Imagine time as a straight still line, by that I mean imagine the timeline as infinite and fixed line, and you are the moving object along that line; now imagine an observer looking at you moving along that line, and finally imagine that an observer from afar being able to have a view throughout this line, meaning the observer can look at your past, present and your future and take snap shots of what he sees.

Now keep the straight infinite straight timeline image as it is, but:

- Replace the observer with yourself.
- Replace the moving object with Gasfrac.

What do you see?

I bet you can see the past and the present along the timeline quite clearly, but the future looks a bit fuzzy; that’s fine, this is the first time you do this exercise, you need some practice to see the future better; however as an experienced observer I became quite apt at seeing the timeline all the way from the past to the future.
Here what I see happening in the next 12 to 24 months:
First, I would like to say the likelihood of Gasfrac surprising to the upside within the next 12 months is extremely high; the company has disappointed in 2011, analysts and investors have significantly scaled down their expectations, having said this what will be in store:

- The company new CEO was appointed in November 2011, only 2 months ago, his appointment is just there (almost at the centre of the line), Zeke is deeply experienced in the oil services industry, he has managed divisions and companies an order of magnitude bigger than Gasfrac; he will meld and structure the company to grow and flourish in the US market, he is not there to build a new technology, he is there to sale, to market, to push and take market share; if you look to the right of the timeline, meaning if you look to the future, you will see press releases of deals signed by Gasfrac as result of its superior technology and new leadership; this is not if, or maybe, this is about when.

- Canadian and American companies are under increased pressure to increase liquids production; they have no choice, the easy oil is gone; they need to dig deeper, go further, frack smarter and stronger; some of these companies have assets in areas that can’t be unlocked with water fracking, they need an alternative, it used to be oil fracking, but this is very expensive and not always as productive; some of them have chosen to try Gasfrac LPG fracking, many of them experienced excellent results, those companies along with others are looking at doing more business with Gasfrac, they need a solution, Gasfrac offer that solution; I can see several spots along the timeline where those companies will opt for Gasfrac.


- Water, few years ago fracking used to be a small industry, it has grown several folds and expected to grow much bigger still, it will go global, it is the key to providing the world with natural gas and additional oil supplies; however current fracking technology require massive amounts of fresh water, it produces massive amount of toxic water; the regulation is getting tougher, the people outcry is getting louder, and as the industry goes global it can’t find the water it needs to do its job; I see Gasfrac getting business as a result of all this, at some point in the timeline, pollution regulation or lack of water will bring business to Gasfrac.

- Sets, in 2008-2009 the company had 1 set, in 2010 it had 3 sets, by late 2011 it has 6 sets and by the end of Q1-2012 it will have 10 sets; 10 sets working throughout North America, being put to work more efficiently with the new management (think the newly created supply chain management division, new COO), being marketed better as Zeke and his new marketing hires go to work every day to get more business; at some point in the next 12 months those 10 sets will print very strong results, they will put 2011 results to shame; it is there on the timeline and you know it; one of those days all those marketing efforts, efficiency efforts and market demand from companies operating in LPG friendly reservoirs will come together to print excellent results; take a snap shot of Q1 results 2013? What do you see? A company with a half billion dollar in business behind it and a billion dollar in business ahead of it in 2014?.


- US listing, my conversations with management indicate a US listing will take place, maybe not 2012, but it will happen possibly in 2013; now imagine with all the growth in shale oil and shale gas by then, and with all the issues with water fracking, imagine how would the US investing public will value a profitable company growing as fast as Gasfrac offering a revolutionary technology that is technically and environmentally superior to water, what P/E will they give it?; think Westport Innovation, think a share price in the 30s, 40s.. ; It is there in the timeline.

- Buyout: Gasfrac technology is unique, the company technology is unlocking multiple reservoirs that have been difficult to access in the past; the company is gaining market share, this $450m to $1B husky contract was taken from someone else, future contracts where LPG technology is superior will do the same, they will take away business from companies that are much bigger; but those companies don’t have what Gasfrac has, they don’t have the technology or knowhow to build what Gasfrac has built; yes perhaps with determination some would try, but not all of them will, one of them will decide to swallow the only LPG fracker out there and run it as division. We know companies like Baker Hughes think highly of Gasfrac technology, we know that HAL and SLB are looking for technologies to reduce water usages and pollution, and we know all those companies will not be shut out of reservoirs where only LPG works best; at some point in that timeline one of those players will make a bid. It is there on the timeline for all to see.

You thought you could not see the future, but you actually can, as long as you can extract yourself from the day to day action and distance yourself to be the observer, you will be able to see, you will see that there is no point in giving away your shares for $6, while so many opportunities will come in the future for the stock to trade much higher; many investors look at the now, they are in the midst of it, they can’t see behind the next tick; but look further in the timeline and don’t tell me with all the above possible and likely developments, this company stock will not spike multiple times much higher in the next 12 to 24 months?.

Regards,
Nawar