Quadrise Fuels lands Kuwaiti partner for MSAR development

Quadrise Fuels International on Wednesday landed a major Kuwaiti partner as it entered into an agency agreement with Hawazin Regional Trading Company for its MSAR low-cost alternative to heavy fuel oil.

The agreement has a duration 18 months and defines the manner in which Quadrise and Hawazin will work to combine their expertise on an exclusive basis to fast-track MSAR projects to long-term commercial agreements for the production and supply of MSAR technology, services and fuel in Kuwait.

Quadrise said its MSAR fuel alternative is more convenient for storing, transportation and use in comparison to HFOs, as well as being more environmentally friendly.

Oil and gas industry services provider Hawazin, which has annual sales of over $5bn, has first right of refusal for any in-country subcontracting or support services required by the AIM traded company on the basis that their proposal is competitive in comparison to the alternatives.

The company also entered into an evergreen memorandum of understanding with Hawazin and Aleph Commodities setting out the principal terms and conditions on which Quadrise, Aleph and Hawazin are willing to negotiate binding agreements in order to facilitate MSAR technology and fuel projects in the Middle Eastern nation.

Mike Kirk, executive chairman of QFI, said: "We are delighted that following the signature of the agreement with Aleph on 26 February 2019, we have already been able to meet the first of the milestones by signing the agency agreement with Hawazin, and the MoU with Hawazin and Aleph. These will enable Quadrise to accelerate activities in Kuwait and progress towards the second milestone of announcing a commercial scale trial project in Kuwait during 2019."

These agreements are the first following Quadrise's signing of a services agreement with Aleph in February and entitles Aleph to milestone-based rewards.

Consequetly, Aleph will now be awarded 5m warrants to subscribe for new ordinary shares in Quadrise, exercisable at any time until 25 February 2021, at a price per ordinary share equal to the average mid-market closing price per QFI ordinary shares over the five days ending on and including the day after the date of this announcement.

If Alepth reaches all milestones, it will be awarded up to a total of 40m warrants over ordinary shares in Quadrise.

Analysts from Shore Capital said that the implementation of a single commercial MSAR project would likely be "a transformational event" for Quadrise, with the analysts estimating that such a project could be worth between 2.8p per share and 12.0p per share depending on the project size and type.

"The Hawazin agreement represents another positive step in the company’s journey to establish its commercial credentials by the end of 2019," said the analysts.

"Indeed, signature of the agency agreement and MOU is the first of the activities preceding the delivery of a commercial MSAR project in Kuwait, as defined in the Aleph services agreement."

Quadrise Fuels International's shares were up 4.70% at 3.27p at 1156 BST.