Rex investing $20m in oil well stimulation tech

Promises to drastically boost oil production.

Rex has revealed that it will be investing US$20m for a 67% stake in Rexonic, which will own a proprietary environmentally-friendly, high-power ultrasound technology for commercial oil well stimulation developed by Swiss partner Ogsonic AG, reports DBS Group Research.

DBS said Rex management explained that the technology is intended to replace traditional chemical methods and has been shown to increase oil production from 30% to 380%, both onshore and offshore.

The JV will target the oil & gas production phase, and being complementary to Rex’s existing offerings in the exploration phase, offers cross-sell opportunities.

Rexonic has already signed contracts with three major NOCs and could contribute a recurrent earnings stream within the next few years.

Aside from the promise of boosted earnings in the future, DBS said Rex will be basking in brisk drilling activity and new licence interest.

"Drill results from the first well in Oman can be expected around end-December 2013, and the second well around 40 days later. While the developments in Oman are likely to be of much interest to the market, Rex is also aiming to drill another 5-7 offshore wells in various areas in 2014, and looking to grow its portfolio from the current 15 licences to 30 licences over the next 18-24 months, potentially providing a constant stream of newsflow and catalysts," said DBS.