agreed to pay to Sonoro the following consideration: (i) CAD$250,000, (ii) a convertible debenture in the principal amount of CAD$250,000 (the “Debenture”) and (iii) a 10% royalty interest in our realized net revenues for a period of 10 years from the time we commence commercial operations, which is defined as the date upon which we process an average of 50 barrels of feed stock per day over a period of 30 consecutive days utilizing the technology acquired. For a complete description of the Transaction, and the Purchase Agreement please refer to the Form 8-K filed by the Company with the SEC on July 31, 2012.
Following the consummation of the Transaction, we believe that we are not a shell corporation as that term is defined in Rule 405 of the Securities Act and Rule 12b-2 of the Exchange Act. From and after the consummation of the Transaction, our primary operations consist of utilizing the Assets to develop a business relating to the treatment and upgrading of heavy oil by sonicated solvent de-asphalting and operating the business of Petrosonic Albania Sha. (the “Business”). Therefore, we disclose information about the Business in this Form 10-Q. For accounting purposes, the Purchase Agreement has been accounted for under the Purchase Method of accounting by the Company.
Our head office is located at Suite 204, 205 – 9 th Avenue SE, Calgary, AB, Canada, T2G 0R3. We have no monthly rent, nor do we accrue any expense for monthly rent. Our director is letting the Company use his office free of charge in order to save costs until the Company can lease an office when requisite funding is in place. Our main telephone number is (403) 708-7869.
Petrosonic Albania has an office in Fier, Albania at the same location where its processing plant is located. Albania’s heavy oil upstream and downstream industries are located in Fier and the facility is only a few miles away from the heavy oil producing fields. It is also located 35 kilometers away from Albania’s only deep sea port and export facility, the PIR Vlora terminal. The office is offered by the Albanian partner free of charge until the company signs a lease agreement when requisite funding is in place. Petrosonic Albania currently has two full-time employees and three part-time employees, as well as, several independent consultants. Petrosonic Albania plans to hire a Chief Financial Officer and three local operations staff in Albania during the first year of its operations. The company has identified potential candidates for such positions, and expects to proceed with such hires once it has secured the requisite financing.
Operation Plans and Business Focus
Petrosonic has developed a commercial process which improves heavy oil densities by 6 to 15 API 1 from as low as 8 API, reduces viscosities of oil by 99% to pipeline specifications and reduces sulphur and heavy metals by over 50%. The Petrosonic heavy oil process will enable heavy sour oil (HSO) and bitumen (from most heavy oil and oil sands fields in the world) to be converted from nominally an API gravity of 8-14 degrees to a value-added synthetic crude oil of between 18 and 23 API. This is achieved through the reduction of undesirable constituents of the raw heavy oil and/or bitumen. The process incorporates two stages: solvent de-asphalting and distillation.
While solvent de-asphalting and distillation are both proven and well known technologies, the innovation associated with the Petrosonic upgrading process lies in the rapid de-asphalting achieved by sonication of the de-asphalting phase with the Petrosonic reactor stage.
This process is especially beneficial to producers with the following intrinsic challenges:
• Stranded heavy oil due to transportation issues
• Diluent supply issues
• Limited refining markets (light oil refiners struggle with heavy oil)
[1] The American Petroleum Institute gravity, or API gravity , is a measure of how heavy or light a petroleum liquid is compared to water; one of the qualitative measures for crude oil
• Heavy discounts due to:
• Density adjustments
• High sulphur content
• High metals content
We believe Petrosonic will be able to take advantage of an opportunity that traditional upgrading technology cannot address – upstream upgrading on smaller scales. The viability of upgrading is constantly changing due to production mix, refining infrastructure costs, and oil pricing. However, there are three markets for small upgraders that make sense:
· Pipeline systems where access to the pipeline requires blending of heavy oil. Condensate prices and heavy oil differentials have been stable for some time and long term projections indicate that low condensate prices following the global economic slow-down will be short-lived;
· Heavy oil producers in markets where light oil dominates refinery infrastructure. Internationally there are several markets like this; and
· Markets where upgrading asphalt by-products can command premium prices. This is especially attractive in North America given the economic infrastructure stimulus measures being implemented.
To take advantage of these opportunities Petrosonic must be able to:
· Economically upgrade heavy oil from small and medium sized producers right in the field;
· Add value and allow producers to capture a larger share of the market price for refinery products;
· Provide operating plants to heavy oil producers in return for tolling process fees or purchase heavy oil at a premium to blenders;
Upgraded oil provides uplift in crude’s value and eliminates issues related to transport of crude oil to pipeline and refinery companies.
Depending on regional markets, traditional heavy oil discounts (10 API oil with 2% sulphur) are 35-40% and we believe such discounts could be reduced to only 10-20% through our process. On 5,000 barrels of oil per day (“bopd”) this would equate to increased revenues of approximately $6/barrel (bbl) or around $11 million per year (based on $100/bbl brent oil). Capital costs are expected to be between $0.5-1 million per 1,000 bbls capacity. Operating costs will be between $2-3 per bbl on a stand- alone facility basis.
Petrosonic plans to have its first 1,000 bopd stand-alone facility operational within the second quarter of 2013 in Albania. Expected annual cashflows from the initial 1,000 bopd facility are expected to reduce heavy oil price discounts historically received in Albania from 40% to 20% as a result of achieving a 18-23 API oil. Petrosonic believes that with significant heavy oil production growth anticipated from the approximately 8 billion barrels of oil reserves believed to be present in Albania, if we are able to successfully capture a portion of this processing business, Petrosonic expects to expand its facilities over the next 3-5 years to 15,000 bopd as Albanian oil production increases.
If Petrosonic is able to successfully establish their first commercial facility, we believe heavy oil producers will want to integrate the Petrosonic system at their cost into their treatment facilities. Petrosonic would sell the process solution and retain a royalty fee under this type of development. While revenue per facility will be less (estimated at 50%), no capital and minimal support will be required. This strategy would allow for faster growth. Petrosonic may also choose to develop its own stand-alone facilities to capture further upside and long term value creation.
Further upside opportunities exist in several other applications which the Company is in advanced stage of development, including, heavy oil sands separation (both from oil sands and ecology pits), and oil separations from drill cuttings.
Vision and Strategy
· Petrosonic hopes to provide its shareholders with returns and cash flow growth by leveraging its experience and intellectual property within the heavy oil business.
· Petrosonic plans to use an initial model of building its own stand-alone facilities to prove, optimize and develop business growth opportunities with small to medium sized producers. To achieve higher returns and growth, the Company will license out on a fee for service basis or royalty basis its processes to be integrated into producer’s treatment facilities.
· Where there is a distinct advantage Petrosonic may capture heavy oil resources prospects or participate jointly in them. Any resource level participation would require higher returns on investment and be required to stand on its own prior to the benefits of applying Petrosonic’s technology.
· We believe Petrosonic’s leadership in oil processing technology compiled with a strong background in the heavy oil industry is expected to result in a superior rate of return to shareholders from direct and indirect operations. This will be further leveraged if the Company is able to financially participate in the underlying oil assets, especially by acquiring these in advance.
Key Success Factors
Petrosonic’s success will be dependent upon:
· Our ability to attract and develop numerous projects once the first project is complete;
· Access to an ample producer oil supply and our ability to find equitable profit distribution;
· Our development and distribution of asphalt within the market;
· Our ability to minimize the technical risk through avoidance of scale up issues;
· Alleviation of market risk through the use of strategic partners which can gain quick access to markets; and
· Alleviation of financial risk through partnering.
Immediate priorities of Petrosonic are:
· Strengthening the operations and management of the Company as it moves forward in the oil sector;
· Moving ahead with the processing facility in Albania;
· Establishing a second country oil processing project; and
· Building a firm backlog of projects with financing commitments.
Petrosonic’s Technology
SonoProcess
We believe Petrosonic’s technology advantage is based upon the use of the Petrosonic reactor technology and the unique cavitational and enhanced mass transfer effects that it provides. Petrosonic has developed a unique competency in the design of enhanced mass transfer energy processes and the proprietary applications that result from this.
In recent years the use of cavitational technologies and ultrasound has been researched extensively for oil processing – usually in the context of desulphurization or “cold cracking”. Our own research does not support this and we make no claims that it can create a unique upgrading process. The chemistries used in the Petrosonic process are established and our advantage is that we make these more effective.
The Company looks to maintain its initial technical advantage derived from the Petrosonic Sonoprocess™ for heavy oil by adding complementary proprietary process technologies to this.
The Petrosonic reactor has been designed and built in a variety of configurations but all Petrosonic process development is undertaken on full scale units:
· Petrosonic reactors are based on low-frequency / high-amplitude Petrosonic energy reactors;
· A patented electromagnetic drive puts a massive steel bar into resonance and this allows efficient transfer of energy to the reaction chambers;
· There are no moving parts and so Petrosonic reactors have a high reliability and operational availability;
· The reaction chambers are attached at the mid-node points one half wavelength from the drive system, enabling the reactors to apply Petrosonic energy to physical, chemical and biological processes;
· Petrosonic reactors are thus able to achieve more sustainable processes – better reactivity, less reagents, less energy, greater effectiveness and more product for overall economic advantage.
Direct Sonicated Separation
The previous holder of the technology has also carried out independent tests on oil sands to determine if the technology could be effective in a low cost primary separation process. Preliminary tests with a proprietary process protocol produced results comparable with existing technology.
However, the effectiveness of this technology is but a first step due to the massive scale of oil sands projects. At this time the Company believes the volume of material that would need to be processed requires a “next generation” of Petrosonic reactor technology. Existing scale technology may be applicable to small scale oil sands production.
The Company has directed its efforts towards a more immediate but directly related application – the treatment of drill cuttings. This is not the same scale of opportunity but offers immediate access to market and cash flow generation based on modest investment of capital.
Petrosonic Heavy Oil Process Patents
As part of the transaction with Sonoro Energy the company has acquired the following Heavy Oil Process provisional and PCT applications based on the Company’s Sonoprocess™:
· Patent/Application No: WO2009111871. Jurisdiction: WIPO. Title: Method for Treating Heavy Crude Oil. Application Status: Published.
· Patent/Application No: EA201071060. Jurisdiction: Eurasisa. Title: Method for Treating Heavy Crude Oil. Status: Pending.
· Patent/Application No: EP2260089. Jurisdiction: Europe. Title: Method for Treating Heavy Crude Oil. Status: Pending.
· Patent/Application No: 2156/MUMNP/2010. Jurisdiction: India. Title: Method for Treating Heavy Crude Oil. Status: Pending.
· Patent/Application No: US 61/035,690. Jurisdiction: United States. Title: Method for Treating Heavy Crude Oil. Status: Company will appeal the expired priority claim to reinstate the priority claim.
If you weren't short the stock your article may more credibility .
On increasing volume
Looks like the big boy machines have arrived at the party.
Remember we also bought Alaska from The Russians for a little over two cents per acre. Sometimes people get a really good deal. I think PSON also got a good deal.
This company is legit. Cutting edge technology to turn heavy crude into light crude so it can flow in pipelines. Lot of heavy crude in the U.S and Canada. Just getting started.
Let's keep it that way so the little guys can get in before the big guys.
Yes, this company is poised to grow. It hasn't really been noticed yet. When it is the pps will rise significantly IMO
Coming to life!