Clean TeQ Water Ltd (ASX:CNQ) has signed an exclusive distribution agreement with the National Energy Services Reunited Corp to promote the company’s unique water treatment and reuse solutions to oil and gas companies in the Middle East.
The deal is seen as a “substantial expansion” of the company’s ability to promote its technology in the Middle East.
NESR, one of the largest oilfield services providers in the Middle East and North Africa (MENA) and Asia Pacific regions has established a water conservation and management business focused on improving water availability and re-use in the oil and gas sector.
Clean TeQ Water’s suite of water technologies is targeted for such applications and provides NESR with a competitive advantage in this market sector.
Promote technology in the Middle East
Clean TeQ Water chief executive officer Willem Vriesendorp said: "We are delighted to be working with NESR, a world leader in water conservation management businesses with an established track record of delivering exceptional service and deploying optimal technical solutions to solve the challenges of oil and gas customers.
“We consider this cooperation a substantial expansion of our ability to promote our technology in the Middle East.”
Distribution agreement
The distribution agreement is in response to the increased level of interest shown by the industry following the contract with NESR to design, procure, deliver and install a HIROX (High Recovery Reverse Osmosis) plant to treat bore water used for enhanced oil recovery in the Middle East.
This solution is expected to dramatically reduce the required water withdrawal, energy and chemicals use for producing a tonne of treated water.
The agreement will be effective immediately and as part of the distribution agreement, Clean TeQ Water will work with NESR exclusively in the oil and gas sector across the Middle East and in selected other African and Asian countries.
Exclusivity will be for an initial period of five years, provided minimum revenue objectives are met along the way.
The oil and gas sector is expected to dramatically increase its investment in environmental solutions over the coming years to reduce its environmental footprint according to internal targets and to address concerns from shareholders.
There are no material termination provisions and the agreement is subject to standard terms, conditions, and warranties typical of a contract of this type.
Clean TeQ Water has the right to terminate the exclusive rights granted after the second year if NESR fails to achieve minimum performance requirements.
Build, own and operate model
Besides the standard integrated equipment supply model used for the first contract, Clean TeQ Water and NESR plan to cooperate and co-invest in alternative delivery models including BOO (build, own and operate) where parties jointly invest in the building the plant and sell the treated water to the end-user under long term agreements.
Clean TeQ Water is pursuing build, own and operate (BOO) as an attractive future alternative sales model that can generate attractive and stable multi-year returns.
Clean TeQ Water expects the revenues derived from this agreement to be material.
NESR
NESR was founded in 2017 as one of the largest national oilfield services providers in the MENA and Asia Pacific regions and was the first national company from the MENA region to be listed on the NASDAQ.
It has over 5,000 employees representing more than 60 nationalities in over 16 countries.