HOUSTON — A Houston oil field technology company will make its Wall Street debut Tuesday morning pitching an idea that may seem old fashioned to investors pouring billions of dollars into shale-oil basins.
Venture-backed Glori Energy wants to combine an influx of public capital and biotechnology to revamp old, nearly infertile U.S. sandstone reservoirs, a bid to free up some 8 billion barrels of stranded oil it has targeted, Glori CEO Stuart Page said in a recent interview with FuelFix.
The startup uses a water pump system to feed nutrients to dormant, subterranean microbes that can knock loose stranded crude from conventional oil fields that producers have largely left in limbo as they focus on shale plays. Older fields typically trap about two-thirds of the crude that operators discover, Page said.
“We know where the oil is,” Page said. “There’s no fracking needed. We’re bringing more oil into production and we’re doing it in a way that has no negative impact on the environment.”
In a $185 million deal that will take it public, Glori on Monday merged with an Israel-based blank check company backed by Dallas buyout tycoon Thomas Hicks. It will begin trading Tuesday under the symbol “GLRI” on the Nasdaq Capital Market. The IPO is worth another $46 million to Glori.
Boosting oil recovery
The company plans to use its proceeds to buy U.S. acreage that lies over sandstone, adding to the first land deal it made in March, a $40 million purchase in Wood County, Texas, about 240 miles north of Houston. Glori estimates it can boost annual production in that North Texas field from 640,000 barrels of oil to 1.2 million barrels of oil over five years, boosting its revenue there from $52.8 million to $102.4 million.
Glori’s Aero biotechnology system has shown it could double oil production after six months and could boost a field’s estimated ultimate recovery by 9 percent to 12 percent, according to Glori. The company developed the system with Statoil over four years and has been deploying it for oil producers in the United States, Canada and Brazil.
Glori CEO Page said imagine a brimming glass of water and how surface tension keeps water at the rim from overflowing. In a sandstone reservoir, underground microorganisms can break up a similar pressure known as interfacial tension, which acts as a lid on the underground oil. Glori’s water-pumping system feeds those organisms nutrients to stimulate them and boost the amount of oil operators can recover, Page said.
Two years ago, Glori had backed away from a $115 million initial public offering after the technology market nosedived. But after developing a strategy to acquire oil fields and raise their value, investors have come back. Glori developed a list of 200 prospects in North America it believes would be ideal for its microbiology technology, and plans to make two to three deals every year.
For Mark Chess, a managing director at the blank check company Infinity Cross Border Acquisition Corp., that plan was the “final piece of the puzzle” that would draw capital to “allow the company to make hundreds of millions in acquisitions to catapult the company to where it would be on everyone’s radar screen.”
“We can turn this into a really exciting large oil company,” Chess, who is joining Glori’s board of directors, said in an interview before Infinity merged with Glori. “Capital was the major barrier. The more capital you have, the more quickly you can ramp up the business.”
The deal may set the stage for a second, larger IPO sometime in the next two years, said Hicks, former owner of the Texas Rangers, who will also join Glori’s board.
Glori is the third oil field services stock that Dallas investor Hicks has been involved with recently. The Houston startup stood out to Hicks because its Aero technology is “a very cost efficient way to build reserves,” especially compared to carbon dioxide injections the industry uses to enhance production.
“It’s great science,” Hicks said. “I think as we demonstrate the success of the technique and we get the increased reserves we anticipate and we take additional positions, the market will be attracted to raise a much larger IPO.”
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