Junior ASX company Pilot Energy has struck a conditional partnership agreement with South Korean engineering giant Samsung but failed to impress the market, with its shares falling sharply today.
The agreement relates to the potential development of Pilot’s Mid West clean energy project, comprising the Cliff Head carbon capture and storage (CH CCS) project and its clean energy ammonia project.
Under the memorandum of understanding (MOU), Pilot and Samsung C&T Corporation Engineering & Construction Group have committed to jointly progress the MWCEP.
Subject to multiple conditions, Samsung C&T will acquire a 20 per cent interest in the MWCEP.
It will also serve as the engineering, procurement and construction (EPC) contractor for the clean ammonia project and will be responsible for arranging the off-take of clean ammonia to customers in South Korea.
This is the latest of several green energy projects in Western Australia in which Samsung has an interest.
Pilot said consummation of its MOU with Samsung hinged on several conditions.
These include the declaration of a greenhouse gas storage formation over the WA-31-P area by the National Offshore Petroleum Titles Administrator (NOPTA).
The CCS project involves the conversion of the Cliff Head Oil field and associated infrastructure from oil production to carbon capture and storage.
It is also subject to successful completion of an integrated project pre-FEED study and the receipt of final board approval from both Pilot and Samsung.
If all goes to plan, Pilot will receive $67 million from CHCCS Co, a newly established joint venture project entity.
This payment, due at financial close, is based on the historical construction costs of the Cliff Head oil project.
Pilot chairman Brad Lingo said he was delighted to partner with Samsung.
“Samsung C&T’s participation is an important step as they provide additional technical expertise and financial strength to ensure the successful development of this exciting WA clean energy project,” he said.
Pilot’s shares fell 27 per cent today to 2.4 cents.
That followed a recent lift in the share price to a high of 3.6 cents, valuing the company at $34 million.