Manufacturer of emulsion fuels Quadrise Fuels International (LON:QFI) has raised money via a share issue to participate in a share issue by junior oil company Sparky Energy Corp, which is preparing to develop depleted oil fields using the proprietary EOR technology developed by Quadrise Canada Corporation (QCC).
The company has secured binding commitments from its shareholders to subscribe to shares worth a total £875,000, 50% of which, or £437,000 has already been received. The money will be used to fund the purchase of 2 million shares in Sparky worth C$1 million, or £363,500 to maintain its 16.4% stake in the business.
Sparky has a 50/50 joint venture with Optimal Resources, a producing oil company with secured reserves in the Lloydminster area in Alberta, Canada. The EOR technology is designed to increase oil production and ultimate recovery from declining and depleted oil fields. The Sparky/Optimal joint venture holds the exclusive worldwide license from QCC for the use of this technology in clastic oil reservoirs.
The JV is proposing to establish an area of mutual interest of 6,400 square miles in the Lloydminster area to exploit heavy oil production development while employing the EOR technology.
The company said there were many depleted heavy oil pools in Western Canada, the USA and worldwide, for which this technology could be applicable. Sparky has estimated that Western Canada alone holds 35 billion barrels of conventional heavy oil resources in place. Research by QCC revealed that the heavy oil already recovered using primary and early enhanced recovery methods has been in the order of 10% of the oil in place.
Sparky has a 50% interest in all field assets and in the associated recovered oil.
Sparky is raising C$5 million for the early phase programme via the share issue. The early phase development plans, which are already underway, will include a single well injection test scheduled to take place shortly on Block 18 of the Optimal property in the Lloydminster area, a pilot scale five spot (fur injection wells and one producer) pressurised injection flood planned for Q4 2010 and the first small scale commercial development programme.
Quadrise said that a successful Sparky venture should be significant for the future value of its holdings in QCC and the stake could not be maintained without a capital raising.
“We are especially pleased to have maintained a leading shareholding position in Sparky through these arrangements. The QCC EOR technology looks promising and the Sparky-Optimal venture is an ideal vehicle to take it to market,” said Quadrise Fuels International chairman Ian Williams.
The projects will be operated by Optimal.