Shares soared in Graphene NanoChem on Wednesday after the nanotechnology provider announced it had won its first contract order for its smart fluid in the shale gas market in China worth about $360,000.
The order is for 4,000 barrels of PlatDrill, a smart fluid that speeds the drilling and quality of shale gas as well proving environmental and economic benefits, at two well in Changning, China.
The deal is in line with the Chinese government’s policy to increase the development of shale gas resources as more than 300 wells are expected to drilled per year in the next five years, the largest number of wells on Asia.
The Malaysia-based company is working with oil and gas service provider Scomi to expand the PlatDrill in south east Asia, which is expected to to use between 80,000 and 120,000 tonnes of synthetic base mud to replace oil based mud for drilling.
The AIM-listed company said it is working with Scomi’s business partner in China, AntonOil, to reach about 20% of the market in 2017.
It said that with this contract and its existing contract in Myanmar, which will restart drilling on the first quarter of 2017, its order book for PlatDrill is expected to be full for next year.
Jespal Deol, chief executive of Graphene NanoChem, said: “We are pleased to announce the latest progress of our oilfield business and the continued support of Scomi during the challenging period for the industry. Our latest commercial order and its potential market opportunity is a continuing validation of our product value proposition especially now that oil is expected to be ‘lower for longer’.
“Further, our partnership with Scomi has enabled the group to reduce marketing cost and adoption risk and continue to service our orders through working capital financing provided by Scomi whilst we continue to strengthen our financial position.”
