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Rexonic Secures First Contract – What Now For Rex?
Hot Picks, Tradeable | 07 October 2014
Related stocks:
5WH
By: Tradeable
Articles (256)

Rex International’s 66.7 percent owned subsidiary, Rexonic AG has secured its groundbreaking contract with a large and reputable National Oil Company (NOC). The contract is worth about US$10 million and is expected to commence operations by the end of 2014.

Here’s What We Know…

  • Rex International bought its stake in Rexonic AG back in October 2013. The company is a joint venture between Rex International and Swiss firm, Ogsonic AG. Back then, the consideration for Rex’s investment amounted to about $22.4 million.
  • Rexonic AG owns the world’s first environmentally-friendly, high-power ultrasound technology for commercial oil well stimulation. This technology has been shown to increase oil production from 30 percent to 380 percent both onshore and offshore.

An overview of Rexonics's proprietary technology

Tradeable’s POV

  • The contract, while relatively small, is a good initial win for Rex’s subsidiary. The contract should start contributing to Rex’s bottom-line from FY15 onwards.
  • However, the more compelling catalyst would be the successful execution of the contract. Once the proprietary well-stimulation technology has been proven and is shown to be effective, Rexonic would be able to expand its presence and win more contracts in the future. This will thus add another recurring income stream to Rex’s overall financial performance.
  • DBS Vickers expect Rex to generate about US$15-20 million annual recurring revenues from FY15 onwards, and around US$5-10 million in profits from this technology. They maintain a buy with target price of $1.05 on Rex International.
  • We agree with DBS Vickers and feel that this development is a positive one for Rex International. We look out for the successful completion of the contract as well as more drilling plans as further catalysts for Rex International.
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Rex Int'l Hldg  0.076 +0.001 +1.33%   
Business: An independent oil & gas exploration & pdtn Co which has access to a set of proprietary & innovative exploration tech that mitigates exploration cost & risk.

Insight: May-18, 1Q18 revenue increased 50% to US$0.1m, gen... Read More


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