Ticker: VLS.L The Stock Market Show, September Smaller scale gas-to-liquids Commercial roll-out continues

Transcription

1 Ticker: VLS.L The Stock Market Show, September 2015 Smaller scale gas-to-liquids Commercial roll-out continues

2 Important notice This company presentation (the Presentation ) has been prepared by Velocys plc ( Company ). The Presentation has not been reviewed or registered with, or approved by, any public authority, stock exchange or regulated market place. The Company makes no representation or warranty (whether express or implied) as to the correctness or completeness of the information contained herein, and neither the Company nor any of its subsidiaries, directors, employees or advisors assume any liability connected to the Presentation and/or the statements set out herein. This presentation is not and does not purport to be complete in any way. The information included in this Presentation may contain certain forward-looking statements relating to the business, financial performance and results of the Company and/or the industry in which it operates. Forward-looking statements concern future circumstances and results and other statements that are not historical facts, sometimes identified by the words believes, expects, predicts, intends, projects, plans, estimates, aims, foresees, anticipates, targets, and similar expressions. The forward-looking statements contained in this Presentation, including assumptions, opinions and views of the Company or cited from third party sources are solely opinions and forecasts which are subject to risks, uncertainties and other factors that may cause actual events to differ materially from any anticipated development. None of the Company or its advisors or any of their parent or subsidiary undertakings or any such person s affiliates, officers or employees provides any assurance that the assumptions underlying such forward-looking statements are free from errors nor does any of them accept any responsibility for the future accuracy of the opinions expressed in this Presentation or the actual occurrence of the forecasted developments. The Company and its advisors assume no obligation to update any forward-looking statements or to conform these forward-looking statements to the Company s actual results. Investors are advised, however, to inform themselves about any further public disclosures made by the Company, such as filings made with the London Stock Exchange or press releases. This Presentation has been prepared for information purposes only. This Presentation does not constitute any solicitation for any offer to purchase or subscribe any securities and is not an offer or invitation to sell or issue securities for sale in any jurisdiction, including the United States. Distribution of the Presentation in or into any jurisdiction where such distribution may be unlawful, is prohibited. Neither the issue nor delivery of this Presentation shall under any circumstance create any implication that the information contained herein is correct as of any time subsequent to the date hereof or that the affairs of the Company have not since changed, and the Company does not intend, and does not assume any obligation, to update or correct any information included in this Presentation. This Presentation is subject to English law, and any dispute arising in respect of this Presentation is subject to the exclusive jurisdiction of English courts. 2

3 Velocys The company at the forefront of smaller scale GTL Leader in smaller scale gas-to-liquids technology 15 years and >$300 million invested in product development Exhaustive global patent protection (>7,600 granted GTL patent claims) Commercialisation underway Commercial reference plant under construction Supply chain is delivering ENVIA Energy Well capitalised with strong resources 52m fundraise in Sept 2014 Commercial center in Houston, Texas; technical centers near Columbus, Ohio and Oxford, UK Permanent pilot plant in operation First class partners offering a complete GTL solution, e.g. Haldor Topsøe, Hatch, Mourik 3

4 Led by a strong management team and Board Industry expertise, technical and commercial experience Diverse backgrounds inc. entrepreneurial & manufacturing and energy industries In the US/UK and overseas Founding members of Velocys and those with experience from BOC, Esso, Phillips Petroleum, Honda, Arthur Andersen, GE, Chevron & Syntroleum Multiple specialisms: IP, strategy, supply chain efficiency, technical and business unit management 4

5 The gas-to-liquids (GTL) process Chemical conversion of gas to refined products Natural gas Reforming Fischer-Tropsch (FT) Syngas (carbon monoxide + hydrogen) Syncrude (synthetic crude oil) Hydro-processing Clean synthetic fuels & chemicals (diesel, jet fuel, lubricants etc.) Or blend into crude LNG / CNG = physical compression. Product remains natural gas GTL = chemical conversion into refined products (petroleum equivalent) Smaller scale GTL: gas-based minirefinery 5

6 Velocys revenue streams By providing enabling technology to deliver complete projects Project development (financing, permitting, feedstock & offtake contacts) Plant engineering and build by EPC e.g. HATCH Process engineering of FT island GTL plant Reforming, e.g. Haldor Topsøe Gas Other components of FT island Fischer-Tropsch reactors & catalyst Hydroprocessing, e.g. UOP Diesel, jet, speciality products Velocys revenue over a 20 year plant life 6

7 Thinking smaller is bringing GTL to the mainstream Large-scale economics at smaller scales Conventional Fischer-Tropsch reactor Note: Reactor capacities differ considerably Velocys Fischer-Tropsch reactor 7

8 Market environment for smaller scale GTL Opportunity for 25 million barrels per day Smaller scale GTL opportunity size Unconventional gas* 18 million bpd Associated gas: 2.7 million bpd Stranded conventional gas*:4.8 million bpd * Assumes monetisation over 100 yrs >25 million bpd With the current oil price gas / fuels arbitrage at hub prices is challenging for GTL However, smaller scale GTL takes the project to the opportunity Takes advantage of many local situations away from the major hubs Expect smaller scale GTL to get established vs larger scale GTL Velocys is in a very strong competitive position relative to direct competitors 8

9 Where smaller scale GTL makes sense in a low oil price world. Sales pipeline project drivers Low cost feedstocks Biomass, waste and coal; (Red Rock Biofuels, GreenSky) Landfill gas - ENVIA Flared gas in e.g. Russia, Far East, Central Asia Isolated markets Alaskan North Slope Mines in outback Australia Remote Russia, Northern Canada and Central Asia High value speciality products Ashtabula GTL, waxes in US mid-west Also base oils for lubricants and drilling fluids US and in overseas markets 9

10 More than fuels Velocys technology allows range of high value products Velocys FT Syncrude Hydrocracking & separation Straight chain paraffinic hydrocarbons Gasoline blend-stock Transportation fuels, tar diluents Mixed solvent Coatings, adhesives Pure solvent Pharma, electronics, personal care Kerosene Aero fuels, surfactants Diesel Transportation fuels Lubricant base-stock Group III+ engine oils Medium wax Candles, construction, tires Hard wax Adhesives, polymers, personal care Highest quality and reproducibility Sulphur, amine and aromatic free Performance advantages in high-end product formulations Added value speciality products 10

11 Premium pricing for FT speciality products High value and less correlated to oil price Revenue $/bbl Opex Capex $/bbl Gas $/mmscf $3 $2 $1 Gas cheaper in certain locations Gas Opex Capex GTL costs

12 First ENVIA Energy plant being built Adjacent to WM East Oak landfill in Oklahoma City, USA 12

13 ENVIA Energy Oklahoma City project Landmark for GTL Landfill gas + natural gas as feedstock Major companies committing to smaller scale GTL Entered into all main contracts Construction underway Manufacture of FT catalyst and reactors complete Mechanical completion expected H Will be our commercial reference plant a major milestone Demonstrate parallel operation of fullscale Velocys reactors 13

14 Site preparation work continuing By Ventech and its subcontractors in Oklahoma City Photos taken early

15 Manufacture of FT reactors and catalyst complete All QA/QC protocols achieved 15

16 Module and vessel fabrication - progress At Ventech, Pasadena, Texas 16

17 Other public-domain commercial projects announced Pipeline growing and progressing Solena GreenSky London Ashtabula GTL Red Rock Biofuels 4,800 bpd plant supplied from Marcellus 2,500 bpd waste-toliquids plant Future expansion planned to 10,000 bpd 1,100 bpd biomass-toliquids plant in Oregon, USA FEED study complete Letter of support from major lender Awarded $70 million construction grant At former Coryton oil refinery in Thurrock, Essex, UK Water permit received Pre-FEED complete (summer 2014) Identified gas suppliers and off-takers Southwest Airlines & FedEx off-takers Equity funding (Flagship) FID targeted 2016 Targeting FID H BA signed offtake for all jet fuel from facility (worth $500m) 17

18 Other projects, not yet announced Pipeline growing and progressing Some more advanced than those already announced For example, one opportunity with a major fuels player in the US Advantaged site with low cost feedstock Equity investor in place Feedstock and offtake supplier in place Oil majors still talking to Velocys about solving their gas problems Recent approach by an NOC: stranded and associated gas Currently engaged with multiple NOCs regarding flared gas Continuing to see interest from financial institutions as potential project investors Not all potential projects will be funded by oil companies with their reduced budgets Financial markets are seeing fewer good opportunities Do have equity to invest where economics are favourable 18

19 Summary Velocys - the company at the forefront of smaller scale GTL Many opportunities for smaller scale GTL even in a low oil price world Longer term a huge market opportunity Well capitalisation with strong resources Led by a strong management team and Board Commercial plant under construction Strong pipeline of other projects Ashtabula, Red Rock Biofuels, GreenSky/BA Diverse set: geography, feedstock, product focus, type of plant 19

20 Think Smaller Stand

21 Appendix

22 Board of directors Industry expertise, technical and commercial experience Pierre Jungels, PhD, CBE Chairman 30+ yrs in oil industry: was CEO Enterprise Oil; ED PetroFina; MD British Gas Julian West Senior Independent Director 40+ yrs experience of energy policy, in the private and public sectors. Director at CERA Susan Robertson, FCA Chief Financial Officer and acting CEO 17 yrs with BOC: was CFO and VP of Japan Air Gases (now known as Air Liquide Japan) Andrew Jamieson, PhD, OBE Non-executive Director 30+ yrs with Shell including Pearl GTL plant. Leading GTL figure Paul Schubert, PhD Chief Operating Officer 30+ yrs in technical & management roles: SGS, Syntroleum, Phillips Petroleum & Englehard Sandy Shaw Non-executive Director 30+ yrs in oil & gas industry including as legal counsel. Founder of Valiant Petroleum Jan Verloop, PhD Nonexecutive Director 30+ yrs with Shell. Responsible for Shell s strategic innovation and technology vision 22

23 The Velocys senior management team Industry expertise, technical and commercial experience Susan Robertson, FCA Chief Financial Officer and acting CEO Paul Schubert, PhD Chief Operating Officer 17 years with BOC 30+ years in technical & management roles Was CFO and VP of Japan Air Gases (now known as Air Liquide Japan) SGS, Syntroleum, Phillips Petroleum & Englehard Jeff McDaniel Commercial Director Laura Silva IP, Legal & Licensing Director Founding member of Velocys management team Founding member of Velocys; developed large pioneering IP estate Instrumental in securing investments of over $300 million 30+ years technology development and commercialization Formerly with GE and Battelle Formerly with Chevron and Battelle Neville Hargreaves Business Development Director Matt Davis VP, Manufacturing & Supply Chain Over 20 years experience as a strategist and partnership builder in energy industries Supply chain efficiency expert; business unit manager of multiple manufacturing operations that generated $188 million in annual revenue Formerly with Esso, Bain & Co. and several entrepreneurial ventures Experience with Parker-Hannifin, Honda and Arthur Andersen 23

24 Huge market opportunity Shale, associated and stranded gas Much shale gas is distributed scale / remote. Estimated at as much as 3,300 TCF in North America and over 6,500 TCF worldwide (Natural Gas Intelligence/EIA) 4.9 TCF of gas flared every year TCF reinjected to avoid flaring alone (World Bank) Only 5% of the world s conventional stranded gas fields can be monetised by large scale GTL / LNG; distributed Conventional scale could unlock up to 50% of remaining fields (IHS) LNG / GTL 18 million bpd Associated gas: 2.7 million bpd Stranded conventional gas*: 4.8 million bpd * Assumes monetisation over 100 yrs >25 million bpd Distributed scale GTL opportunity size Unconventional gas* 4 >50 (in tcf) Velocys GTL , Field size ,922 gas fields <0.1 Distribution of conv. gas fields outside US 24

25 Intellectual property Largest IP position of its kind World s largest microchannel patent portfolio >26,000 claims in >900 patents 75 patents granted in 2013 Over half of patents cover GTL United States Europe/Russia Canada China Granted claims Japan Australia Pending claims South Korea South Africa High quality IP cited over 3,000 times in others patents 100% success rate to date defending challenges / re-exams of own patents Other Number of patents expiring IP portfolio has years to run continually being renewed and extended Foreign filling and divisional applications yet to come 40 In October 2014, UK High Court orders immediate injunction restraining CompactGTL s infringing activities

26 Company information Ticker VLS Market AIM Market capitalisation 119.3m Number of shares 141.9m Diluted weighted average shares 122m Current share price 89.7p * As of 1st September 2015 Top shareholders Company Ervington Investments % holding 21.3 Lansdowne Partners Invesco Henderson Ruffer Key advisers Numis Securities (Nomad & Broker) PwC (Auditor) Barclays (Bank) Capita (Registrars) Camarco (Financial Comms.) 26