While attending an investor conference a couple of years ago, Brian Williamson, CEO of Jericho Energy Ventures Inc. (JEV:TSX.V; JROOF:OTCMKTS), realized that “nobody wanted to talk to small oil and gas companies. No matter how good your assets, no matter how exciting the story, the capital markets had moved, and we recognized that the appetite for public oil and gas was not coming back.”
By the end of 2019, Williamson, along with Company Founder Allen Wilson and Jericho’s Board, decided that “we either needed to transform Jericho into something different or we needed to take it private because the public (market) was not investing in small-cap oil and gas anymore.”
Wilson said it was at that point that they decided to “pivot” and transform Jericho’s focus on investing into more sustainable energy technology.
A seasoned executive with 30 years in the junior oil sector, Wilson continues to be a board member and hand-picked Williamson, who has an impressive finance, legal and accounting background, to lead the company.
While Jericho hasn’t entirely left the oil and gas patch and continues to operate producing oil and gas assets in Oklahoma, the company is primarily focused on advancing the low-carbon energy transition with investments in hydrogen technologies, energy storage, carbon capture and new energy systems.
One way they are achieving this is through their subsidiary, Hydrogen Technologies (HT), which has patented a breakthrough method for burning hydrogen and oxygen in a vacuum chamber to create high-temperature heat and steam with zero greenhouse gases. With the only byproduct being water, their cleanH2steam DCC™ Boiler harnesses the power of hydrogen, which is the most abundant chemical substance in the universe.
The decision to add sustainable energy alongside their oil and gas portfolio is certainly paying off for the company and its investors. Their market cap has grown to approximately CA$174 million from CA$30.4 million a year ago, and currently has approximately 220 million shares outstanding. About 40% of the Company is held by insiders. In August 2020 its share price was trading in the CA$0.11-CA$0.15 range. Its most recent trading range of CA$0.78-CA$0.80 is about six times higher than a year ago.
In late July, Jericho made another move toward their clean energy transition when it announced co-leadership of a Series A financing for another subsidiary, H2U Technologies, Inc. (H2U), a company focused on developing its proprietary ultra-high throughput, AI-driven, electrocatalyst discovery process for electrolyzer and fuel cell applications. Jericho's USD$1.5 million investment was joined by a veritable ‘who’s who’ of the ventures community—Dolby Family Ventures, Hess Corporation (HES: NYSE) and Motus Ventures—with a total raise of approximately USD$7 million. Each of the co-leads, including Jericho, will have board representation. The board of H2U will also be joined by independent director, Tom Werner, former CEO (2003-2021) and current chairman of SunPower (SPWR: NASDAQ).
H2U intends to use the funds to support the start-up and development of its proprietary electrocatalyst discovery process and machinery. H2U will also develop its own polymer electrolyte membrane (PEM) electrolyzer technology using its proprietary catalysts, breakthrough subcomponent innovations and manufacturing processes.
H2U's low-cost electrolyzer is being developed in partnership with Southern California Gas Co. (SoCalGas). The cost target is half that of current PEM electrolyzers. SoCalGas, which recently announced its commitment to reach net-zero carbon emissions in its operations and delivery by 2045, will conduct demonstration testing of the new low-cost electrolyzer, as well as validation testing on the performance of new nonprecious metal catalysts, materials used in small quantities to initiate and accelerate the chemical process of splitting water into hydrogen and oxygen.
"If all of this sounds a bit complex, well, that’s because it is," Williamson explains. "While both HT and H2U were years in the making, renewable technology is still new to the consumer. That said, the essence of what these breakthrough methods accomplish is necessary to help the planet achieve zero emissions. Combine that with the ever-growing ESG push from local governments, universities, Fortune 500 companies, investment firms—the list goes on and on—and it is clear that Jericho is at the forefront of this headwind and headed down the right path for the environment and their shareholders."
Williamson says that they “saw the world evolving and developing. And for us, what we found most interesting was hydrogen. And what was interesting to us about hydrogen was its ability to offer what the current renewable environment couldn't offer, which was: always available, storable, transportable energy…so the equivalent of natural gas, but with the profile to be developed in a cleaner, green and sustainable way.”
The company is looking “to make quantum leaps forward in the generation of hydrogen” in addition to “closely looking at the storage space in the hydrogen value chain,” said Williamson. The second-generation DCC™ Boiler has increased process monitoring and remote management options. Improvements were also made to the ignitor design providing optimum combustion resulting in 30% greater efficiency than traditional hydrocarbon boiler thermal efficiency.
There is no pathway to net-zero targets without a robust, efficient, zero-emission boiler. Currently, 37% of the fossil fuels burned by U.S. industry alone is to produce steam. HT's DCC™ is the only zero-emissions, closed-loop hydrogen boiler that produces clean process steam without generating any air pollutants or emissions. The DCC™ system is designed to replace existing boilers that burn coal, natural gas, diesel or fuel oil, which are estimated to account for over 20% of all global greenhouse gasses emitted each year.
The total cost of production ($/lb of steam) is equivalent to the current boiler market with the added benefits that all NOx and CO2 emissions are eliminated through the closed-loop process. This is compelling because it eliminates future carbon tax costs ($CA120/tonne) that conventional boiler operators will have to pay.
“You'll see us look to bring customers on board with those boilers and move that out to the market by end of year or early next year,” Williamson noted.
The process to find viable investments in this sector is time-consuming, but “worth it,” Wilson said. Led by Williamson with insights from Santa Barbara, CA-based Capella Partners, who serve as Jerichco’s senior technical advisor, Jericho vetted more than 100 companies and took a fine-tooth due diligence comb to them. “We really landed on our feet with what we've got and where we are. We are an energy company, we still have our cash-flow producing oil assets, but our focus is very much sustainable energy sources, specifically, hydrogen,” Wilson said.
Clearly, with such a strong management team and a focused plan for the future, there appears to be significant upside in the sector for Jericho to tap into. All complexities aside, and simply put; Jericho Energy Ventures is healing the planet through hydrogen.
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Disclosures:
1) Deborah Thompson compiled this article for Streetwise Reports LLC and provides services to Streetwise Reports as an independent contractor. She and/or members of her household own securities of the following companies mentioned in the article: None. She and/or members of her household are paid by the following companies mentioned in this article: None. Her company has a financial relationship with the following companies referred to in this article: None.
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