Replies to post #38178 on QS Energy Inc (QSEP)
On November 28, 2016, QS Energy, Inc. (the “Company”) entered into a Field Test Agreement (“Agreement”) with a large Canadian oil company, located in Calgary, Alberta (“COC”). The Agreement confirms COC’s desire to field test (the “Field Test”) the Company’s AOT Viscosity Reduction System (the “AOT Technology” or “AOT”) at a COC facility utilizing a fully functional laboratory-scale AOT device (the “AOT-Lab”) to assess the technical capability of the AOT Technology under field operating conditions. Toward this end, the Agreement provides, among other things, that the Company shall deliver and setup, and thereafter Field Test, the Company’s AOT-Lab equipment at a suitable location to be provided by COC (the “Services”). The Field Test shall be conducted and completed over a consecutive five (5) day period, by a date no later than March 31, 2017. As compensation for the Company’s Services, COC has agreed to pay the Company a fixed sum of $50,000 (USD), payable in two (2) equal installments of $25,000 (USD), each due no later than 30 days from COC’s receipt of the Company’s invoice, the first of which was issued by the Company upon execution of the Agreement, and the second of which shall be issued upon delivery of the Company’s Final Report to COC. The Final Report shall contain, among other things, the results of the Field Test, including technical information and data related thereto, preliminary specifications for a full-scale AOT configuration optimized to pipeline operating parameters supplied by COC, and a pro forma benefit analysis applying the Field Test results to the Company’s recommended AOT configuration and operating parameters provided by COC.
The above description of the Agreement is qualified in its entirety by reference to the Agreement, a copy of which is attached hereto as Exhibit 10.1, and incorporated herein by reference. The name of the COC has been redacted on confidentiality grounds.
With respect to any Confidential Information, the Confidentiality Agreement shall govern the use and non-disclosure obligations of the Parties.
Following an initial presentation to a major Columbian oil pipeline company's leadership, we are currently in the process of discussing the potential deployment of customized AOT systems in support of their plans to favorably affect the flow of crude oil through existing lines and deliver overall better efficiencies of their sprawling infrastructure. The opportunity for improving the performance of their operations with strategically placed AOT systems provides an ideal application of our patented technology. The bulk of crude produced in Colombia ranges from heavy to heavy sour to intermediate, most of it requiring diluents such as naphtha to encourage acceptable flow rates. Among the heaviest grade of Colombian production are Castilla Blend from the plains region which is transported by pipeline to Coveñas port in the Gulf of Morrosquillo on the Atlantic Coast; Magdalena Blend, a heavy sour crude produced in the Magdalena Medio basin; and Vasconia crude, produced by mixing output form the plains region and the Upper Magdalena.
Due to this Columbian company's status as a vertically-integrated energy entity, controlling vast aspects of exploration and production, transportation and refining, they present us with the potential to use our industrial hardware in a variety of configurations to deliver greater efficiencies throughout their operations.
In pursuit of additional opportunities within the Colombian energy sector, we have established an agreement with Finamco SA, an asset-based lender active in high-growth and emerging markets in Columbia. Working with Finamco management we expect to continue to benefit from introductions to senior management at several of the other 12 private sector crude oil producers active in this market, beyond the one that they have already provided. As in other pending overseas AOT projects, our goal is ensuring the most favorable terms possible for our shareholders and maximum return on investment for the customer.
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