CALGARY, AB, Dec. 30, 2021 /CNW/ - Entropy Inc.
("Entropy" or the "Corporation", a subsidiary of Advantage Energy
Ltd. or "Advantage") (TSX: AAV) is pleased to announce it has
entered a non-binding strategic financing agreement with a leading
energy transition investor, and to provide a year-end corporate
development update.
Highlights of the Strategic Financing Agreement
Entropy and a leading energy transition investor have agreed to
the terms of an exclusive, non-binding financing agreement expected
to provide sufficient capital for the execution of Entropy's
near-term growth plan, including a structured initial commitment of
$300 million. The financing is
expected to close during first quarter 2022, subject to customary
closing conditions including confirmatory due diligence and
completion of definitive transaction agreements, and implies an
Entropy value of approximately $300
million pre-financing. We look forward to working with our
new investment partner to accelerate our mission of reducing
atmospheric carbon dioxide using Entropy's low-cost, low
energy-intensity carbon capture and storage ("CCS")
technology. Further details of the transaction will be
announced upon execution of definitive agreements.
Year-End Corporate Update
Entropy has evolved rapidly since our introduction to the
markets in March 2021, and we are
pleased to provide an update on several notable elements of the
business.
With international carbon markets evolving rapidly, commercial
CCS projects are now feasible in many jurisdictions around the
world. However, in most cases it is necessary to apply the most
sophisticated CCS technology to carefully selected point-source
emissions to achieve commercial returns. Entropy has acquired and
developed numerous innovations that have driven CCS costs down to
the point where post-combustion projects (including capture,
transport and storage) are economically viable at carbon pricing of
CAN$50/tonne.
Significant Pipeline of Projects with Years of
Development
Entropy is currently working with third-party emitters under
eight Memoranda of Understanding ("MOU") and thirty-four
non-disclosure agreements ("NDA"). From these established and
developing relationships, Entropy has now high-graded nine scoped
projects leveraging Entropy's modular technology. Entropy's
pipeline of projects under MOU now exceeds 1.8 million tonnes per
annum ("Mtpa") and just over $800
million of estimated net capital expenditures. Pre-FEED
(front-end engineering design), engineering, and subsurface
evaluations are underway for each project, and final investment
decisions for several are pending, subject to financing, commercial
agreements, and regulatory approval.
Entropy's breakeven carbon pricing remains approximately
CAN$40/tonne (USD$32/tonne) for
capture only, or CAN$50/tonne (USD$40/tonne) for capture, transport and storage.
Typical all-in capital efficiency for mid-sized projects (including
capture, transport and storage) are approximately $400/tonne per annum ("tpa"), with several
near-term projects expected to fall below that
metric. However, certain projects that are first-of-their-kind
or involve more challenging exhaust conditions may exceed
$400/tpa pending further research and
development. Typical operating costs are expected to be
$15/tonne, with certain projects
approaching $20/tonne depending on
the energy efficiency of the emitting facility.
Entropy's current business plan anticipates approximately
$250 million of net capital
expenditures per year, with several years of project inventory
under MOU. In addition to MOU projects, Entropy continues to
be engaged with numerous other third-party emitters in multiple
industrial applications including boilers, compressors, cement
production, reformers, chemical plants and power generation, in
multiple jurisdictions. These evolving projects exceed 3 Mtpa
in aggregate, in addition to the projects under MOU.
Update on Entropy's Glacier Project
Entropy's Glacier Phase 1 modular CCS project is progressing
on-time despite global supply chain disruptions, with operations
scheduled to begin in early second quarter 2022. Projected
total installed cost remains close to original estimate of
$27 million with minimal impacts from
the current inflationary economic environment. All major
equipment has been purchased, major contracts for installation have
been awarded, and modules have been fabricated in Alberta facilities. Upon commissioning of
the CCS equipment, Entropy will initially run MEA
(monoethanolamine, the industry standard solvent) for up to three
months to establish the baseline energy intensity of Entropy's
patent-pending process. Subsequently, Entropy will run our
patent-pending Entropy23TM solvent to establish a
full-scale dataset of solvent-specific performance versus MEA in a
commercial application.
Entropy Technology Licensing
Entropy is pleased to introduce a licensing model to those
companies that are interested in deploying Entropy technology under
their own funding and ownership. As a part of this service, Entropy
will provide project scoping, regulatory management, process
design, procurement, construction management, commercial and
geological disposal support, and non-exclusive use of Entropy's
patent-pending CCS process and Entropy23TM solvent in
exchange for a commercial licensing fee.
Entropy Introduces Integrated Carbon Capture with First
Deployment at Glacier
Entropy has developed an integrated CCS design
("iCCSTM"), whereby original equipment manufacturers of
industrial process equipment will integrate Entropy technology into
new equipment at the factory. Entropy believes that
iCCSTM should eventually be available on all industrial
equipment including power generation, compressor engines, boilers,
cement kilns, steel smelters and hydrogen reformers.
As previously announced, Entropy has collaborated with North
American equipment fabricator Compass Energy Systems Ltd. on the
first iCCSTM design for a compressor
engine. Prototype designs are approaching final and total
costs are estimated to be 25% less than a comparable retrofit
project. The first iCCSTM installation is expected to be
at the Glacier Gas Plant in approximately 12 months ("Glacier Phase
1b") and is designed to capture
approximately 16,000 tpa.
Ongoing Research and Development at CETRI
At the University of Regina's Clean
Energy Technologies Research Institute ("CETRI"), the second
protocol of Entropy's research and development is underway. During
this phase, Entropy's patent-pending technology will run over 6
months to demonstrate the degradation-resistant properties of
Entropy23TM over extended periods; extended
Entropy23TM degradation characteristics are expected to
be determined late in first quarter 2022.
Executive Team Appointment
Entropy is pleased to announce the appointment of Mr.
James Martin to Vice President,
Engineering. Mr. Martin has been with Advantage since 2019 as
Director, Operations and has been critical in the early stages of
Entropy's business, including the Glacier Phase 1 project, as well
as technology and patent development. Mr. Martin has over 30 years
of experience in all aspects of gas processing operations and has
served in several engineering and management roles for various
companies. For more information on the growing team, please see
www.entropyinc.com/who-we-are/.
Looking Forward
As Entropy and our financing partners work towards closing the
strategic financing agreement, Entropy intends that the net
proceeds would be used to fund near- to medium-term growth plans
including construction of the Glacier Phase 1b iCCSTM project, Glacier Phase 2
project and advancement of several CCS projects currently nearing
final investment decisions.
Entropy is excited about the future our business has in 2022 and
beyond with the tremendous engagement of third-party emitters and
global growth in support for commercial carbon capture and
storage.
For additional details regarding Entropy, an updated
corporate presentation is available at
www.entropyinc.com/investors/.
About Entropy Inc:
Entropy is a privately-owned company, founded by Advantage to apply
sophisticated science and engineering to commercialize CCS.
Entropy's technology is expected to deliver commercial
profitability at a carbon price of CAN$50/tonne, using proprietary
modular carbon capture and storage technology. Entropy intends to
deploy this technology in the global effort to reduce and
eventually eliminate carbon emissions.
About Advantage Energy Ltd:
Advantage is a low-carbon energy producer focused on developing
its high-quality Montney
resources. Advantage's owned infrastructure, top-tier cost
structure and capital efficiency provide a strong foundation for
sustainable, disciplined production growth. With modern, low
emissions-intensity assets and the Glacier carbon capture and
sequestration asset, Advantage continues to proudly deliver clean,
reliable and sustainable energy, contributing to a reduction in
global emissions by displacing high-carbon fuels. Advantage's
common shares trade on the Toronto Stock Exchange under the symbol
AAV with its head office in Calgary,
Alberta, Canada.
About Clean Energy Technologies Research Institute (CETRI):
CETRI centralizes all low-carbon and carbon-free clean energy
research activities at the University of
Regina. Areas of research focus include decarbonization and
zero-emission hydrogen technologies, carbon capture and
utilization, and waste-to-renewable fuels and chemicals. Bringing
together one of the most dynamic teams of researchers, industry
leaders, innovators, and educators in the energy field, CETRI's
mission aligns with the Environment & Climate Action areas of
focus in the University of Regina's
Strategic Plan.
Advisory
The information in this press
release contains certain forward-looking statements, including
within the meaning of applicable securities laws. These statements
relate to future events or our future intentions or performance.
All statements other than statements of historical fact may be
forward-looking statements. Forward-looking statements are often,
but not always, identified by the use of words such as
"anticipate", "continue", "demonstrate", "expect", "may", "can",
"will", "believe", "would" and similar expressions and include
statements relating to, among other things, that the non-binding
financing agreement will lead to a completed financing and the
anticipated timing and benefits to be derived therefrom; the
anticipated use of the proceeds derived from the strategic
financing; the benefits to be derived from the MOUs and NDAs and
the expectation that they will result in completed CCS projects;
that Entropy's CCS technology will make post-combustion projects
economically viable at carbon pricing of CAN$50/tonne; Entropy's
anticipated break-even carbon pricing; the anticipated all-in
capital efficiency for Entropy's projects including anticipated
operating costs; Entropy's estimated net capital expenditures per
year; the anticipated benefits available to third party industrial
emitters that partner with Entropy; that Advantage will achieve
"net zero" emissions by 2025; that Entropy's Glacier Phase 1
modular CCS project's operations will begin in early second quarter
2022; Entropy's expectations that iCCSTM technology will
be available on all industrial equipment; the anticipated timing,
costs and benefits to be derived from Entropy's first
iCCSTM design for a compressor engine; that Entropy's
patent-pending technology will demonstrate the
degradation-resistant properties of Entropy23TM over
extended periods and the anticipated timing thereof; the
anticipated benefits to be derived from Entropy's CCS technology
and that its projects will capture carbon dioxide tpa as disclosed;
the expectation that there is a significant pipeline of additional
potential projects available to Entropy; Entropy's focus,
strategies and plans for its technology; and Advantage's strategy
and focus. Advantage's and Entropy's actual decisions, activities,
results, performance or achievement could differ materially from
those expressed in, or implied by, such forward-looking statements
and accordingly, no assurances can be given that any of the events
anticipated by the forward-looking statements will transpire or
occur or, if any of them do, what benefits that Advantage or
Entropy will derive from them.
With respect to forward-looking statements contained in this
press release, Advantage and Entropy have made assumptions
regarding, but not limited to: that the non-binding financing
agreement will lead to a completed financing; that Entropy's
existing MOUs, and NDAs will lead to completed CCS projects; that
iCCSTM technology will be available on all industrial
equipment; that Entropy's pipelines of projects will exceed 1.8
Mtpa and $800 million of estimated
net capital expenditures; conditions in general economic and
financial markets; effects of regulation by governmental agencies;
current and future commodity prices and royalty regimes; future
exchange rates; royalty rates; future operating costs; availability
of skilled labor; timing and amount of net capital expenditures;
the impact of increasing competition; that Advantage and Entropy
will have sufficient cash flow, working capital, debt or equity
sources or other financial resources required to fund its capital
and operating expenditures and requirements as needed; that
Entropy's conduct and results of operations will be consistent with
expectations; that Entropy will have the ability to develop its
technology in the manner currently contemplated; current or, where
applicable, proposed assumed industry conditions, laws and
regulations will continue in effect or as anticipated; and the
anticipated benefits and results from Entropy's technology are
accurate in all material respects. Readers are cautioned that the
foregoing lists of factors are not exhaustive.
These statements involve substantial known and unknown risks
and uncertainties, certain of which are beyond Advantage's and
Entropy's control, including, but not limited to: that Entropy's
existing MOUs and NDAs will not result in completed CCS projects;
that Entropy's CCS technology will not make post-combustion
projects economically viable at carbon pricing of CAN$50/tonne;
that Entropy's break-even carbon pricing will be higher than
anticipated; that Advantage will not achieve "net zero" emissions
by 2025; that Entropy's Glacier Phase 1 modular CCS project's
operations will not begin when anticipated; Entropy's
iCCSTM technology will not be available on all
industrial equipment; the anticipated timing, costs and benefits to
be derived from Entropy's first iCCSTM design for a
compressor engine will be inaccurate; that Entropy's patent-pending
technology will not demonstrate the degradation-resistant
properties of Entropy23TM over extended periods; there
will not be a significant pipeline of projects available to
Entropy; changes in general economic, market and business
conditions; industry conditions; actions by governmental or
regulatory authorities including increasing taxes and changes in
investment or other regulations; changes in tax laws and incentive
programs; changes in carbon tax and credit regimes; competition
from other producers; the lack of availability of qualified
personnel or management; intellectual property and patent risks;
credit risk; changes in laws and regulations including the adoption
of new environmental laws and regulations and changes in how they
are interpreted and enforced; ability to comply with current and
future environmental or other laws; stock market volatility and
market valuations; failure to achieve the anticipated benefits and
results of Entropy's technology; failure to achieve the anticipated
benefits of Entropy's relationships with third parties; ability to
obtain required approvals of regulatory authorities; and ability to
access sufficient capital from internal and external
sources.
Management has included the above summary of assumptions and
risks related to forward-looking information above in order to
provide shareholders with a more complete perspective on Entropy's
future operations and such information may not be appropriate for
other purposes. Entropy's actual results, performance or
achievement could differ materially from those expressed in, or
implied by, these forward-looking statements and, accordingly, no
assurance can be given that any of the events anticipated by the
forward-looking statements will transpire or occur, or if any of
them do so, what benefits that Advantage and Entropy will derive
there from. Readers are cautioned that the foregoing lists of
factors are not exhaustive. These forward-looking statements are
made as of the date of this news release and neither Advantage or
Entropy disclaims any intent or obligation to update publicly any
forward-looking statements, whether as a result of new information,
future events or results or otherwise, other than as required by
applicable securities laws.
Non-GAAP Financial Measures
The Corporation
discloses certain financial and performance measures in this press
release that do not have any standardized meaning prescribed under
GAAP. These financial and performance measures include "net capital
expenditures" which should not be considered as an alternative to,
or more meaningful than "cash used in investing activities"
presented within the financial statements as determined in
accordance with GAAP. Net capital expenditures include total
capital expenditures related to property, plant and equipment and
intangible assets. Management considers this measure reflective of
actual capital activity for a period as it excludes changes in
working capital related to other periods. The Corporation's method
of calculating this measure may differ from other companies, and
accordingly, it may not be comparable to similar measures used by
other companies.
SOURCE Advantage Energy Ltd.