Quadrise Fuels International PLC (AIM:QFI) said the rise in crude oil prices in the wake of Russia's invasion of Ukraine is positive for the company.
In its interim results statement, the alternative fuels supplier said the demand for heavy fuel oil (HFO) in the power and marine sectors has remained strong, with the latter driven by the increasing use of exhaust gas cleaning systems to comply with IMO 2020 (regulations on sulphur oxide).
Quadrise expects that distillate fuel demand will continue to recover in 2022 driven by the transportation sector. This will be positive for refinery margins and the HFO-distillate spread, underpinning the economic value of refinery residuals as an energy source for Quadrise’s MSAR and bioMSAR in its key markets.
The publicly supported global energy transition towards the adoption of renewables and low emission fuel options is accelerating interest in bioMSAR and increasing the market opportunity in various sectors, Quadrise added.
During the next 12 months, the company plans to demonstrate the long-term economic and environmental benefits of MSAR and bioMSAR projects through commercial-scale trials which, on successful completion, will lead to supply contracts and commercial revenues. In parallel, it will focus on identifying and developing new net-zero fuel solutions, as well as looking into opportunities to deploy its MSAR emulsion technology platform in new applications.
The company's cash balance of £5.6 million at 31 December 2021 is sufficient to reach revenue generation in the second half of 2022 subject to the conclusion of commercial project agreements.
Non-project cash expenditure is currently around £240,000 per month.
The group recorded a loss of £1.5mln for the six months to 31 December 2021, versus a loss of £2.3mln the year before. This included production and development costs of £0.7mln (2020: £0.6mln) and administration expenses of £0.7mln (2020: £0.8mln). The prior year's loss of £2.3mln also included a non-cash fair value loss arising on the valuation of convertible securities of £0.7mln.
"Increases in both energy prices and volatility exacerbated by Russia's invasion of Ukraine have further emphasised the reliance that the global economy has on fossil fuels and the need to more efficiently utilise hydrocarbons as the world transitions towards a Net Zero future. The focus on large scale and immediate Net-Zero carbon solutions to climate change often underplays the valuable and critical role that must be played by transitional technologies such as Quadrise's. Our proven MSAR and low carbon bioMSAR technologies are available immediately and can generate both cost and emissions savings for adopters without the need for large scale capital investment,” declared Jason Miles, the chief executive officer of Quadrise.
“Quadrise has progressed a range of its core projects and business opportunities during and following the period, underlining the advantages of our strategy of pursuing a diversified range of projects; however, progress in converting these projects to agreements has been slower than anticipated, largely due to factors beyond the direct control of the company,” Miles said.
“During the year, opportunities which maximise our ESG [environment, social, governance] credentials will be prioritised. We expect to continue to develop the next generation of bioMSAR and Net Zero energy using our innovative technology platform, as well as investigating complementary opportunities,” Miles concluded.