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magazineVelocys puts strategy to work
Velocys (VLS:AIM) 48p
Gain to date: 60%
Original entry point: Buy at 30p, 29 September 2016
Small scale gas-to-liquids play Velocys (VLS:AIM) is up nearly two thirds since we highlighted its potential in September 2016. We see more to come, particularly as it has struck a very interesting deal.
The announcement of a strategic tie-up with Japanese fabrication group Morimatsu (17 Jan) shows the company is beginning to put its growth strategy into action.
We flagged Velocys when it was close to all-time lows. The share price has since come back to life thanks to management in December 2016 outlining long-term plans for the business.
Historically gas-to-liquid projects have required capital investment running into billions of dollars. They were only really an option if you had very large quantities of gas to develop.
Velocys claims its technology is efficient on a much smaller scale and therefore represent a way of developing otherwise ‘stranded’ deposits of natural gas.
Seeking strategic partners was a key element of the group’s relaunched strategy and the proposed deal with Morimatsu is a first demonstration of that plan.
The next catalyst on the horizon is commissioning of the company’s first full-scale and most advanced project, the ENVIA-1 plant at East Oak in Oklahoma City. News is expected on this front in the next few weeks.
Keep buying at 48p. (TS)
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