Quadrise Fuels International Plc (“Quadrise”) is a London (AIM) listed company engaged in the manufacture and marketing of a low viscosity oil-in-water emulsion fuel (MSAR®) for use as a synthetic, low-cost and environmentally friendlier substitute for conventional heavy fuel oil, in power generation and marine diesel engines as well as in on-site utility applications in refineries and industrial applications. Quadrise is the licensor of the MSAR® technology to refining partners who sell the fuel to end customers. Subject to continued positive results from current commercial-scale trials, Quadrise could start delivering early-stage commercial revenues during 2017/18. We believe that at 10p per share, a price very close to a 3-year low, the market is pricing-in a rather conservative production ramp-up.
The MSAR® fuel is value accretive to refiners and offers material cost savings and enhanced environmental performance to consumers than heavy fuel oil (HFO). Compared to a traditional refinery process where refiners dilute residues to create HFO by using a portion of the higher value distillates slate as diluents and therefore reducing higher value distillate products’ sales, the MSAR® technology enables refiners to produce a synthetic HFO using water and a small amount of speciality chemicals. This provides refiners with a low cost, scalable upgrading technology that enables refiners to sell all the higher value distillates, rather than using some of them as diluents to create HFO.
The difference between the corresponding increase in revenue and the variable cost of the MSAR® process to the refiner is positive and represents a benefit to be shared between the refiner, the customers and Quadrise as licensor of the technology.
The environmental benefits of MSAR® fuel manifest themselves by the ability of customers to remain compliant with ever stringent environmental regulations, with respect to Nitrogen Oxides (NOx) and carbon particulate emissions. This is in addition to the cost advantages of MSAR® versus HFO which we believe provide definite pricing power to the MSAR® supply chain providers.