Thoughts on Generation III oil Corp?

During research I found Giii company. It’s described as a clean tech company recycling used lubricants to make them have lower carbon emissions. They may be in agreement with a large oil company (Shell). Perhaps their tech or “process” can be expanded to be much larger?

“According to a used motor oils life-cycle assessment study conducted on behalf of the BC Used Oil Management Association, re-refining used lubricating oils reduces CO2e emissions by 2.47 kgs/litre, versus burning or disposal. Based on this formula, Gen III’s 2,800 bpd Alberta and 5,600 bpd US Gulf Coast projects represent a combined CO2e emissions reduction of over 1 million tonnes per annum. This is the equivalent of removing 233,000 cars from the road each year, according to the EPA. Furthermore, “…the carbon footprint of re-refined base oils is 81% lower than virgin-stock derived base oils that are not re-refined,” according to a 2013 sustainable chemicals report published by The American Chemical Society.”

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Asked on January 16, 2021 1:12 pm

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Hi there,

Your description of the product is good and as a clean tech company, it is certainly interesting. However, for us it always goes back to a proven business model. At the moment, GIII does not have one - in fact, it has yet to generate any revenue. Since it doesn't, and it is burning through approximately $500K cash a quarter, it will need to finance operations through dilutive share issues. Which it did recently at a price of $0.35 per share.

So why has the company's stock price jumped? Outside of just general appetite for clean tech, it appears to be working on an agreement with a "Super Major". The company recently (Jan 7) provided an update on this deal in which it has received a draft agreement for "for the offtake of all its base oil production from the Company's recently announced re-refinery facility in the US Gulf Coast.".

It is important to remember, this is a draft agreement and financials are not known. So there is still considerable risk here. The deal could fall through, the financials be not as material as investors would expect, etc.

It is yet another company that has an interesting technology, but has yet to prove the model. This means that it will carry additional execution risk. Not to say it won't be successful, it certainly can but investors must understand the risks with these early stage companies.

Mat

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Posted by Mathieu Litalien

Answered on January 17, 2021 10:20 am

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