Hunt Global Resources, Inc. - Our New Strategy
The Company was founded in 2008. At that time there was, among the founders, as with many startup companies, only a “sense” of the emergence of what has becomes a larger and faster growing Hydraulic Fracturing business in North America, including what has become a strong and stable pricing growth for all ‘proppants’, i.e. frac sand. Hydraulic fracturing was a staple in the drilling of oil and gas wells globally for decades. The ability to drill deviated wells was being done for several decades as well, especially in offshore wells. Over the period of 1980 to the early 2000s the development of computerized drilling with MWD (measurement while drilling) tools, FEWD (formation evaluation while drilling), and advances in “steerable” drilling system developed to a very important level of precision. The combination of the three factors in the early 2000s came together to create a powerful force of growth in oil and gas drilling in North American:
- A highly developed knowledge base that defined the vast amounts of recoverable natural gas and liquids (including oil) that existed in the “unconventional shale” formations in many parts of the United States and Canada;
- The advances in “horizontal” drilling necessary to thread these thin pay zones. These advances are discussed above; and
- Advances in hydraulic fracturing techniques that enable oil and gas to adequately flow from the tight shale formations.
These important technologies continue to advance today at a rapid rate.
2008 to 2011:
The most challenging factor which influenced the company’s start-up and going-forward plans was by far the unexpected collapse of the economy and the unwillingness of the private equity market to lend money to start-up ventures, regardless of asset values. To counter that effect, instead of an industry specific focus on the frac sand at the Conroe property, the founders invested in other opportunities to “build a company.” These were specifically (a) biofuels, and (b) a global enterprise built on a unique, but undeveloped, technology regarding the complete recycling of used tires. It appeared, therefore, at the time, that a path to develop a company focused on green, alternative energy activities made sense. And greener technology could also be employed in building and operating a Conroe sand plant.
2011 to present:
In late 2011, the founders and the Company understood that the past pursuits of “new opportunities” left Hunt Global Resources with several valuable assets but a severe lack of the capital and management resources to pursue all of them. Also the regulatory environment for the biofuels space had changed for the worse, and the opportunity in the oilfield frac sand arena continued to grow more promising. The founders and management, recognizing they had too much on their hands and a chronic problem raising capital, in part associated with a fragmented sense of strategic direction, engaged strategic consultants to evaluate the best course of action going forward.
2012, A NEW, FOCUSED AND REALISTIC STRATEGY IN THE FRAC SAND BUSINESS:
Following several months of study, evaluation of the capital and resources necessary for each of the three areas of past investment and the opportunities to use each of the assets to provide meaningful initial capital to pursue the others, the Company decided to focus solely on the development of a frac sand operating company. As a result of this important decision, the Company has:
- Made the decision to exit all biofuels activities. Given the regulatory changes in this space in the US, these assets are not valuable and the Company has simply closed those activities. At the present there are no assets or personnel on the books of the Company and the operations have been classified as “discontinued”.
- Made the decision to sell the Carbon Green assets in a cash transaction. The Carbon Green business was acquired in early 2011 so the decision to exit this business has been made relatively soon and was quickened by the stress of the Company’s liquidity.
Hunt owns the surface mining rights to 350 acres of land in northwest Houston. All of the sand is contained from the surface to a depth of fifty feet.; the mining process is “surface mining” which uses a dredging technique, utilizing water and industrial vacuums to extract the material. The process is safer and less expensive than other mining processes. There is approximately twenty one million tons of frac sand in the deposit.
All of the material is contained from the surface to a depth of fifty feet.; the mining process is “surface mining” which uses a dredging technique, utilizing water and industrial vacuums to extract the material.
Texas Frac Sand
The frac sand in the Texas region has an advantage over traditional Northern sands, being that it is geographical – the deposits are located near many of the traditional (Permian Basin) and recent (Barnett Shale and Eagle Ford ) oil and gas producing regions of the U.S.
Eagle Ford Shale
The potential impact going into 2012: if number of new wells, stages per well and amount of sand per stage continue to grow per estimates, the potential demand for frac sand is explosive. In Eagle Ford, the estimated volumes for 2011 are over 3 million tons, but over 8 million tons for 2012.
Carbon Green - (An Asset Held for Sale)
Carbon Green is a proprietary end-of-life tire (ELT) recycling technology, developing a commercially viable process for recycling 100% of used tires into high-grade steel, oil, off-gases and Carbon Green™ (a carbon black substitute).
Carbon Green™ is derived from the Company’s patent pending technology. The pyrolysis technology separates tires into their component parts and post-processes the outputs. A total of four PCT patent applications, covering 128 countries, have been filed and additional National applications have been filed in Taiwan and Argentina relating to the process and technology. A fully operational commercial pyrolysis facility has been built in Cyprus, an EU country, capable of processing over 6,000 tonnes of ELTs per year.
Pyrolysis is the transformation of a substance into one or more other substances by heat alone without oxidation. Pyrolysis is the thermal distillation or decomposition of tires into oils, off-gases, steel and carbon black.
At least one billion car and truck tires reach their end-of-life each year. It is estimated that in the United States alone there are in excess of one billion tires in tire piles and landfills with approximately 10 billion tires stockpiled around the world. These discarded tires are a major environmental hazard that has the attention of governments worldwide. The very attributes that determine the quality and durability of tires makes them difficult to recycle.