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Monday, August 11, 2014 5:16:33 PM
I recorded the file and saved it here: https://www.hightail.com/download/ZUcwY05sUnJrYUFzeHNUQw
The only new thing I could get from this call was this line, in reference to the TransCanada test:
“Although testing and operational details are protected under a non-disclosure agreement, I can say that we are very encouraged by preliminary test results. We will report ongoing test results to you in the future.”
And there was the part about the TransCanada test. Mr. Bigger said: "In June of this year installation was complete, our equipment was commissioned, and the lease was accepted by the pipeline operator. Full scale testing commenced in July. On July 15th we were notified by the pipeline operator that they believed the full term of the lease would not be necessary to successfully complete testing. As such they would be terminating in 90 days..."
This is a new piece of information. Assuming it is true, it means that it took them several months from actually bringing in the AOT to getting everything ready for the testing to officially commence. About four months, if this is to be believed, because we have photographs from February and March showing it being installed.
Again, if it's true, it would indicate that the testing only went for two weeks before TransCanada decided that they'd seen enough to cancel the lease.
I'll be interested in the market's reaction to this. I think it's positive but remains far below what we were waiting for. However, this extremely short testing timeframe is quite remarkable. It is fully consistent with extraordinary test results. I suppose it's also consistent with horrible test results. But if that's the case, I would not expect the "10-15%" and the "up to 56% viscosity reduction" numbers to appear in that corporate profile, and I'd expect Mr. Bigger to say something more circumspect than that "we are very encouraged."
Finally, the corporate profile which mentioned those numbers came out on July 28. If testing indeed started in July, they worked very quickly to spit out that document, particularly given that management was supposed to be in Europe for most of July.
The timelines here are a little strange, in fact. The 8/8 news release said "management recently returned from a shareholder and investor road show which included a series of meetings in London, Geneva and Zurich from July 3rd through July 26th, 2014." Are we to believe that testing began in July, just as STWA executives were leaving for an investor jaunt through Europe? Am I the only one that finds this odd? I would have thought that if this is the first test, and it's just getting started, that you would want to be on hand as soon as they turn the damn thing on to know right away what the data SCADA system is spitting out.
We also have the datapoint that it seemed to be plugged in and unattended throughout March and April (I believe is when one user posted video and the like.) So, why did it take three or four months after the equipment was delivered and attached to "officially" start the test? And why did STWA announce that they had first revenues on May 27? (http://ir.stockpr.com/stwa/press-releases/detail/1844/stwa-reports-initial-revenues) Was that referring to the month of June? I guess that would make sense.
Confusing. I'm not suggesting that there is anything untoward going on, but I find it intriguing. Maybe I am overanalysing this. If TransCanada really only did run it for two weeks before concluding that they can cancel the lease, yet they let it sit there for three months before starting the test, I wonder what that means for their decision-making process. Will they take forever to decide if they want to buy it? Or are they costing out a whole installation package now? Just what's going on? I continue to believe that these 10-15% flow increase numbers came from the TransCanada test, and it wouldn't take much to just shove those into an already mostly-complete Corporate package. Moreover, the IR people could easily have prepared all that and Mr. Bigger just reviews it from his hotel room in Paris before an investor meeting. All that makes sense. It would mean they're working hard and have extreme confidence in the technology. I hope that TransCanada does not take forever and a day with this.
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