Synthetic oil specialist Oxford Catalysts Group has successfully completed the fabrication of its first commercial scale Fischer-Tropsch reactor, a feat that independent broker HSBC describes as signalling the beginning of the commercial roll-out of the FT technology.
The reactor was ordered by Portugal’s SGC Energia after the Alternative Investment Market-quoted firm successfully demonstrated its FT technology at Güssing, Austria last year. The group says the order provided an important opportunity for the validation of its manufacturing and supply chain readiness ahead of larger commercial orders, while also representing a key technical milestone. This is endorsed by HSBC, which says: “OCG has embarked on a journey towards commercialisation, with major transition in revenue stream likely from 2011 onwards.”At the end of February, Oxford Catalysts raised £21 million from shares that were placed at 80p each. These funds will be used to accelerate the group’s transition from a research and development company to a commercial product business. HSBC sees further orders from SGCE and other customers as being likely share price stimuli, together with the start of the group’s GTL (gas-to-liquids) plant that is expected to arrive in Brazil in time for the beginning of its demonstration this summer. HSBC expects Oxford Catalysts to report revenues of £9.1 million for 2010, along with a net loss of £6.8 million. For this year it estimates that revenues will come in at £13.4 million, with the net loss reducing to £1.9 million.
HSBC has also set a target price of 120p each for Oxford Catalysts’ shares, which currently trade for 102.25p.
Market: AIM
Symbol: OCG
Price: 102.25p
12-month high/low: 102.5p/56.5p
Market cap: £92m
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