If you’re someone who thinks the world should use less oil, that we shouldn’t be building pipelines, that we should do everything we can to move away from fossil fuels, do I have an energy stock for you.
No, it’s not wind turbines. No, it’s not solar cells, or lithium batteries, or weed or pills.
It’s oil. Specifically, oil recovery.
Now, I know what you’re thinking; “Hey Gaalen, I’m a sandal-wearing, neckbeard-sporting hipster with a head full of righteous indignation about the oil business and I want the world to be a better place so NO, foul marketing man, I will not buy your wares!”
I hear you, bro. Robix Environmental Technologies (RZX.C) does too. They’re in your camp.
Look, you’re not going to stop oil from being a thing by paddling out in a plastic kayak and shaking a fist at a passing tanker. You’re not going to stop oil pipelines from being built by telling your friends how crappy it is that oil pipelines are being built.
Oil is a thing. It will continue to be a thing. Hell, it will be even more of a thing than it is now.
And that’s an opportunity, even for you, sweet prince.
When oil flows, more often than not, it gets where it’s going without drama. But sometimes, on the rare occasion where someone doesn’t turn off a spigot properly or notice a pipeline weld that’s heaving, oil escapes. And when it does, it doesn’t want to go home quietly. It sticks to things. It sinks and spreads and gloops.
Which means it’s a great thing that Robix Environmental Technologies has two patented oil recovery technologies that pick up over 90% of oil from water.
According to The International Tanker Owners Pollution Federation (ITOPF), seaborne transportation of oil has been getting progressively safer. During the 70s, there was almost 3.5 million tonnes of oil spilled into the environment, perhaps half coming from disco enthusaists’ hair. Through the 80s and 90s, we more than halved that total with an average of approximately 1.25 million tonnes lost for both decades. Post millennium, we’ve managed to chop those numbers by approximately 80%.
Which is great!
However, even though we’ve managed to average just 1.8 large spills per year since 2010, that’s about 1.9 large spills too much. Any oil spill is an environmental nightmare, and from 1970 to 2015, 50% of all large spills occurred while vessels were underway in open water, massively complicating clean up efforts while damaging sensitive ecosystems that we depend on to live.
With approximately 7,000 tonnes of spilled oil lost to the environment in 2015, the need for advancing our environmental cleanup technologies has never been more apparent.
Remember the Deepwater Horizon Spill a few years back, when an oil platform blew up and the black stuff flowed into the sea for weeks as Big Oil spun in circles wondering what to do about it?
Yeah, you do.
Robix Environmental Technologies (RZX.C), based out of Lethbridge, Alberta, isn’t down with that happened again, and has open water oil recovery tech that it says would have made such a spill far less world-changing.
Robix has a simple, yet ingenious mechanical drum recovery system that successfully recovers more than 90% of oil from water, quickly, cleanly and without chemicals.
The beauty of Robix’s proprietary counter-rotating metal drum technology lies in two basic concepts of physics. First off, there is a natural affinity between metal and oil, known as the Oleophilic Principle, which causes the oil to cling to the drums as they spin. Then the 1-inch space between the counter-rotating drums creates a superior pump effect which lifts oil more effectively than other traditional methods. Basically, the oil clings to the drums as they rotate and is squeegeed off into containers for recovery.
Presently, the company has two patented oil recovery platforms, the P Series and the C Series. Robix’s P Series system is to be used to recover oil from tailings ponds where excess oil has been stored. This series is suited well for the Gulf of Mexico, where recovered oil typically has a 40% water cut and companies like PEMEX, have been using massive tailings ponds that allow the oil/water to separate by gravity over a period of months.
It is no surprise then that Robix inked a deal with PEMEX where the first of Robix’s P Series units is expected to be shipped to PEMEX by mid-2017 as part of a five-year minimum US$50 million contract, expandable to US$250 million if all goes to plan. The P Series will enable PEMEX to move its stored oil from tailings ponds to its refineries more efficiently from both an economic and environmental standpoint. That means big money savings, faster production, and profits for the Robix folk.
Robix’s C Series is intended to operate in inland waters or open oceans. The C Series is currently being reviewed by the Mexican Navy as it carries out its mandate of protecting Mexican waters and coasts from spills. The deal could potentially call for more than 20 of the C-Series COVs to be deployed along the coast and could also result in a more than $50 million multi-year contract.
It takes about 45 days to build and deliver each COV, which are manufactured by Rayco Steel in Sparwood, BC. This is the same company that has for many years acted as a supplier of steel fabrication services to international mining giant Teck Resources.
So, great, now that you sold your gear, where’s money going to come from in future, Robix folk?
Well, that’s another beautiful point to Robix’s plan. The company is NOT going to sell its units. It will instead lease them for initial five-year, multi-million-dollar equipment supply contracts. Robix will receive monthly recurring revenue as part of the services deals.
Something to note is that 95% of Robix’s revenue from its PEMEX contract is guaranteed by the Canadian Government through the Export Development Corporation (EDC). That’s right, government backing, son!
According to the company, their COV technology is easily scalable and proven with a full-scale unit already having been tested by PEMEX. Both the P Series and C Series are built to last more than 20 years of service with only the regular replacement of the units’ Teflon scraper being required, which where those recurring revenue deals come in.
But there’s more!
Not only is Robix helping to reduce oil spillage and waste, it’s moving into water treatment with its acquisition of Formation Fluid, back in October. The acquisition of Formation resulted in the creation of Robix’s Water Division, a new business segment that will use Formation’s proprietary three-stage waste-water mobile treatment plant, known as HydroCycle.
Each plant is able to process up to 1000 cubic metres of water per day and meets or exceeds CCME Guidelines for reusable water for: Boilers, frac water, water floods and drilling operations. Robix is currently in final RFPs and in advanced consideration for several potential multi-million dollar contracts within Canada, which makes it even more of a total waste treatment solution.
Robix’s PEMEX contract and its October acquisition of Formation point to what should be an active and news-heavy 2017 as the company’s next generation tech pushes the organization towards profitability.
I see long term growth for Robix if it can execute on what seems to be a simple leading-edge tech (and with an approximate 50% profit margin).
Oil profits for environmentalists! What a time to be alive!
FULL DISCLOSURE: Robix Environmental Technologies is not an Equity.Guru client, but we have been watching it for some time and believe it to be a solid watchlist addition going into 2017.