Quadrise Fuels (LON:QFI), a firm that develops oil technology, has seen its share price blaze up over 65 per cent after announcing a partnership with a Saudi group.
The AIM-listed company, which produces a low-cost alternative to heavy fuel oil known as MSAR, has signed a memorandum of agreement with the Rafid Group, a conglomerate from Saudi Arabia that provides a range of oil services.
Under the terms of the deal, Quadrise will work with Rafid to install its technology in refineries run by Saudi Aramco, the kingdom’s oil giant. Quadrise and Rafid will have an exclusive relationship within the country, and have committed to form a Saudi joint venture in which Rafid will hold a stake of up to 30 per cent.
The chairman of Quadrise, Ian Williams, commented that he was ‘delighted’ with the agreement. ‘Saudi Arabia’, he explained, ‘is a key market with enormous business potential for Quadrise, especially as the government seeks to optimise energy resources.’
Abdul Aziz Al Mandil, chairman of Rafid, agreed. ‘We have been convinced from the outset of our relationship with Quadrise that MSAR technology offers great benefits for both Saudi Aramco and the kingdom at large.’
MSAR improves the efficiency of refineries by producing higher-quality fuel using water instead of expensive oil-based diluents. The technique also reduces the emission of pollutants.
Quadrise issued additional shares on AIM in March 2011, raising £2.7 million at a share price of 3.5p. Shares are now 9.38p.
But despite the boost to its share price, the company has struggled to strike a profit. It has lost money in each of the past five years, with a cumulative deficit of nearly £50 million, and is forecast to shed another £1.6 million this year. Quadrise Fuels International hasn’t paid a dividend in that period either.