Long Pipes Logan Project Teaser

EXECUTIVE SUMMARY

• Long Pipes Limited (the “Company”) has developed a unique technology to build the world’s first composite pipeline laid continuously onsite, with 30x fewer joints on average, no welding and with a potential to disrupt the global pipeline industry – it is called the Fluid Highway™.
• The Fluid Highway™ is expected to transform the way pipelines are built and delivered across the industry through significant cost, performance and safety advantages compared to existing pipe technology:
  • Up to 8x faster to install, 4x lighter and up to 50% less installed price compared to steel pipes.
  • Up to 10x faster to install, 4x lighter and up to 75% less installed price compared to polyethylene pipes.
• Based in Australia, the Company is developing a portfolio of patents across 50 countries to protect its technology, creating significant barriers to entry.
• Having successfully completed two projects for an Australian water utility company at the end of 2016, Long Pipes is ready to execute its commercialisation strategy with cash flow generation in the first year of operation:
  • 10 potential projects for Australian blue chip companies in the energy, water and mining sectors.
• US$11 billion addressable segments in the US$100 billion global pipeline industry, The Fluid Highway™ pipe technology also has the potential to open up new market applications such as the CO2 segment

INVESTMENT HIGHLIGHTS

• Fluid Highway™ is the world’s first pipe technology that is uniquely made onsite in a continuous manner with 30x fewer joints, and is significantly lighter, stronger, and more durable.
• Addresses key industry challenges including transportation, storage, logistics, leakage and corrosion, as well as enhancing efficiencies and reducing costs across the pipeline value chain.
• Due to its strength, flexibility and ability to withstand high pressure and temperature variations, the Fluid Highway™ can address most pipeline market sectors, including process water, slurry, brine, coal seam gas and oil and gas.
• Has environmental advantages due to its fewer joints which minimises leakage risk.
• Delivers significant cost savings to end clients, including raw material cost, labour cost, health and safety, project execution time and operating cost.
• Able to capture higher margins compared to existing industry players, particularly for larger diameter pipe projects where cost savings and margins increase significantly.
• Successfully completed two projects for a regional water utility company in late 2016.
• Delivered all key project metrics including costs, schedule, technical performance and safety.
• In advanced discussions with Australian blue chip companies for 10 water, coal, seam gas and slurry projects. These represent potential contract value of c.AU$150 million, of which it is estimated that c.AU$53 million would be generated in the first 24 months post funding.
• Management team has built and led a number of early stage companies up to a value of $1.5bn and created successful exits through M&A and IPO. Management has also occupied senior executive roles with listed companies with a turnover > US$6bn.
• Proven track record in identifying and developing new technologies, prototyping and building production processes and executing commercialisation/business models that generate strong margins.
• The world pipeline industry is estimated to grow at annual growth of 6.5% from 2015 to 2019. Key drivers include population growth resulting in increased demand for new oil and gas, and water pipelines.
• Management estimates that current addressable segments are c.US$11 billion.
• Well positioned to also penetrate the specialist spoolable pipe, GRP glass fibre pipe markets, and for high temperature and operating pressure oil & gas and corrosive chemicals markets.

BUSINESS MODEL

• Long Pipes is focused on building a major integrated, end to end, global pipeline and delivery company, concentrated on the oil, gas, process water and slurry transportation sectors.
• It plans to develop its business model through the following staged expansions:
  • Geography: initial focus on Australia, followed by North America, China and Middle East markets.
  • Segment: enter the process water segment followed by brines, slurry, coal seam gas and ultimately oil and gas segments.
  • Margin: starting with the medium diameter, lower margin segments to commence cash flow generation and then moving into the larger diameter, very high margin pipeline segments.
• The Company will be seeking value-add transactions and alliances to quickly enter geographies and deliver projects across the value chain.

THE OPPORTUNITY

• The Company is currently raising AU$25 million (Series A) to fund its commercialisation strategy, with a pre-money implied valuation of AU$ 57 million
  • Early close: target AU$8 million at a discounted valuation of AU40 cents per share (30 July 2017)
  • Follow-on: target AU$17 million at a valuation to be determined based on near term milestones (October 2017 )
• Use of proceeds is estimated to fund the Company’s capital expenditure, certification process and working capital requirements with, an immediate ability to generate cash flow in the first year post funding through securing and delivering the 10 projects that the Company has been in discussions with clients in Australia:
  • 10 projects are estimated to have potential total contract value of AU$150 million, of which c.AU$53 million is projected to be generated in the first 24 months post funding.
• Long Pipes seeks to grow through both organic growth as well as M&A strategy through a potential acquisition of, or JV with, a pipeline production and installation company in North America or China.
• The Company is currently in discussions with prospective partners with regards appropriate in-country structures in North America and China.
• The Company aspires to provide an opportunity for shareholders to unlock value in the Company through a possible trade sale or IPO in 3 to 5 years.

AWARDS

• 2012 “WA Innovator of the Year 2012” for the oil and gas industry in Western Australia.
• 2016 Long Pipes received two awards from the Australian Technologies Competition the National Energy Resources Australia (“NERA”) “Energy Resources” Award.
• 2016 Long Pipes also received the People’s Choice Award for the best technology in Australia.
• 2017 Long Pipes received the “Top Innovator” and “Best Presenter” awards at the Venture Summit West in the United States.

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