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.
All good stuff Zizek, except for one point. I don't think either STWA or TransCanada would be running this program without having first subjected the crudes they will be using to exhaustive tests in the laboratory.
A field trial on a working pipeline obviously introduces other elements, which is why it is taking place. But they must already know that electrorheology has a significant effect on their particular grades of crude. To conduct an expensive and time-consuming pilot program without this information would be crazy. I don't believe they are crazy.
I think we can reliably deduce that TransCanada already know that AOT positively affects their crudes in the laboratory. Without thus information they would already have shelved the project. They now want to find out if it works in the field.
Mr Sano, I am pleased you feel the TransCanada development is a positive step.
I think there are a couple of things that can be surmised from this test.
1. TransCanada would not embark on the program unless they were pretty confident from previous tests held at Temple, the DOE and PetroChina that the technology works. It has been argued elsewhere that if they really believed in the technology they would fit out an entire pipeline, but I don't think any company would be so incautious. I think they are doing exactly what you would expect them to be doing in the circumstances
2. To sign a lease agreement involving hard cash, even if it is not a lot of money by TC's standards, they must know that STWA are capable of delivering the relevant units, not only for this test but also for an entire commercial pipeline should they decide to adopt AOT on a large scale. On this basis, I think we can assume that STWA have established the necessary manufacturing partners to roll out production.
Of course, it is always possible there will be problems with the test, and it may be that having evaluated the technology TransCanada will decide not to adopt it. Which is why, as I have said elsewhere, we are in a holding pattern until the test is complete next year.
In the meantime I think it is reasonable to believe that STWA are establishing comparable test programs with other pipeline companies. They were as good as their word in relation to the TransCanada program, there is no reason to believe that at least some of the other NDA's they have signed will not also come to fruition.
I know you have concerns about the salaries paid to senior STWA management, but as the saying goes, 'if you pay peanuts you get monkeys'. If they are producing these kinds of results I personally think they are worth the money. I don't imagine any Tom, Dick or Harry could walk into a major pipeline corporation and negotiate a deal of this kind.
Whatever may or may not have happened in the past, and I think even the most fervent STWA supporter would acknowledge that the company has had a chequered history, there is now solid evidence that the current management are in the process of turning things around. To what extent they succeed remains to be seen.
I hope you agree with this evaluation and that one day you will feel able to change your opinion and join the rest of us longs.
As I understand it mr sano, AOT is intended to be a supplement to existing viscosity reduction methods. If I am right in thinking this, the fact that they are using diluents on Bitumen doesn't mean AOT is not applicable. Does that sound right to you?
Go through STWA's SEC filings, but as far as I can see they have not issued any convertible notes or shares since July 2012. If I have missed something I stand to be corrected.
I am not saying people were not exercising warrants in the latter half of 2012, nor am I saying they were not converting convertible notes. I am simply saying that none were issued after this date.
Warrants are indeed exercised but a payment has to be made, and on the last round of options it was 30 cents a share.
I agree that not to pay 30 cents for shares that were trading at the time for over $1 would be a bit crazy, but whether or not they were all taken up I don't know. I don't think these warrants were held by just one person, and it may be that some people did not have the cash liquidity to pay for them.
But as I say, I have not been able to find any information on this. All that I do know for sure is that according to STWA's SEC filings, 1,951,132 were available to be exercised before July 31st 2013.
SoxFan,
I have been looking through STWA's filings, and the precise situation in relation to exercisable warrants is as follows.
The last warrants that were exercised were issued on July 31st 2011 and expired on July 31st 2013. They provided the option to purchase 1,951,132 shares at 30 cents each, resulting in a total potential income to STWA of $585,339. I have not been able to establish precisely how many of these options were purchased, but whatever the amount, this money is already in the bank.
There are five other sets of warrants that are still due to be exercised.
On 15th October 2011, 682,880 optional shares were issued at 30 cents each, resulting in a total potential income to STWA of $204,864. These will expire on 15th October 2013.
On 13th December 2011, 6,066,016 optional shares were issued at 30 cents each, resulting in a total potential income to STWA of $1,819,804. These will expire on 13th December 2013.
One 13th January 15th 2012, 4,082,936 optional shares were issued at 30 cents each, resulting in a total potential income to STWA of $1,224,880. These will expire on January 15th 2014.
On 13th February 3rd 2012, 1,806,200 optional shares were issued at 30 cents each, resulting in a total potential income to STWA of $541,860. These will expire on February 3rd 2014.
On 23rd July 2012, 1,422,300 optional shares were issued at 40 cents each, resulting in a total potential income to STWA of $568,920. These will expire on 23rd July 2015.
So the total potential income STWA can anticipate from exercisable warrants between now and July 2015 is $4,360,328.
The first four of these sets of options (at 30 cents each) were issued when the market price per share ranged between 20 and 40 cents. The last options (at 40 cents apiece) were issued when the pps was in the region of 50 cents.
These options were issued, every two or three months, in conjunction with the purchase of shares or convertible notes. The money from these purchases was clearly necessary while the company was still in R and D and no income from sales was anticipated in the immediate future.
It is now over a year since the last private offer. So my question to you, is why have they not sold any shares or convertible notes in the last 12 months, given that the share price has multiplied in the interim? If they do not anticipate income from sales any time soon, surely this would be the logical thing to do.
If, as you and Mr Sano regularly imply, STWA management's primary raison d'etre is to live off money raised from private placements, why not sell more stock? With the market displaying greater confidence in the company, STWA could sell shares for two or three times the figure they have sold them for in the past, as well as having warrants at a comparable price to be exercised in the future. Why would they not do this?
There is only one explanation that makes sense. They clearly believe that, together with the potential $4.36 million expected from outstanding warrants, they have enough money in the kitty to cover their operating expenses until the company is earning an income from sales; which means there is no need to further dilute the stock. A rather responsible standpoint one might think.
If STWA management had even a modicum of concern that a significant income stream would not be forthcoming in the foreseeable future, they would surely have conducted another private placement, if only as an insurance policy. And yet nothing for over a year.
With the recent announcement of the TransCanada leasing agreement, as well as other negotiations that are reportedly in the pipeline (both literally and metaphorically!) it is not hard to see where this confidence is coming from.
If I were you I would drop this line of argument. This is not a horse that will run.
Hi Mr Sano, Thanks for your post. Since everything hinges on the success or failure of the Trans Canada pilot program, can I suggest that we lay down arms until the results are forthcoming?
I don't think anyone would argue that mistakes have not been made in the past, but there is not much point rehashing them now. What more could one ask of STWA management than a pilot program, on a productive pipeline, of a major North American corporation? Let's wait and see the outcome.
Hi Perfection and Ease,
Well I certainly wasn't expecting that response! I can now see where your moniker came from!
I am nor sure that I do have any doubts about STWA at the moment. I may have had moments of anxiety in the past, but following the tests at Temple and the DOE I feel the science has been proven beyond reasonable doubt, and with the recent lease agreement I am confident they are able to manufacture the units and bring the technology to market.
So why do I bother to even engage with Mr Sano? Only because I think bashers can have an impact on share price, as well as on shareholders of a more nervous disposition, and I see no reason why one should not take the fight to them. If other board members had not stood up to them over the past few months they would have run amok. One has only to look at what happened last September.
Although this is a matter of opinion, I think this activity does have an impact on the company's progress. We are all agreed that an uplist to NASDAQ would be an extremely positive move and I have no doubt this will happen sooner or later. However, it would surely be better if it happened sooner and if unrealistically negative posts are impeding this progress, then why not expose them for what they are?
Having said this, with the signing of the TransCanada contract there is not all that much more to say at the moment. Mr Sano has conceded that if the pilot program proves positive he will change his mind about the company. So this debate is essentially over until the results of his program are published. Whatever one's opinion of STWA's past, it is not relevant to what is happening now and there is not much point rehashing it. STWA have a genuine agreement with a major corporation and it will not be long before we know the outcome. What more could one ask of Cecil and co?
Other than that I am in rather a sanguine frame of mind at present. After all the trials and tribulations of the past, STWA is rapidly turning into a fairy tale with an extremely happy ending. What is also gratifying is that so many of the beneficiaries of this story seem to be rather nice people, such as yourself dear sir - or is it madam?
So thanks for your personal insights and words of support and I look forward to meeting you in the orchard.
Mr Sano, It is true that the US Department of Energy Rocky Mountain Oilfield Testing Centre loop could only handle 200 gallons a minute while the new AOT midstream device is designed to handle 5,000 gm. It was clearly necessary to scale up the program. Whether this could be achieved only on a commercially productive pipeline or whether another test facility existed on which they could have installed a single AOT midstream unit I don't know.
I think it is reasonable to believe, however, that TransCanada must have looked at the data from the 200 gm test at the DOE facility and seen no reason why a 5,000 gm device would not produce comparable results, and hence similar cost benefits. They presumably concluded that if the technology could be scaled up from a test tube at Temple University's physics laboratory to a six inch pipeline at the RMOTC, there was no reason why it would not scale up further to four AOT midstream devices collectively pumping 20,000 gallons a minute on the 36 inch Keystone Pipeline.
That, in my opinion, is why they were prepared to put in the time, resources and money to run the pilot program. If they had been presented with less substantial evidence I very much doubt they would have done so.
Your assertion that this might just be an environmental publicity stunt is belied by the fact that neither STWA nor TransCanada have publicised this program beyond the obligatory 8K. Of course, I have no doubt that if or when it is successful, as they clearly hope or believe it will be, they will trumpet their environmental credentials to the heavens, but to suggest that the program itself is a publicity gambit is obviously not true.
With regard to Cecil's announcement in 2009 I am not in a position to judge his motivation, although, personally, I do not think it was either cynical or dishonest; he has certainly not sold any of his own shares. What I do know is that since he focused STWA's efforts on AOT around the same time, he has made all the right moves. There has been a logical progression from laboratory testing, to prototype design and development, to field testing, to commercial design and development, to the current pilot program on a productive pipeline. Some people may have bailed during this period, but as far as I can see most have stayed the course. And for those who have kept the faith, it would appear that they are about to be richly rewarded.
I honestly don't know why you are so consistently negative Mr Sano. You are clearly not stupid so something else must be at play and there are a limited number of possibilities. In fact, there are only two I can think of. Either you are intent on driving the price down in the pursuit of a short term profit, as I suggested in my last post. Or you have some kind of nihilistic bent, which makes you look at even the most optimistic news from a worst case scenario.
In either case, it is not hard to see why you meet with so much opposition from other members of this board, almost all of whom have invested their own money in a company they believe in. Although the tide is rapidly turning and they have, in my opinion, little to fear in the future, they clearly take it personally when they see their investment threatened by what I would imagine they perceive as malicious propoganda; from someone who has not put his own money where his mouth is. Unless, of course, you have been less than truthful and you are betting on the price going down.
If I was in your shoes and I was in receipt of the news about TransCanada I would say something like this: 'I have had my misgivings about STWA in the past but this is an extremely positive step and perhaps I was mistaken. Let's hope I was'.
Instead you are as determined to pour cold water over this event as you were to make the most dire and, as it turns out, competely inaccurate predictions in the past. Which is why I am inclined to believe you are either out to make a cynical profit or you have an emotional screw loose. What other explanation is there? Why else would you put so much energy into defaming a company you don't believe in?
That, in any event, is my opinion. I would be interested to know what everyone else thinks.
Mr Sano, Your inability to concede even the smallest error of judgement, in the face of overwhelming evidence running contrary to your position, undermines everything you have to say, including any positive contributions you might have to make.
Do you seriously believe TransCanada would have embarked on this program if they had not checked out the science first? Correct me if I am wrong, but I think it is reasonable to believe they have a modicum of expertise in this field. If they had any doubts don't you think they would first have run the technology at a test facility, as opposed to a commercial pipeline? And do you think they would have paid for the privilege? The onus would surely have been on STWA to convince them of the science before they parted with any money.
As I said in my last post, which you failed to respond to, a consistently negative interpretation of events is just as much an enemy of reality as even the giddiest brand of optimism.
I feel somewhat foolish even presenting this argument because you seem like an intelligent person and are presumably aware of what I am saying - unless I have misjudged you and you are not as smart as I thought you were.
Which throws me back to what everyone on this board has felt all along; i.e. that you are not interested in reasoned debate or the possibility that STWA might make a positive contribution to the economy and/or natural environment. Your sole concern is to disseminate enough fear and doubt to drive the price down, either for your own or for someone else's short term profit. As I also pointed out in my last post, this activity is not without casualties. People lose money as a result of your propoganda.
Fortunately, for those of us who believe in zero and have put our money where our mouths are, events are rapidly turning against you. Over the next few months, I predict, you will become an increasingly isolated and beleaguered figure as new contracts are announced and STWA goes from strength to strength. At which point, I trust, you will either go through a conversion of Damascene proportions or quietly disappear.
This endless pessimism does get a little monotonous.
Mr Sano, Might I also suggest that you temper your pessimism. If you believe that some members of this board are inclined too far in the direction of enthusiasm, your own tendency towards doom and gloom is at least as pronounced, probably a lot more so.
You have made numerous dire assumptions in the past, without any evidence to support them, which have subsequently turned out to be false. They were simply your opinion. This has just as distorting effect on rational debate as exaggerated optimism.
If you wish to join a measured discussion that is in everyone's interests, can I suggest that you commit yourself to a more open approach; one that gives equal credence to unknown possibilities as it does to unknown dangers.
Because, as it turns out, the positive outcome envisaged by the optimists has been much closer to the truth than the calamitous events predicted by yourself.
These are not victimless forecasts. I know of at least one person who sold his entire shareholding on the basis of the relentless negativity dispensed by yourself and the other bashers, who is now bitterly regretting his decision. This may not weigh on your conscience but I think it should.
In the interests of humility, fairness and reason can I recommend that you acknowledge this error and endeavour to be more even handed in the future.
Quite right alkaline, I stand corrected.
I think, however, that the central point stands. I very much doubt Trans Canada would be conducting a pilot program on an operational pipeline if they were not fully convinced that the technology works. If they had the slightest doubt they would surely be running it at a test facility.
Mr Sano, You have not adequately answered my point.
Why would TransCanada risk disrupting production on their commercial pipeline network with a technology they do not yet believe in? To install AOT will presumably require the suspension of their current viscosity reductions applications (i.e. either diluents, Drag Reducing Agents or heat) If AOT does not work TC could lose a lot of money. Even a single day's outage would be extremely expensive
Surely the sensible thing for them to do if they are not yet convinced, would be to take one unit, not four, and install it on a test facility. The RMOTC flow loop with its six inch pipeline may not be large enough for this purpose. But one has to believe that a company with TC's resources could set up an alternative testing site. I would imagine this would be considerably less expensive than the money they might lose from a suspension of production.
The only logical explanation for the lease agreement is that TC already believe in the efficacy of the technology. The pilot program is not to find out whether or not it works. They clearly know it works well enough to replace their existing viscosity reduction applications at a commercial installation.
Apart from gaining a deeper understanding of the technology from an operational perspective, the purpose of the test is surely to discover to what extent it works; i.e. just how much additional revenue they are likely to make from installing it.
You say that you are not buying shares on the basis of this news. If you are not able to take a risk with this amount of supporting information I wonder how you make any money at all.
Mr Sano, The fact that Trans Canada are prepared to pay for the installation and leasing of AOT on an operational piece of pipeline would indicate a huge amount of confidence in the technology.
They must have studied the technical data from previous field trials and been convinced. If they had any doubts about its effectiveness they would surely have installed it on a test pipeline, such as RMOTC, rather than risk interrupting production on a commercially active pipeline. As far as I remember, STWA have a five year lease on the Department of Energy facility so this would surely have been easy to arrange. Trans Canada could have run a test for as long as they wanted in Casper Wyoming, with all of their own protocols in place, without any financial risk whatsoever.
The fact that they are prepared to pay for the technology, even if they are getting it at an introductory rate, further reinforces this position. If they had an doubts they would surely have insisted that STWA meet the cost.
This is manifestly not a pilot program to find out whether the technology works, as you are implying. The test results from RMOTC have clearly convinced them that it does. This program is presumably to find out just how well it works from a commercial perspective before making a larger commitment. However convinced they may be by AOT's effectiveness, they would be unlikely to install it on their entire pipeline network, or even a substantial part of it, without a controlled trial on one section.
With this in mind, don't you think it is time to be a little more upbeat about STWA? One can only imagine what it is like to live in a world where the glass is always half empty.
I quite agree E808.
In the past just raising this question has been the one thing guaranteed to have one's posting removed from the board by the powers that be. And yet it would appear to me to be almost as central to the credibility of a poster's argument as the argument itself. In criminal investigations it is called 'motive'.