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.