Coretrack enters shale gas market
UPDATE 2.20pm: Drilling technology company Coretrack has made a foray into the surging shale oil and gas market with an agreement to buy unlisted Queensland-based proppant developer Ecopropp.
Proppants are solid materials that are mixed with fracturing fluids to hold open fractures after a hydraulic fracturing treatment (fracking).
They can range from naturally occurring sand grains to synthetic resin-coated sand or high-strength ceramic materials.
Ecopropp's product is a ceramic proppant that is manufactured largely from the unwanted bi-product of coal-fired power stations known as fly ash.
Coretrack said the Ecopropp proppants were a significant improvement in the fracking market because they were lightweight, able to withstand high pressures and cost less to produce than traditional ceramic proppants.
NSW-based Business Custodians have signed a firm commitment letter to raise $3m worth of capital for Coretrack as part of the deal.
Coretrack will issue Business Custodians 300 million new shares at 1 cent each as well as 21 million extra shares as part of a capital raising fee agreement.
The acquisition will be staged over the successful achievement of three milestones
Coretrack said the worldwide market for ceramic proppants was about $US2.5 billion a year.
It said horizontal deep oil and gas wells typically required $1-$3 million worth of proppants during hydraulic fracturing.
Coretrack chairman Matt Birney said the unique proppant developed by Ecopropp had the potential to lead the industry given its ultra-light weight and ability to withstand the high pressures in deep wells.
"Proppants are big business, particularly in the USA, with proppant manufacturing companies regularly making $100m plus investment decisions in the last few years," he said.
Ecopropp managing director Siegfried Konig said the company had followed a well-developed plan over the past few years and its proppant technology which met American Petroleum Institute and ISO certifying authority guidelines, was ready to be taken to the next level via public listing.
"Ecopropp's ceramic proppants have been specifically engineered for oil and gas wells that are deeper than two kilometres, not for shallow, Coal Seam Gas or Coal Bed Methane wells, which are often only 300 to 500 metres deep," he said.
Coretrack shares which have risen sharply in recent weeks to a 52-week high of 1.5 cents on no apparent news, were off 0.6 cents, or 42.86 per cent, to 0.8 cents at the close.
