Montreal Investment ConferenceI finally was able to free myself and go to conference today. If you wonder, yes, I attended Jim Letourneau's presentation on the coming boom in enhanced oil recovery. I even had a chance to chat with him after the presentation and I took the opportunity to ask a few questions about WEE!
I'm happy to share with you the information I got this afternoon. As a cautionary note, I felt that Jim was not there to pump WEE but rather talk about an investment opportunity. Consequently, Jim was open to talk about the enormous potential he sees in WEE and also the risks associated with a junior stock at this stage of its development.
First you shouldn't expect a big rise in interest in WEE following this presentation since there was about only 10 of us attending the small workshop that was set for about 30 people. Jim will be speaking in the main conference room tomorrow morning at 9:00 but I don't know if he will speak about WEE tomorrow. I find that the timings for his presentations are not the best since he has to speak at lunch and early in the morning. Too bad for those who won't profit from his insights.
Enough about the conference, now back to WEE and some clarifications I got from Jim.
On the Pemex deal:
- 36 waterfloods = 36 tools to be installed
- Pemex represents an enormous potential for WEE as it is 10 times bigger than Encana
- He's more cautious however regarding the timeframe it could take to get things going in Mexico. Having been following WEE for a long time he has seen companies taking a long time to actually install the tools. He doesn't know how much time it will take with Pemex. Perhaps 2 years? Perhaps less? I had a feeling that he would like to see things moving faster in the oil business....!
On Encana:
- Very positive results from the trial.
- They make $30 out of every $1 they invest in WEE tools.
- They want to deploy more tools but they are trying to do it at a lower price. WEE now gives the Pemex deal a s a reference and are saying that they can't go lower than that after having set an agreement with a major client at this price.
-Tools have been in use for more than 2 years and they know it works. If things could go faster in the oil business...
Top 5 oil producer:
- Definitively BP
- BP did extensive tests with WEE 4 years ago and they know that Powerwave works.
- They are finally installing one tool. Things don't go fast in this business, so you don't know when will be the next development with BP.
-Lots of politics inside BP has slowed things in this case. BP develops EOR technologies and this probably creates resistance from their staff when it comes time to move to an outside technology
-When will the next developments be with BP? Sooner than later hopefully but....
Injections wells:
There are 300,000 of them in North America according to him.
I asked him if there are known cases where Powerwave wouldn't work. He answered that naturally fractured reservoirs don't respond well to water injections in general and that Powerwave wouldn't work well either with these reservoirs. I then wanted to confirm with him if I was correct to assume that if normal waterflooding has shown benefits in a field, it would probably work even better with Powerwave. His answers was these fields are all potential targets for Powerwave.
He also told me that there are some operator related risks and that the tools had to be installed and configured appropriately to provide benefits.
share price:
WEE had a tremendous ride lately. It is possible to see the price go down in the short term, but the potential contracts pending might hold the price. The next major resistance will be at $5.. To go higher than that, WEE will need to have constant revenues that will justify a higher share price.
Finally, he thinks WEE as the potential to do very well. The share price could easily move 20 or 30 times higher, but that will probably take time. If you are willing to be patient with this stock, you might be largely rewarded.
Hope this helps!
GLTA