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Yeah man so true. It is so thin and so easy to see their bs. Very easy to make them cover. Any little bit of buying and they scramble on the bid to buy back their shares. it is funny.
Yeah, all of us long have this float incredibly locked up, you can easily tell by comparing the OS to the volume and how it trades. Any good news or meaningful buying and this stock will fly higher. $1.00 $2.00 very easily obtained. We will likely be 500% higher or more on good data if we get it. Then initial sales should send us much higher. This stock likely a steal at these prices if the data is good. We are on heavy crude oil this time - a shoe in.
Wow spot on. You know the game the market makers play my friend, I'm impressed! Not many do.
I might just slap this back into the .20's...
.13's would be nice though.
We will see about that.
once that data comes out it's game over for the bears
20 to 30 companies lined up to buy AOT - worth many millions in revs and profits
I just took all the shares at .14 out, offer now back to .18ish :)
Bidding more at .1350, let's see if I get filled.
I am long and strong as well.
This is a .10 stock (was a .10 stock now .14) that will be at .50 - $1.50 in the medium term, and then $3.00, and $5.00-$10.00 longer term. All the DD available lays out a clear picture as to how they will get there. This is the potential myself and largest shareholders see for this stock. We are long term holders, holding the vast majority of the float.
It is well known Oil pipeline companies have always had a problem not being able to move enough oil due to the limited number of pipelines, the very thick viscous nature of crude oil, and the vast oversupply of crude here in the US. This is well evidenced by the rail and trucking accidents and fatalities that have resulted in trying to transport crude oil by train and truck; sadly entire towns have burned down. Pipeline companies spend millions every year in an effort move the oil faster and cheaper through their pipelines. They heat the oil, treat the oil with expensive diluent, and add drag reducing agents (DRA's) in order to minimize drag on the oil which slows the oil down while in transport.
In a nutshell, QSEP has developed a new technology (AOT - short for "Applied Oil Technology) that helps oil companies move a lot more oil in an existing pipeline (up to 20% more) and as a result make more money by bringing more crude oil to market.
As far as potential revenue is concerned, pro forma estimates state that on a typical 100,000 barrel per day pipeline, AOT will generate approximately $17 million in annual revenue for QSEP.
AOT increases pipeline efficiencies with a flip of the switch. In many cases by simply being able to reduce diluent by replacing it with the effect of the technology (QSEP has copyrighted “ediluent”), and in other cases by reducing or eliminating bottlenecks, AOT will translate into huge pipeline efficiencies. Especially on thick heavy crude in cases where simple diluent or heat won’t work. If oil companies can sell 10% to 20% more oil onto the market- their revenues can increase by 10%-20%. Even a 3% increase would generate a massive revenue increase for the typical oil company, and specifically the oil pipeline companies themselves both in the US and in places like Canada, South America, China, and Russia. And Especially in countries where the transporters and E&P are the same state run entities like South America. All places QSEP has strong interest from.
QSEP have tested their technology with fortune 500 powerhouses like Kinder Morgan and TransCanada right on the famous Keystone pipeline that moves 500k barrels per day, and both oil giants have paid the cost of the tests (proof that there is serious interest from the industry in the AOT).
QSEP has landed a major pilot agreement with a Billion dollar fortune 500 oil company which will be named in the relatively near future. This will be a demonstration site for all potential customers of AOT to view the technology in action in real time.
If good data comes from this pilot with QSEP’s current partner, it is my belief that the first major contracts are about to come through. The current customer/partner has said they intend to outfit the rest of that pipeline with AOT’s that the pilot is being done on. Once they lease or sell units to any oil company this will be considered adoption in the industry (which is a huge deal in the pipeline industry which rarely sees such drastic innovation). Industry adoption = future sales.
During the last shareholder meeting, QSEP stated they have 20-30 oil companies ready to move forward with the sales process once the data is made public and accessible to customers. Many oil companies are waiting to see the real time oil viscosity reduction data off a commercial pipeline. If the data is good, the industry will move to adopt the technology and the commercialization (sales) phase will commence. This is because QSEP have been cultivating relationships will all of the major oil companies both domestic and internationally for the past 10 years, and they will buy the tech once it is adopted by the industry.
I believe that QSEP will see a dramatic valuation increase if and when it commercializes its technology.
And most importantly, this pilot is being done for a reason. The Oil company is interested in adopting the technology if the data is good, with the aim of sales with this fortune 500 customer. As of Monday April 1, 2019, during an interview at a micro cap conference QSEP CEO Jason Lane stated that the first sales for AOT are expected to be generated from this AOT pilot program with the Billion dollar oil company.
QSEP has 2 distinct revenue generating business models. Both are a recurring revenue model. In addition to leasing units to oil companies, QSEP has developed a revenue model for their business which charges the oil companies a per barrel fee; QSEP would make money on every barrel of oil that passes through the pipeline equaling 10's or 100's of thousands of dollars per day depending on the # of barrels moved. The lease revenue model v.s. toll/fee model will depend on the customer and their needs.
To put a bow on this story, there has been MASSIVE insider buying within the last year. Another fascinating aspect to this stock is that 3 other groups have approximately 65% of the float locked up, so there are not any sharesfor sale in size. So if any decent size investor wants say a million shares, there simply are not a lot of shares for sale. There is about 300M shares outstanding. So about 195M of that is locked up in strong hands if not more. The float has changed hands many times over the years, and imo the vast majority of impatient shareholders were gone long ago after all of the mishaps. All the recent note holders are strong hands, and myself and several others are the ones who own those notes and we are holding tight for the long term.
If QSEP sees their AOT adopted by industry this is easily at minimum a multiple dollar stock. The growth of the company will be exponential with annual recurring revenues over the next 10 years due the demand from the industry, and the vast number of pipelines around the world that will be outfitted with AOT's. QSEP right now has multiple international oil companies that want to deploy AOT on their lines, they are simply waiting for the data. QSEP will have a backlog like that of Boeing on a smaller scale, creating incredible growth for many many years to come. Imo we are in the very early stages of what will become an amazing wealth creation vehicle over the coming years and it's beginning right now.
I'm bidding/buying QSEP today, this is overdone imo
Yeah, and? Please explain how I said anything contradictory to that lol. Like I said, it's important, but it's still not a power source.
Markets are tanking QSEP is solid. Agree someone got some cheap shares. I think this would be a good buying opportunity.
The power supply is nothing more than a converter, it doesn't supply the power. While it's important, it has little to do with the performance of the AOT. I'm confident they will be back online and getting that data.
Welcome back 1300. Glad to see you’re still here. I agree with you. We have to understand we will occasionally see technical delays. But in exchange for this, if they are successful this stock will pay us for many years. My largest long term hold.
“Quite. They said 4-6 weeks to install the faulty part, that was 4 weeks ago. Let’s be patient a little bit longer.
However I would still welcome an explanation of what went wrong to the faulty electrical installation, providing it doesn’t compromise QSEP commercially.”
Well said. 100% agree.
Also, I invest in many OTC stocks daily. I think this stock is doing great, not worried at all. Dips in this = $. Things are just beginning. I wouldn’t want to be on the sidelines if these guys come out with good data.
Pappythom, they are in the process to having the power conductor/power supply shipped back from the manufacturer and then reinstalled at the site. I'm sure we will get an update letting us know when that happens or shortly thereafter.
Let's give them time for the manufacturer to refurbish and ship the part. We will be hearing from them soon enough. They are also probably working on the Q as well. Those are important.
Your welcome. Just personal preference. You read it, and you're prob the only one who wanted my opinion anyway, so it doesn't matter.
Yeah .05 to .38 sucks...
Learn the OTC folks. 99.999 stocks on the OTC would be way lower right now. QSEP is holding up beautifully. Rarely have I seen an OTC stock trade so well.
NOTHING goes up in a straight line guys. We know what they are working on. We know what they are doing. The data is coming. I understand it’s difficult, but try and be patient. These are the times sitting in your hands and doing nothing pays you big time. Sometimes, doing nothing is the hardest work of all, but the most rewarding.
Welcome back Earth1, and thank you for that extremely detailed write up on QSEP's current value proposition. I would guess you have some experience in pipeline engineering. Either way, the AOT results have been extremely impressive and it offers oil companies and pipeline operators an opportunity for serious increased cash flow. Let's get these results which I think will be good and AOT can begin sales.
There are much better and much larger holders of QSEP stock. They are the largest holders in the company. And similar to Board member Bunting have continued to acquire shares as they see QSEP moving into sales and having huge success. Bunting sees QSEP as having huge success. NOTHING has changed.
They are long and strong and are not selling one share. 80%- 90% shares are not even converted nor will they be. This is one of several reasons I continue to remain heavily long this stock.
Who you gonna listen to, someone with no sweat in the game who uses others for their amusement? Or someone who is investing huge money out of their own pocket who sits on the board of the company. You be the judge.
Huge large holders who are not selling + huge insider buying. Do the math.
This will be a huge wealth creator. Stay long.
Bravo As I See It! You are 1000% correct, and the other poster is WRONG. An Excellent clarification of the FACTS. VS ignorant fear mongering. We all appreciate your time and your clarification of the facts. THANK YOU.
Sorry been away. Just catching up. This is fantastic:
Hello there.
I love how pundits love to jump on QSEP when they have any sort of technical glitch or issue. AOT is an engineering feat. Every feat of engineering has it's snags and sanfu's. So far this power supply issue appears to an issue from the manufacturer. I'm not worried about it.
Yeah, because heavy insider buying is such a bad sign lol.
QSEP up 20%. Shorts WILL GET BURNED HERE LOL. We have friendlies, this is one stock you don't want to mess with. You'll see.
Exactly what AISI said Jaymark, the power supply is a totally separate piece of equipment, it is not integrated or attached to the AOT. It is comprised of a master component, and two slaves that are easily detached.
That's completely fine ZeroEden. Do not listen to what i have to share, and I'll keep to myself from now on.
And ZeroEden, I never claimed to speak on behalf of the company. Large shareholders very commonly are able to talk to management of a company and they do not get any new or non public information. This goes for big board and OTC companies. Many of the OTC investors I follow for example are always talking to different OTC CEO's. It's very common for shareholders to reach out to management, and vice versa, it doesn't mean they are getting non public information.
I was just trying to help out. If it's not appreciated that's fine. Just use the PR's or updates.
Good luck to you..
ZeroEden, I think they did not do another addendum probably because they did not think it was necessary. And imho I don't think so either really. They didn't tell me anything too different from the update really.
To be clear, I'm sure they don't want me educating shareholders. They were just talking to me about the power supply and I got some clarification. They probably believe that update was adequate. I'm doing this as a courtesy to you and other shareholders. Based on my discussion with them, that one update was enough imo, I'm just trying to give shareholders here some more color and help out. AISI actually discerned from the update what I learned. They are very busy and I will talk with them again as their schedule allows. I'm simply a shareholder. But I will continue to do what I can.
It's very simple, they need to refurbish the power supply. Let them get that back from the manufacturer and on the line and work it out. If that power supply has another issue or there is something else going on I believe they will be fully transparent with shareholders and update us accordingly. If I get a chance to talk to them again I will emphasize this. Even if there is another issue with the power supply though, I'm confident they will figure it out. There are smart people working on this. People with PhD's and engineers. They are also working on a redesign of the internal components as I mentioned that will use less power (again not as a result of this power supply issue they've been working on this redesign for many months). I'm not an engineer, and I'm sure if they started explaining this in more detail it would probably go over mine and most of our heads. What's important is if this is an issue that can be fixed or not. And as AISI said, we shall see. They haven't even been able to test the AOT properly yet, and that's all that really matters from a shareholder perspective imho.
I think this was just a failure of one of the internal components inside the power supply. Something that can be fixed by getting it refurbished. If it's not I have every reason to believe that we will all find out at the same time, and that they will work through this. After all, we've faced way more difficult challenges on the TC line and the KM line and those issues got sorted out. They want to and are trying to be more transparent with shareholders. I'm sure we will be getting another update when they have something to update us on.
I spoke to the company yesterday. Guys, I think you are wrong on some of your assumptions/facts.
This was not the same problem we have had before. 100% not the same problem. I have been working on a more detailed post about my convo with the company and am waiting for it to be approved by my guys. Until I can share more, I can tell you with certainty that the failed power supply was:
a) Not the same problem we had with any of the other tests. With TC we had the completely wrong power supply unit, that was the problem there regarding power, among other political problems. With KM we had impedance issues, neither of which is the problem here.
b) Simply having a back up would not have fixed the issue, it doesn't work like that. First of all it's expensive, $70,000, not that this is a main deterrent from having a 2nd, but its a factor. Second they had no reason to question the power supply, they ran a ton of tests prior to installation. However under usage during the test it failed. Think of it as running too many electrical items in your house and you blow a fuse due to the increased power usage. That's not what they said, I'm giving this example. But thats basically what happened. Third, the power specs of the power supply are based on the API of the crude oil. So you don't order 2 because if you are wrong on the settings you simply change the settings on that unit, you don't spend another $70,000 for another unit with potentially the wrong settings also, because then you will have to pay to change both power supplies, or have to buy 2 new ones.
b) this was not managements mistake imo, it was simply a failed power supply, a part that came from the manufacturer. It was no ones fault, a part failed and it's now being fixed. If the company made a mistake they told me that if they could have done something different they would have had the power supply refurbished prior to install, but again they did a lot of pre testing and it was exhibiting no issues.
d) As the update stated they have developed a way to determine exactly how much power they will need based on the API, and Chris and Shannon are all over it. They are also working on upgrades of the internal components also as the update stated that will require less power; but requiring less power is a side benefit that will occur as a result of this re-engineering that has been going on for 6 months or more. They are not doing this upgrade due to the power supply failure. These upgrades have been in the process for the last 6 months or more and Shannon (and now Chris) have been working on these upgrades for a long time, this isn't something new. This slight delay will allow them to do the upgrade in time for when the power supply is done. The upgrades have been planned for a very long time, and it will also give QSEP new IP protection as well is what I was told. And it won't cause downtime from testing. They can now simply remove a section of the AOT unit and make changes easily to the internal components nowadays.
This is not something to get that worked up over imho based on what I learned form the company. Remember AOT worked on every other test. An engineer that my friend knows confirmed this has nothing to do with the AOT, just an issue with the power supply and that's all. As a final thought I would just emphasize that this is a highly engineered product and this stuff is kind of to be expected. The company wants to have more transparency, and share how the pilot is going with it's shareholders good and bad. During the other tests with TC or KM, we likely would never have known about a part failing even though it is an important part.
I have warrants to exercise coming up and I plan on exercising them. I have real money at stake here. A lot of money. And this is not enough to keep me from thinking adoption and contracts are heading our way.
I hope this helps others who are actually invested in this.
Everything they have been working towards now, trying to get a pilot for AOT in order to get verified data on a commercial pipeline is in the process of coming to fruition.
They have recently entered into an agreement with a major fortune 500 oil company (a member of the PRCI (Pipeline Research Council Int'l which means they are massive); where QSEP will retain ownership of the all the real time data that AOT generates. This partner company has agreed to make it a demonstration site as well so all of QSEP's other potential oil company customers can view the AOT and it's real time data in person. Many oil companies have said they will be coming to see AOT in person. Will Saudi Aramco come see it? I think they will.
Also, the company has stated at their most recent shareholder meeting they have 20-30 large oil companies who are ready and willing to move into sales on AOT if the commercial real time data is good. Most importantly, QSEP owns the data, and plans to release it publicly in a form with will not give away any sensitive date regarding their AOT pilot partner (the oil company).
Additionally, this fortune 500 US based oil company partner that QSEP will do the pilot with is not just doing this for fun. They have a real time problem they believe AOT can help them with and have already expressed a desire to outfit the rest of the pipeline (2 additional units) if they data has good results for them. They also have additional large pipelines in other areas of the continent.
This a sweet deal for QSEP, as this pipeline runs South american crude oil which is thick as hell, and we know that AOT has shown the best results on heavier crudes. The whole set up is a sweet slow pitch that QSEP can hit a grand slam on without blinking.
They (QSEP) now has TransCanada's lead engineer from the AOT test with TC who has made even further improvements on the AOT (mentioned at the SHM).
To top it off there has been recent MASSIVE insider buying.
In addition, Between myself and 2 other groups I would say we have 60% of the float locked up between us. There is about 200M share float. So we have about 130M of that locked up, if not more not including the large holders that have sold out over the years and not bought back in. The float has changed hands many times over the years, and imo the vast majority of impatient shareholders were gone long ago. All the recent note holders are strong hands, and myself and a few others are the ones who own those notes and we are holding tight for a buy out of the company which we believe will happen in the next 3 years somewhere between $6.00 - $8.00. No joke. It;s easy to see how this will be sold if it is commercially adopted.
Now, if this isn't the sweeteest set up of all time I don't know what is. And, if QSEP gets good data anyone who sells under $3.00 is a fool imo.
Together, if we all work as a team we can lock up this float up and make this thing fly to new heights. And that is what myself and other large strong shareholders are doing. We have funded the company and are soaking up shares in the market every time it dips so when/if there is any good news she will fly. But everyone has to make up their own mind if they want to own QSEP. This is my opinion and I'm not telling anyone to go buy it. But myself, along with industry professionals believe QSEP can be a very successful investment.
Imo every share that gets bought up is locking the float up more and more.
I'll leave you with this: Shannon Rasmussen, the engineer for TransCanada that headed up the AOT test with TC said at the most recent QSEP shareholder meeting that he sees AOT as "one of the 3 main solutions" the oil industry will employ to combat bottlenecks and viscosity issues. Diluent being another solution obviously. Not a small market.
That's why they are doing an unrestricted pilot in which they will be running AOT coninually for 6 months straight minimum.
QS ENERGY CEO JASON LANE ISSUES SHAREHOLDER UPDATE
HOUSTON, TX -- (Marketwired) -- 01/25/18 -- QS Energy, Inc. (the "Company" or "QS Energy") (OTCQB: QSEP) is a developer of integrated technology solutions for the energy industry. The following is a shareholder update from Jason Lane, Chief Executive Officer and Chairman of the Board, QS Energy, Inc.
Dear Shareholders,
2018 is poised to be a turning-point for QS Energy. We made progress on many fronts over the past year and are now positioned to complete our evolution from research and development to commercialization. 2017 was a year of change. When I took the helm as CEO last April, I immediately set out to execute critical short-term objectives, re-aligning our Board bringing in new Directors with deep oil industry experience, hiring Shannon Rasmussen as VP of Engineering, and expanding our capital structure to provide a foundation to fund our final push to commercial markets in the U.S. and beyond. Throughout 2017, the company worked to improve both the efficacy and efficiency of our AOT technology, implementing a retrofit program based on lessons learned while operating our equipment on midstream pipelines under commercial operating conditions, and initiating a value engineering program targeting a 30% to 40% reduction in cost of goods.
Over the past few months, we have been working diligently on what I believe to be the company's final key to success -- the installation and operation of one or more pilot projects; projects that will operate under relative transparency, allowing limited access to test facilities and open access to data with independent third-party validation. The crude oil industry is known for keeping its information tight-to-the-vest, with virtually all outside agreements operating under tight conditions of non-disclosure. QS Energy's experience to date with tests and operations is no different. Although we have operating data we would like to freely share with potential customers, confidentiality agreements strictly limit such disclosure. After discussing this issue with oil executives and potential customers, I am confident that access to pilot project facilities and independently-validated operating data will provide the catalyst needed to accelerate adoption of our AOT technology.
BUSINESS DEVELOPMENT
Our efforts to secure one or more pilot projects are currently focused on specific prospects in three primary markets: U.S., South America, and Asia. Each of these prospects operates heavy crude oil pipelines with an identified system-wide need likely to benefit AOT viscosity reduction.
In November, Shannon and I had a very productive trip to South America, meeting with eight companies in Ecuador, Colombia, and Peru. After communicating remotely with engineers and executives of these companies over the past few months, this trip provided an opportunity to meet face-to-face, tour facilities and operations, and see first-hand how and where AOT would likely provide benefit to their operations. Each of these companies expressed both interest and need for our AOT technology and discussions are continuing at a variety of levels.
Our most interesting prospect in South America has a defined need to increase capacity on a pipeline transporting a very heavy crude typical throughout South America. This operator is weighing AOT against installing more pump stations while adding more diluent to its blend to meet its needs. Preliminary analysis indicates AOT could decrease viscosity by more than 50%, allowing for increased flow rates and decreased reliance on diluent, with the potential to increase pipeline capacity by 20%. We are now in negotiations on terms of a Letter of Intent (LOI) detailing the preliminary scope and terms of a pilot project subject to crude oil sample laboratory testing and analysis to improve on our preliminary estimates and optimize the pilot site AOT configuration. A heavy crude oil sample has been provided, and is now in transit from South America and is scheduled to arrive at Temple University in the next 7 to 10 days after clearing customs later this week. The LOI will also detail the expected system-wide deployment of AOTs subject to 30 to 60 days of pilot testing. Importantly, we intend to maintain a high level of transparency on pilot test data collected for future use and dissemination by QS Energy. Overall, we are looking forward to a very busy 2018 in South America.
We are also very excited by opportunities in Asia, having recently reopened discussions with an Asian crude oil company with prior experience testing AOT equipment in the field. Although these discussions are early stage, we have provided a draft LOI and hope to move quickly based on their experience and familiarity with QS Energy and our technology.
Of course, North America continues to be a market of major focus. After operating AOT on a condensate (ultralight) pipeline in Texas, we continue to work with this midstream operator to locate a new test site on a pipeline transporting heavier crude to demonstrate greater benefit from AOT viscosity reduction. We are also in active discussions with several other U.S. and Canadian midstream companies regarding a pilot project allowing for data transparency. We are working closely with one midstream operator with an expressed interest in using AOT to alleviate pipeline bottlenecks in the Southern United States. A crude oil sample from the prospective site arrived at Temple University this week for laboratory testing. Preliminary test results and analysis should be completed next week, with final results to follow shortly thereafter. After working with this company for the past five months, we have confidence that AOT can provide a cost-effective solution to their bottleneck issues. Subject to laboratory test results at Temple University, we intend to move forward with an AOT pilot project with potential for system-wide deployment.
While our efforts are tightly focused on executing our pilot program strategy, conversations continue with prospective customers in the Gulf Coast, Canada, and the Middle East.
FINANCING
Our current funding strategy incorporates a combination of working capital and expansion funding. We anticipate an increase in capital requirements upon completion of our first pilot project as we expect to deliver additional equipment to the pilot customer, as well as leverage operational data and project transparency to gain traction in the commercial markets. In advance of our first pilot installation, we have made moves to reduce operating expenses and outgoing cash flows, including but not limited to deferring payments to former CEO, Gregg Bigger under his separation agreement. We do have an immediate need for working capital to fund operations through our first pilot project. To this end, we have been meeting with several funds and family offices regarding both working and expansion capital.
PATH FORWARD
We are excited about 2018 and the strategy and plans we have for this company. I would like to share the certain goals and milestones we have set as management of QS Energy.
Our key focus is the installation and completion of a pilot project. This effort is well underway as we are in pilot project discussions with three companies and expect to have our first letter of intent signed shortly. Upon completion and analysis of laboratory testing of sample crude oil, we will meet to discuss analytics, select a pilot project site, define the scope of a post-pilot rollout and execute definitive pilot project contracts. Pilot installation and testing would begin upon contract execution. Based on current timelines and discussions, we are projecting installation of our first pilot test in Q2-Q3 2018, followed by 30 to 60 days of testing to be completed by the end of Q3 2018. Subject to successful testing, we would execute definitive agreements to sell or lease equipment for the expanded rollout as defined in the original LOI in Q4 2018.
Based on current discussions with prospective pilot customers, we believe this schedule is achievable, putting us on target to begin commercial deployment by year-end. Armed with pilot project data, we should be positioned for accelerated sales in 2019 and beyond.
CLOSING THOUGHTS
All of us at QS Energy continue to work diligently in our efforts to move our Company forward towards full commercialization, revenues, and profitability. Since joining the team, I have enjoyed visiting with many shareholders and have come to appreciate your insights and our shared dedication and excitement for our Company's future. I believe we are moving in the right direction and are laser-focused on heavy crude oil markets in which we can thrive. We all look forward to seeing the AOT operating in the field worldwide, solving many of the problems that oil pipeline operators face today. In closing, I would like to thank you all once again for your confidence in myself, my team, and the Company and I look forward to bringing you all definitive news as it happens in the very near future.
For further information about QS Energy, Inc., visit www.QSEnergy.com, read our SEC filings at http://ir.stockpr.com/qsenergy/all-sec-filings and subscribe to Email Alerts at http://ir.stockpr.com/qsenergy/email-alerts to receive Company news and shareholder updates.
Safe Harbor Statement
Some of the statements in this release may constitute forward-looking statements under federal securities laws. Please visit the following link for our complete cautionary forward-looking statement: http://www.qsenergy.com/site-info/disclaimer
About Applied Oil Technology
Developed in partnership with scientists at Temple University in Philadelphia, Applied Oil Technology (AOT) is the energy industry's first pipeline flow improvement solution for crude oil, using an electrical charge to coalesce microscopic particles native to unrefined oil, thereby reducing viscosity. Over the past four years, AOT has been rigorously prepared for commercial use with the collaboration of engineering teams at numerous independent oil production and transportation entities interested in harnessing its demonstrated efficacy to increase pipeline performance and flow, drive up committed and uncommitted toll rates for pipeline operators, and reduce pipeline operating costs. Although AOT originally attracted the attention of pipeline operators motivated to improving their takeaway capacity during an historic surge in upstream output resulting from enhanced oil recovery techniques, the technology now represents what we believe to be a premier solution for improving the profit margins of producers and transporters during today's economically challenged period of low spot prices and supply surplus.
About QS Energy
QS Energy, Inc. (OTCQB: QSEP), provides the global energy industry with patent-protected industrial equipment designed to deliver measurable performance improvements to crude oil pipelines. Developed in partnership with a leading university along with crude oil production and transportation entities, QS Energy's high-value solutions address the enormous capacity inadequacies of domestic and overseas pipeline infrastructures that were designed and constructed prior to the current worldwide surge in oil production. In support of our clients' commitment to the responsible sourcing of energy and environmental stewardship, QS Energy combines scientific research with inventive problem solving to provide energy efficiency 'clean tech' solutions to bring new efficiencies and lower operational costs to the upstream, midstream and gathering sectors.
Let me remind everyone what the company said at the last shareholder meeting. QSEP has 20-30 customers lined up ready to move into sales when they provide commercial data that can be shared and made available to the oil industry/potential customers.
This pilot is being done on the commercial pipeline of a massive fortune 500 oil company.
Since the AOT hasn't even been tested yet, I think it's a good time for refresher by someone who has thoroughly DD'd this story. As I See It.
Don't let shorts scare you into covering their short positions for them.
Noting has changed on the thesis for this investment:
Delivery
Installation
Data (yes it's STILL coming)
PR Firm gets engaged
IR firm gets engaged
conferences
Institutional investment
Sales
Revenue
Cash flowwwwww
Stock = multiple dollar share price
Anyone who got in any size sub .10 will be wealthy.
Those that fought it all the way up? Make = $0
Stay the course.
Sunny is back and badder than ever it seems already hitting stocks like HXPN out of the park.
One of the best traders here. I’m looking forward to following him here!
Delivery
Installation
Data (yes it's STILL coming)
PR Firm gets engaged
IR firm gets engaged
conferences
Institutional investment
Sales
Revenue
Cash flowwwwww
Stock = $?.00
Anyone who got in any size sub .10 will be wealthy.
Those that fought it all the way up? Make = $0
My take on QSEP:
Full disclosure, I am long and a large shareholder.
This is a .10 stock (was a .10 stock) that will be at .50 - $1.50 in the medium term, and then $3.00, and $5.00-$10.00 longer term. All the DD available lays out a clear picture as to how they will get there. This is the potential myself and largest shareholders see for this stock.
It is well known Oil pipeline companies have always had a problem not being able to move enough oil due to the limited number of pipelines, the very thick viscous nature of crude oil, and the vast oversupply of crude here in the US. This is well evidenced by the rail and trucking accidents and fatalities that have resulted in trying to transport crude oil by train and truck; sadly entire towns have burned down. Pipeline companies spend millions every year in an effort move the oil faster and cheaper through their pipelines. They heat the oil, treat the oil with expensive diluent, and add drag reducing agents (DRA's) in order to minimize drag on the oil which slows the oil down while in transport.
In a nutshell, QSEP has developed a new technology (AOT - short for "Applied Oil Technology) that helps oil companies move a lot more oil in an existing pipeline (up to 20% more) and as a result make more money by bringing more crude oil to market.
As far as potential revenue is concerned, pro forma estimates state that on a typical 100,000 barrel per day pipeline, AOT will generate approximately $17 million in annual revenue for QSEP.
AOT increases pipeline efficiencies with a flip of the switch. In many cases by simply being able to reduce diluent by replacing it with the effect of the technology (QSEP has copyrighted “ediluent”), and in other cases by reducing or eliminating bottlenecks, AOT will translate into huge pipeline efficiencies. Especially on thick heavy crude in cases where simple diluent or heat won’t work. If oil companies can sell 10% to 20% more oil onto the market- their revenues can increase by 10%-20%. Even a 3% increase would generate a massive revenue increase for the typical oil company, and specifically the oil pipeline companies themselves both in the US and in places like Canada, South America, China, and Russia. And Especially in countries where the transporters and E&P are the same state run entities like South America. All places QSEP has strong interest from.
QSEP have tested their technology with fortune 500 powerhouses like Kinder Morgan and TransCanada right on the famous Keystone pipeline that moves 500k barrels per day, and both oil giants have paid the cost of the tests (proof that there is serious interest from the industry in the AOT).
QSEP has landed a major pilot agreement with a Billion dollar fortune 500 oil company which will be named in the relatively near future. This will be a demonstration site for all potential customers of AOT to view the technology in action in real time.
If good data comes from this pilot with QSEP’s current partner, it is my belief that the first major contracts are about to come through. The current customer/partner has said they intend to outfit the rest of that pipeline with AOT’s that the pilot is being done on. Once they lease or sell units to any oil company this will be considered adoption in the industry (which is a huge deal in the pipeline industry which rarely sees such drastic innovation). Industry adoption = future sales.
During the last shareholder meeting, QSEP stated they have 20-30 oil companies ready to move forward with the sales process once the data is made public and accessible to customers. Many oil companies are waiting to see the real time oil viscosity reduction data off a commercial pipeline. If the data is good, the industry will move to adopt the technology and the commercialization (sales) phase will commence. This is because QSEP have been cultivating relationships will all of the major oil companies both domestic and internationally for the past 10 years, and they will buy the tech once it is adopted by the industry.
I believe that QSEP will see a dramatic valuation increase if and when it commercializes its technology.
And most importantly, this pilot is being done for a reason. The Oil company is interested in adopting the technology if the data is good, with the aim of sales with this fortune 500 customer. As of Monday April 1, 2019, during an interview at a micro cap conference QSEP CEO Jason Lane stated that the first sales for AOT are expected to be generated from this AOT pilot program with the Billion dollar oil company.
QSEP has 2 distinct revenue generating business models. Both are a recurring revenue model. In addition to leasing units to oil companies, QSEP has developed a revenue model for their business which charges the oil companies a per barrel fee; QSEP would make money on every barrel of oil that passes through the pipeline equaling 10's or 100's of thousands of dollars per day depending on the # of barrels moved. The lease revenue model v.s. toll/fee model will depend on the customer and their needs.
To put a bow on this story, there has been MASSIVE insider buying within the last year. Another fascinating aspect to this stock is that 3 other groups have approximately 65% of the float locked up, so there are not any sharesfor sale in size. So if any decent size investor wants say a million shares, there simply are not a lot of shares for sale. There is about 300M shares outstanding. So about 195M of that is locked up in strong hands if not more. The float has changed hands many times over the years, and imo the vast majority of impatient shareholders were gone long ago after all of the mishaps. All the recent note holders are strong hands, and myself and several others are the ones who own those notes and we are holding tight for the long term.
If QSEP sees their AOT adopted by industry this is easily at minimum a multiple dollar stock. The growth of the company will be exponential with annual recurring revenues over the next 10 years due the demand from the industry, and the vast number of pipelines around the world that will be outfitted with AOT's. QSEP right now has multiple international oil companies that want to deploy AOT on their lines, they are simply waiting for the data. QSEP will have a backlog like that of Boeing on a smaller scale, creating incredible growth for many many years to come. Imo we are in the very early stages of what will become an amazing wealth creation vehicle over the coming years and it's beginning right now.
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Outline of investment thesis in QS Energy (QSEP)
“The simpler it is, the better I like it.” — Peter Lynch
Summary
1. QSEP has developed a disruptive new technology that uses dielectrophoresis
(basically, electric fields) to make crude oil much less viscous, by up to 80%. This
can increase the amount of crude oil midstream companies can transport via
pipeline by up to 20%. With a barrel tariff of $5, moving another 20,000 bbl/d starts
to add up to huge money.
2. The technology has been piloted and shown to work by TransCanada and Kinder
Morgan. There is a lot of peer reviewed science and real-world tests establishing its
efficacy.
3. For years the company was led by ineffectual management that failed to
commercialize the opportunity. That changed in April 2017, when Jason Lane, an oil
industry veteran, took over the company as CEO. He brought on a proactive,
connected board of directors and has been working hard to strike permanent leases
for this product.
4. The company is about to sign some Letters of Intent (Q1-Q2 2018), as well as close
on institutional funding, and ship the tech to South America for installation (Q2-3).
Then, after a period of 30-60 days of testing, a systemwide pipeline installation will
begin (Q4 2018-Q1 2019).
5. As soon as the tech is adopted, the company will have an extremely high-margin,
high revenue business (in the example provided below, an investment of a few
hundred k by QSEP would yield annual revenue of $17m) with an impenetrable
moat, and huge opportunities for reinvesting capital and years of high revenue
growth and compounding returns.
6. The stock is thinly traded. Near-term catalysts for share price increase are the
signing of these LOIs, followed by institutional funding, then the pilot tests, followed
by systemwide installs. It appears that 2-3 LOIs will come out within a several
month period.
Introduction
Oil producers in the U.S. and elsewhere have long faced a problem: the cost and difficulty
of moving crude oil from point A to point B. Crude, especially heavy crude, is highly
viscous and requires massive centrifugal pump power to propel it through pipelines across
the country.
This company (QS Energy) offers a novel way of increasing pipeline capacity and reducing
costs of operating existing infrastructure. The technology, known as the AOT (Advanced
Oil Technology), has the potential to save operators money and move more product more
efficiently than competitor technologies and with a lower environmental impact.
QSE has been developing the technology for over eight years, and right now appears to be
on the cusp of seeing its product adopted by industry.
When the company signs leases for its tech, it will be a business that offers strong returns
on invested capital, a wide moat (it owns the patents to the tech), large opportunity for
reinvesting earnings, double-digit compounding growth for many years, an enormous
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addressable market, and a recurring revenue business model based on the 24/7 flow of the
basic commodity powering modern society: oil.
Background
QS Energy’s product is called Advanced Oil Technology (AOT). It was developed by Temple
University professor Dr. Rongjia Tao, a top scientist in the field of electrorheology. The
company has the exclusive perpetual license to the tech.
AOTs have been tested by TransCanada and Kinder Morgan beginning in 2013 and 2014
respectively. The TransCanada test showed a viscosity reduction of crude from between
8%-30%. The Kinder Morgan test verified that the AOT performed in accordance with
laboratory expectations, and that they demonstrated a pressure drop on the line according
to SCADA data. This is described in a 2017 10K .
But for years this company was run by ineffectual management with a compliant board —
a typical story. The CEO was doing nothing and did not know how to penetrate the oil
industry.
Frustrated with this state of affairs, in early 2017 it appears that shareholders got rid of the
former management and installed a new CEO. Jason Lane, a veteran oil man, assumed
control of the company on April 1, 2017. This breathed new life into the company and
reinvigorated its prospects for commercializing its product. Lane kicked dead wood out of
the board of directors, moved the company to Tomball, Texas, and filled the board of
directors with oil & gas veterans (two current executives at Kinder Morgan, one of them a
high-level executive) who have invested their own money in it.
On January 25, 2018, Lane laid out an ambitious plan for commercial adoption, saying that
he would have systemwide installations of the tech on pipelines in early 2019. The
technology will be extremely profitable when revenue starts coming in.
Some important links:
? Company overview - basic self-introduction
? AOT Technology overview - basic introduction to the tech
? QS Energy CEO Jason Lason Issues Shareholder Update - an overview of the
company’s specific, imminent, commercial developments.
? Application of Electrorheology to Improve Crude Oil Flowing Properties Through
Pipeline - technology paper. Read if you want to geek out.
The technology (AOT)
There are two main ways that oil flows in a pipeline.
Turbulent: Or laminar:
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Obviously, oil companies want flow that is more laminar, since it is far more efficient.
They can move more product.
In short, this is what the technology does:
The crude oil in its original state is on the left — many tiny particles all crashing into one
another.
Once it goes through the device in the middle (the AOT) the particles form chains in the
direction of the flow.
Here are some photographs of the device:
Newly appointed Vice President of Engineering Shannon Rasmussen with AOT installation on a high
volume, high API gravity crude oil pipeline.
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The AOT plugged into the TransCanada pipeline in 2014:
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Here’s what it looks like inside:
Competitor technologies
The other available technologies that do something similar with viscosity reduction are
diluents and drag reducing agents (DRAs). Diluents are refined petroleum products, like
naphtha. They are added to crude to water it down and reduce viscosity so it can be
pumped. They take up space in the line and must be refined out at the destination. These
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are significant additional costs.
DRAs are polymer chains that are added through injector stations after pump stations.
They are added in very, very small amounts, but they’re expensive. They mainly suppress
turbulence.
The AOT does both things - it reduces viscosity and suppresses turbulence. It's solid state.
You plug it in and leave it. It connects with the SCADA system at the pump stations.
Recent changes in management
The tech is only half the story. Management and their ability to execute is also a key part of
the puzzle — and the part that had been missing from the QS Energy story until April 2017.
Jason Lane of JBL Energy Partners quit his job and came onto QSE as CEO in April
2017. Lane has been in the oil business for 20 years and appears to have a thick rolodex.
Lane must have confirmed that it worked through contacts at Kinder Morgan. He also
hired Shannon Rasmussen, formerly a TransCanada pipeline engineer, to be VP of
Engineering. Rasmussen left a cushy job and traveled across the country at short notice
and on half way to take on the new role.
Lane also transformed the board. Proxy here with the new board members — all oil &
gas men:
http://ir.qsenergy.com/all-sec-filings/content/0001683168-17-001185/qsenergy_pre14a.htm .
Note in particular the new board addition of Gary Buchler. COO of NatGas at KM. That
makes the second KM man on the QSEP board.
Interesting to ask: Why does the COO of natural gas at Kinder join the board of a penny
stock that is trading at $0.12?
Insider buying
The total insider buying since October 2016, with most taking place since April/May 2017,
is 5.25 million shares: www.otcmarkets.com/stock/QSEP/insider-transactions . Many board
members have invested tens or hundreds of thousands.
Business model and revenues
This is a pre-revenue company, obviously. No sales.
However, looking forward (if they make sales) the margins are very promising.
QSE will not sell the AOTs, but instead lease them to make recurring revenues.
The January 25, 2018 press release notes that Rasmussen lowered the cost of production of
AOTs by 30-40%. So it may only cost $70,000 to manufacture an AOT, which can generate
that much value in a couple of weeks of operations.
When the first lease contract is signed, valuation of the company will qualitatively change.
It is a high margin business with a huge moat (they own the patents, so they have no
competitors), with recurring revenues and rapid growth for the foreseeable future (this
claim is made based on the imputed significance of one sizable contract: such a contract
would mean industry adoption, which would mean that the AOT offers a substantially
better solution to existing technologies, which would mean continued adoption and,
potentially, eventual ubiquity). This business just ticks off box after box in classic value
investing metrics. And it will also a growth company - moreover, one that no one has
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heard of. Moreover, one that, if all the above plays out, will move from over-the-counter to
NASDAQ in a year or two.
The recent company profile gives some revenue numbers.
Page 4 shows that simply by getting rid of or reducing reliance on diluent, it can increase
crude throughput by ~16% (in the example above).
This means an estimated $17m annual revenue for QSE for a 100,000 bbl/d pipeline. QSE
would have had to pay only a few hundred k to manufacture, deliver, and install that
equipment. This is an extremely high margin business.
In sum
It is impossible to know the future. The best we can do in investing is look at the set-up and
form an educated opinion about what is most probable, and weigh the risk. I would
summarize it like this:
We know from the science that the technology works; we know it works in the lab; we know
it works in prototype; we know it works at a commercial scale. It just hasn't actually been
sold. Now there is a new CEO who is a 20-year oil veteran and who has filled the board with
O&G people. He is about to sign letters of intent with major oil companies, and close on a
round of institutional financing. Insiders are buying shares. When they sign leases, revenue
and margins will be extremely high, and the growth rate of revenue will be extremely high.
The company will go from 0 revenue to millions, then tens of millions of recurring revenue
annually.