Acceleware, a public company listed on Canada’s TSX Venture Exchange, is piloting RF XL, its patented low-cost, low-carbon production technology for heavy oil and oil sands. This technology is intended to eliminate greenhouse gas emissions associated with heavy oil and oil sands production. Acceleware is also actively developing partnerships for RF heating of other industrial applications using its proprietary CTI. Acceleware and Saa Dene Group have created Acceleware | Kisâstwêw to improve the environmental and economic performance of the energy sector, supporting ideals that are important to Indigenous peoples. Acceleware assumes that current cost estimates are accurate, simulations of oil production at the RF XL Pilot are accurate, the price realized for oil produced at the pilot remain at or near current levels, current timelines will not be delayed by either internal or external causes, that research and development efforts including commercial-scale test plans will result in commercial-ready products, and that future capital raising efforts will be successful.
Acceleware Ltd. has released its financial and operating results for the fourth quarter of 2022, ending on December 31. The Canadian-based company, which focuses on transformative technologies that aim to reduce industrial heating carbon emissions, reported revenue of CAD 73,056 for the quarter, down from CAD 87,031 in the same period in 2021. However, the company’s revenue for the full year was CAD 328,293, which is lower than the CAD 752,770 it generated in 2021. The company’s gross R&D expenditures in 2022 were CAD 5,674,180, while its comprehensive loss increased from CAD 4,079,593 in 2021 to CAD 5,142,168 in 2022.
The company’s results reflect the contributions of its two business units: radio frequency (RF) heating for industrial applications using its proprietary Clean Tech Inverter (CTI), including enhanced oil recovery (RF XL), and high-performance computing (HPC) scientific software. Acceleware’s RF XL Pilot test in Marwayne, Alberta, continues to make progress, and the company is confident that the technology will become an essential tool in the decarbonization of heavy oil and oil sands production. Initial data analysis, supported by subsequent “history-matching” simulations and further analyses, provides strong evidence that the operation of the RF XL Pilot in 2022 resulted in sustained RF heating of the formation around the heating well. The timing and cost of the fibre optic distributed temperature sensing (DTS) system workover will depend on service rig availability, weather conditions, supply chain availability, delivery timing, and the successful deployment of repairs and components. For more information on the RF XL Pilot Update, please refer to the MDA.
Overall, Acceleware Ltd. remains a leading innovator in the development of transformative technologies that reduce carbon emissions from industrial heating. The company’s continued progress on the RF XL Pilot test reinforces its commitment to advancing its proprietary technology to help decarbonize the oil and gas industry. Acceleware’s audited financial statements and accompanying notes for the year ended December 31, 2022, as well as management’s discussion and analysis (MDA), can be found on the company’s website or on SEDAR.
Acceleware Ltd. recently released its financial and operating results for the year ended December 31, 2022. The company had cash on hand of $1.1 million as of December 31, 2022, and up to $1.4 million of amounts committed but not yet received or receivable from three major oil-sands producers. Acceleware’s negative working capital, excluding cash, was $1.8 million as of December 31, 2022. The company actively manages its cash flow requirements with a combination of cash generated from operations, external funding, and capital raising activities.
The company had several highlights during the three months ended December 31, 2022. Acceleware and Aurora Hydrogen announced the award of $2 million from Alberta Innovates to Aurora Hydrogen for a collaborative project to develop a new method of methane pyrolysis, utilizing RF energy from Acceleware’s CTI to heat Aurora’s unique reactor. In addition, Alberta Innovates committed an additional $0.9 million funding for the RF XL Pilot in December 2022. The company closed a private placement of 6.7 million units, consisting of one common share and one common share purchase warrant, for gross proceeds of $1.8 million on November 10, 2022.
Acceleware has 13 patents granted or allowed to protect various proprietary technologies related to its intellectual property, and 31 patent applications pending or under development. The company uses an integrated strategy for IP protection involving a combination of patenting and trade secrets, working closely with the patent offices and intellectual property advisors.
The RF XL Pilot test in Marwayne, Alberta, continues to make progress, and the company is confident that the technology will become an essential tool in the decarbonization of heavy oil and oil sands production. During the DTS workover planning, the company scaled back heating and continued to produce oil. When the workover activities commenced at site, RF power was reduced to zero, and oil production was paused. In December 2022, the remaining portion of the DTS was successfully “fished” and in-well inspection was performed. When the severed DTS was removed, it was determined that replacement was required. Replacement components have been received, quality control tested for electrical and mechanical specifications, and are currently ready for installation underground.
Acceleware Ltd., a leading innovator of transformative technologies targeting the decarbonization of industrial heating, recently provided an update on its RF XL project. The company identified subsurface components that required repairs during in-well inspection of the non-removable RF XL transmission line components. The operations team, service provider partners, and operating partners analyzed the components, and management decided to move forward with a solution that is expected to be completed in Q2 2023. Acceleware has worked to mitigate the risks involved with downhole operations by developing a repair plan using standard downhole repair technologies and selecting proven service providers. Upon successful completion of these final workover steps, RF XL components and DTS will be reassembled, and heating operations will resume. The workover steps will be implemented in a staged process to ensure maximum efficiency.
Upgrades to the RF XL heating system successfully completed as part of the workover included improvements in RF energy transmission system design and CTI operation and control software enhancements. These upgrades will improve the electrical performance, resilience, and overall performance of the CTI, and will be used to refine the RF XL system, resulting in additional intellectual property that will improve future deployability, performance, and economics.
The final timing and cost of the workover remains dependent on various factors, including availability of service rigs, weather conditions, and supply chain availability. However, the company remains confident that the technology will become a critical tool in the decarbonization of heavy oil and oil sands production.
In terms of financial highlights for 2022, the gross R&D spending was significantly lower than 2021 as the construction of the RF XL Pilot was completed in early March 2022, followed by operations which continued through the year. The operational spending in 2022 included some workover costs incurred late in the year. Cumulative RF XL Pilot expenses as at December 31, 2022 were approximately $25.9 million. The remaining cash committed but not yet received from SDTC, ERA, and Alberta Innovates, including holdbacks receivable was $1.0 million as at December 31, 2022, and amounts committed but not yet received or receivable from three major oil-sands producers were $1.4 million as at December 31, 2022.
Acceleware continues to actively manage its cash flow requirements with a combination of cash generated from operations, external funding, and capital raising activities. Recent highlights during the three months ended December 31, 2022 included the award of $2 million from Alberta Innovates to Aurora Hydrogen for a collaborative project to develop a new method of methane pyrolysis, utilizing RF energy from Acceleware’s CTI to heat Aurora’s unique reactor. Alberta Innovates also committed an additional $0.9 million funding for the RF XL Pilot in December 2022, and the company closed a private placement of 6.7 million units for gross proceeds of $1.8 million on November 10, 2022. Acceleware has 13 patents granted or allowed to protect various proprietary technologies related to its intellectual property, and 31 patent applications pending or under development.
Acceleware Reports Revenue Generation and Comprehensive Loss in 2022
Acceleware Ltd. (“Acceleware” or the “Company”) reported that revenue generated in Q4 2022 was primarily from maintenance and services revenue, with software revenue lower due to less demand for FDTD and seismic software. The company also received non-refundable milestone cash payments for the RF XL Pilot. Data revenue will be recognized as revenue at the end of the RF XL Pilot or when data contracts are terminated.
Comprehensive loss in 2022 was impacted by an unrealized gain on derivative financial instruments, with R&D expenses and government assistance lower compared to 2021 due to less expenditure required for heating operations of the RF XL Pilot.
Research and Development Spending
R&D spending was lower in Q4 2022 compared to Q4 2021, due to lower costs for operating the RF XL Pilot. However, they were higher than Q3 2022 due to expenditures incurred for the workover. Government assistance had been fully recognized at the end of Q2 2022, and additional government assistance of $0.9 million was received and recognized in Q4 2022 related to the workover.
General and Administrative Expenses
G&A expenses incurred in Q4 2022 were $0.6 million compared to $0.5 million in Q4 2021 and $0.5 million in Q3 2022. Additional legal and professional fees were incurred in connection with the equity offering, and non-cash payroll related costs were higher in Q4 2022 and Q3 2022 compared to Q4 2021 due to the timing of option grants.
Conclusion
Overall, Acceleware is prioritizing cost control amid uncertain economic conditions. The company has reported a decrease in R&D spending and government assistance compared to the previous year due to lower expenditure required for heating operations of the RF XL Pilot. Although software revenue was lower, the company generated revenue from maintenance and services revenue, with data revenue expected to be recognized at the end of the RF XL Pilot or when data contracts are terminated.
Acceleware’s Revenue, Losses, and Working Capital: A Year in Review
Acceleware, a clean-tech decarbonization technology company, saw lower revenue in the year ending December 31, 2022 compared to 2021 due to lower demand for software and maintenance in the HPC segment. Revenue was also impacted by non-refundable milestone cash payments for the RF XL Pilot, with $1.3 million received in 2022 compared to $2.3 million in 2021. Total deferred revenue recorded on the statement of financial position as at December 31, 2022, is $4.4 million, compared to $3.1 million in 2021.
Acceleware’s total comprehensive loss for the year ended December 31, 2022, was higher compared to 2021. This was primarily due to lower government assistance recognized in 2022 for heating operations of the RF XL Pilot and lower revenue.
R&D and G&A Expenses
Gross R&D expenses for the year ended December 31, 2022, were lower than 2021 because of lower costs for operating the RF XL Pilot. This was due to the costs incurred for drilling, completion, and construction in 2021. Government assistance recognized in 2022 was also lower compared to 2021 due to the RF XL Pilot commencing operations.
G&A expenses incurred during the year ended December 31, 2022, were higher, primarily due to legal and professional fees for the convertible debenture and equity offering. Non-cash payroll related costs, including option grants, were also higher.
Working Capital
As of December 31, 2022, Acceleware had negative working capital of $0.6 million, including cash and cash equivalents of $1.1 million. This is an increase from negative working capital of $0.9 million in 2021. The increase is due to the timing of receipt and recognition of government and partner funding. In addition to receivables for government assistance, there is $1.4 million of industry partner funding still committed and not yet received. However, deferred revenue of $4.4 million at the end of 2022 is a liability that is weighing on the company’s balance sheet.
About Acceleware
Acceleware is an innovator of clean-tech decarbonization technologies, with two business units: Radio Frequency (RF) Heating Technology and Seismic Imaging Software.
Acceleware: Advancing Low-Carbon Production Technologies
Acceleware (TSXV: AXE) is a clean-tech innovator focused on decarbonization technologies. The company’s patented RF XL technology offers a low-cost, low-carbon production alternative for heavy oil and oil sands, which could help bend the emissions curve downward, leading to cleaner energy production.
RF XL: Electrifying Heavy Oil Production
RF XL is a breakthrough technology that could pave the way for the electrification of heavy oil production. With clean electricity, Acceleware’s RF XL technology has the potential to eliminate greenhouse gas (GHG) emissions associated with heavy oil and oil sands production. Unlike other heavy oil recovery techniques, RF XL uses no water, requires no solvent, has a small physical footprint, and can be redeployed from site to site.
Acceleware | Kisâstwêw Partnership
Acceleware has partnered with Saa Dene Group, co-founded by Jim Boucher, to create Acceleware | Kisâstwêw. The partnership aims to raise the profile, adoption, and value of Acceleware technologies while promoting the environmental and economic performance of the energy sector.
Seismic Imaging Software Solutions
Acceleware’s seismic imaging software solutions provide state-of-the-art high fidelity imaging, offering the most accurate and advanced imaging available for oil exploration in complex geologies.
Forward-Looking Information
Acceleware’s press release contains “forward-looking information” regarding the company’s business, capital, and operations that are prospective in nature. The forward-looking information includes details about the expected commercialization of RF XL, the expected cost of the RF XL Pilot, the amount and realized price for the oil produced at the RF XL Pilot, and the anticipated economic and societal benefits of the RF XL technology.
Acceleware assumes that current cost estimates are accurate, simulations of oil production at the RF XL Pilot are precise, and that current timelines will not be delayed by internal or external causes. The company also assumes that research and development efforts, including commercial-scale test plans, will result in commercial-ready products, and future capital-raising efforts will be successful.
Acceleware is a public company listed on Canada’s TSX Venture Exchange under the trading symbol “AXE.”
Disclaimer and Forward-Looking Information
Acceleware, a public company listed on the TSX Venture Exchange under the trading symbol “AXE”, cautions that the forward-looking information contained in its news release is subject to certain risks and uncertainties that may cause actual results to differ materially from those projected. The Company assumes no obligation to update or revise any forward-looking information unless required to do so under Canadian securities legislation.
Disclaimer
The TSX Venture Exchange, as well as its Regulation Services Provider, disclaim any responsibility for the adequacy or accuracy of the information contained in Acceleware’s news release.
Contact Information
For more information, please contact Geoff Clark at +1 (403) 249-9099 or [email protected]. The Company’s address is 435 10th Avenue SE, Calgary, AB, T2G 0W3, Canada, and its website is www.acceleware.com.
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