Good morning everyone, welcome to this first quarter results presentation with M Vest Water. My name is Nils Thommesen, from Fearnley Securities, and I will moderate this presentation. Please bear in mind that you can use the Q&A function at the bottom of your screen to submit questions that we will address later at the Q&A of the end of the presentation. With that, I'll give the word over to Stein Giljarhus, CEO of M Vest Water.
Thank you, Nils. Thank you for attending our first quarter podcast. With me today, I have the CFO, Morten Hilton Thomassen, who will also participate and help me throughout this presentation. This is the agenda for our presentation today. M Vest Water is a green tech company offering environmental friendly products and technology for water and sludge treatment. Our solutions are highly efficient, competitive, and applicable for several industries and a wide range of waters. Our technology is unique and patented internationally. We have today business activities in Norway, in Germany, and in the USA. We are currently 13 employees, and we are listed on the Euronext Growth in Oslo. We have, since we started up five years ago, developed categories of two main products, which are the basis for our technology and activities. These are the flocculant, NORWAFLOC, and our polishing filter reactor, NORWAPOL.
Our main product is the biodegradable chemical, NORWAFLOC. NORWAFLOC is dosed into polluted water to separate pollution from the water. Thereafter, the pollution can be separated in any kind of conventional separation devices, as for example, a filter. We have a short film to demonstrate how the NORWAFLOC works. The dosing, the flocculation, and the separation. At closer sight, you will see the flocks here, and they will easily be separated through a filter mass, and you will have clean water. Our second product is a disruptive pollution filter, NORWAPOL, which is the combination with the NORWAFLOC removes pollution far better than any competing technology. With this technology, we have now outstanding success within oil and gas and aquaculture industries. The further potential in other water treatment markets are huge. I leave the word to Morten here.
Thank you, Stein. Please flip to the next slide.
Sure.
Thank you. Finally, we see that our investments in technology development and commercial projects are starting to pay off. Revenues has increased from NOK 0.4 million the first quarter of 2022 to NOK 2.9 million in 2023. By the end of first quarter last year, we had two projects that generated revenue. Today, by comparison, we have 10. We have been awarded contracts in several industry segments and see a positive development going forward. The table to the right shows an OpEx of NOK 10.5 million for the quarter, net profit of minus NOK 8 million. The CapEx has been low, around NOK 1 million and cash burn was NOK 10 million. The trend with increasing number of contract awards, business inquiries, paid projects, and the tendering request is continuing.
The table at the bottom right shows the estimated values of our commercial ongoing projects and prospects. Our project portfolio includes the four main business segments: oil and g as, municipal wastewater, dredging, and aquaculture. These projects have an estimated economic value of more than NOK 50 million, thereof NOK 40 million being annual recurring revenues. Several of the projects are scalable, and we have identified prospects with spin-off effects. The prospects have an estimated value of more than NOK 250 million. In summary, the financial key figures show a positive development, and we expect further growth in 2023. You can move to the next slide, Stein.
Okay. These are the most important main events for last quarter. On the left-hand side, our highlights for the first quarters is listed, followed by the subsequent events shown to the right. In Q1, we made significant progress, particularly within oil and gas and aquaculture. For oil and gas, we have implemented our NORWAPOL technology at an oil terminal here in Norway. In addition, we have successfully completed a 2-month contract for treatment of slop water. Next to this, on the right-hand side, we have reached a milestone with our produced water projects in USA. A pilot program running since August last year is successfully completed with excellent results. We have now been invited by the operator to a large, final large-scale qualification. For aquaculture, we have been awarded two contracts for deliveries of NORWAPOL and water treatment equipment.
Even more important, we have this month successfully completed a full-scale verification at the salmon slaughterhouse in Norway. This enable us to approach the market facing new and stricter regulation from December this year. In addition, we have also been awarded contracts for other business segments, such as PFAS treatment at the Bergen Airport and gravel sand projects in Germany. PFAS is polyfluoroalkyl substances, very nasty substances, and they seem to be all over, also in drinking water and in the air. This morning, we got a very fresh news coming back from our end client there, Avinor. We are operating there together with an entrepreneur locally here. Name is Løvaas, and the results was outstanding. There was no signs of any PFAS in the process after being treated by M Vest Water.
This is, I think, far better than we hoped for, but it is a fact. We are happy to announce this now. We also have sustained solids being taken out down to a level which is not detectable below two. This is. We're happy to announce this here now. This will open up a very large market for us now and forward, not only in Norway. It's everywhere, like I said. Some of you have probably read about this in the news and heard about it in the news. We don't know today that there is any other cost-efficient way as we use to treat this. We are really enthusiastic about this forward.
I will comment further on the other events on the next slides to come. These are some of the companies we work with. These are suppliers, distribution partners, and end customers in our four prioritized business segments. All our business segments are covered, and you can also see partners related to our German business activities here. We focus as previous. That stands clear for us and where we have the more closer possibilities and what we, if we should call anything low-hanging fruit, this is the area where we have focused and done very good results. And we'll continue to upscale the possibilities and activities in these four markets. We are today doing projects in Norway and USA within the oil and gas industry, as mentioned. For Norwegian market, we supply two onshore wastewater treatment plants with our NORWAFLOC.
One of these plants treats produced water from several offshore platforms. We also made a step further in a client treatment process and installed our NORWAPOL filtration technology. The system was in full-scale operations from February. Following this, the technical results has been further improved down to the very low scale of 0.1-0.2 ppm, parts per million, oil in water, also separating more dissolved and nano-sized pollution particles. While others talk about being below 30 ppm oil in water, and they talk about being down to 10, which the general, say, level of some of the produced water is, we talk about 0.1 and 0.2. This is very important for us. We see now more and more interest as regulations are tightening around these activities in different markets.
The second plant of treating slop water, which is draining surface water from offshore platforms, we have treated a series of batches with highly oil contaminated water for this client during 2022. In Q1 2023, we completed a 2-month full scale operation successfully. The successful treatments with variable waters showed results clearly in advance of other competing technology, is now resulting in client to order more from M Vest Water. Further extensions with this end client and also others are in the pipeline. We hope to announce some of these in the near future. The oil and gas in the U.S., we have been a part of a program since Q3 2022. M Vest Water's technology was being field proven in this industry on produced water onshore.
The pilot was carried out in collaboration with a major global oil and gas operator, and our products replaced their existing old-fashioned technology for treatment of onshore produced water. Previously, I mentioned that this is a walnut shell filters, and there are a long list of advantages with our filtration and technology, which now has been more and more visible to the clients there, but also the clients in Norway. The extended verification program over the past six months is now successfully completed and proves NORWAPOL technology to be superior and to the existing technology. Our green and disruptive solution gives a robust and cost-efficient operations for the client, as well as contributing to circular economy. In competition with alternative technologies, we have stood out as the preferred supplier.
A 20,000 barrel per day large scale verification project is now under planning with this client. This is an intermediate step, and the final verification prior to a full scale permanent field installation, then comprising treatment of 1 million barrel of water per day. We are, as of now, also participating in three quotation to the U.S. produced water treatment markets. We see increased in-interest there. We have dialogue with several other oil companies there now, and we hope that this will give results and sales and contracts in the near future. This strategic important breakthrough attracts now the attention from several large market players, and not only in the U.S., but also in Middle East, as these are multinational companies and they work in different regions as we know. An update on aquaculture.
The aquaculture industry is facing new and tighter discharge regulation that must be solved with environmentally-friendly technology to secure sustainability within the present operations and for further growth. We focus on solutions for two segments. The first segment is SME facilities, where we have two important ongoing projects. Erko Settefisk AS has awarded us a contract for implementation of our NORWAPOL technology for their RAS facility at Stord here in Norway. RAS is Recirculating Aquaculture System, as you probably, some of you, recall, meaning that you circulate clean water, a low percentage of clean water into the SME facilities at all time. Erko main reason for choosing NORWAPOL is to ensure optimal fish health and living condition during breeding.
It is also no secret that this also make the fish mass to grow somewhat more healthier and faster, which is of course a financial benefit for the fish farmers. NORWAPOL is now being installed and will be full operation within the end of next month. That project goes according to plan. Secondly, we are now preparing a full scale qualification for Grieg Seafood. I didn't put that in the slide, but it's Grieg Seafood, and one of their SME facilities in Norway. The project involves our NORWAPOL and is planned for execution in Q3. The salmon processing facilities will need to meet new and stricter discharge regulation from December this year. The industry faces investments in the range of NOK 0.5 to 1 billion.
Based on our latest technological advancements, we feel confident to state here and now that we have a highly efficient solution for the industry to meet these new regulations. Together with our business partner, Downstream Marine, who has supplied treatment systems to approximately 70% of the Norwegian market. We now actively approach the customers. We have estimated a yearly consumption of chemicals for the Norwegian salmon production to be approximately NOK 100 million. Update on dredging activities. The market for dredging water and sludge treatment is large internationally, as mentioned earlier. Going back to Q4 last year, we had a technological breakthrough at one of the largest European mechanical dredging sludge dewatering sites. In a full-scale qualification, we successfully treated 2,000 cubic meter per hour dredging sludge for dewatering. The next step is a repeated and final full-scale verification.
The project has been rescheduled by the client to Q4 2023 due to mechanical modification to their plant. In parallel, we worked on a second project because we want to have fallback if there are delays. We have plenty to do down there. The other project is in cooperation with a major German dredging company operating mobile dredging units, and our NORWAFLOC has been qualified. We made our first deliveries of NORWAFLOC in Q1 and focus now on the implementation of our solution at four of their operating sites in Germany. The municipal market is the largest segment of water and sludge treatment and accounts for 60% of the total flocculant and coagulants consumption globally. We are now focusing on the German market and currently involved in three projects for sewage sludge.
We are, as we speak, into last stretch of qualifying our solution at three different plants. To mention one of these plants treats sewage sludge equal to the capacity of serving households of 600,000 citizens. By a comparison, here home close to us, this is twice the size of the city of Bergen. The difference is that down there, it's in one single treatment plant. That says something about the enormous amounts of sludge and water being processed through there and need to be treated. This is a large project, and we are starting up that now, soon. In Germany, we have today identified 10 different plants to approach when we have completed the three aforementioned projects. These are only close by regional, and there are, of course, many others.
We have identified and started talking with clients also on the other plants there. This is strategically important for us and the clients now being able to replace presently used harmful chemicals with our more cost-efficient and environmentally friendly solutions, also complying with the new regulation. Because they like to use the by-products in nature, like building construction material and also fertilizer like I mentioned earlier. Finally, let's summarize the most important developments in Q1. We are experiencing increased interest in our technology, no doubt. We see an increase in the numbers of paid project, which again increase our turnover. I would like to emphasize on the positive development we now see in several of our targeted business areas. Municipal wastewater, Germany, we have three important verification projects to be completed the coming quarter.
Oil and gas, Norway, the mentioned projects shows that our solutions for the oil and gas industry is technically superior, cost efficient, and environmentally friendly compared to competitors' solutions. Regarding our U.S. projects, eight months of comprehensive testing on different technical and operational parameters shows our technology to be disruptive and superior to competing technology. Finally, for the Norwegian salmon process industry, we feel confident to state that we have a highly efficient solution for the industry facing the new regulation soon to come. As you probably have read in some of the media, they claim that there is no solution, and some other claim that there is a solution. We feel confident to tell you and tell them and show them that we have the solution. Thank you.
Thank you, Stein and Morten. I think we'll now move over to the Q&A. There's been some questions already answered by you, Morten, in the chat, but maybe we can just recap them for those who are not reading there. The NOK 40 million that you mentioned in annualized revenue, there was a question, is that from existing contracts? I think you wrote that this is, you know, potential annual recurring revenue from the contracts included in the project portfolio, and then that the margin potential for those are above 60% supported by your deliveries so far. Maybe we can move over to a follow-up question on that. So how much of those NOK 40 million are firm revenues today?
Yes, I can comment on that. So far, a smaller share of that is confirmed, but this is now in full focus and we have a few contracts that we are sort of, like, close on. So and hope that we will come with some announcements in the near future with this.
Maybe I can add a question on top of that. Those NOK 40 million, that excludes potential filter sales. That only refers to flocculant sales, right?
That's correct.
Uh-
Just to emphasize on that, the sale of our flocculant will be recurring revenues. For instance, if you have a 5-year contract, the NOK 40 million will occur every year, with NOK 40 million.
Very good. A question if PFAS treatment, if that's something you will target going forward or if it's considered an optionality?
We have had a lot of different potential clients and also companies operating to achieve better results on PFAS. Now we went together with a very close entrepreneur here, in fact, where we have our offices, and they asked us to participate in this, and we did with Avinor. This was more like a say, a development thing for us to see if we really could do that. We have had some indications earlier on some PFAS water that we had made good results on. Again, we focused very much on the ones that we are more commercialized on. We participated in this since it was an okay trial close to our offices and also with the revenues on it.
The results are there now, and of course we will direct some of our effort towards that to be able to serve at least companies, you know, big companies like Avinor. I guess they will be interested to do something more with us. There is not only the airport here in Bergen, there's airports all over. This is not only linked to the airports, it's all over. This comes from the fire extinguishers chemicals they use, which is not allowed to use anymore now. They need to clean up their areas and their properties. We will refocus on that, and we will come back to our engagement and strategy with regards to PFAS now.
Thank you. When it comes to U.S. oil and gas, where in the U.S. have you been involved?
This is a heavy oil area in west of U.S., more closer to California. The client there, we are not, we have not any, we don't have any consent to announce their name yet, but it's one of the majors. They are also all over U.S. and all over the world. We do this now first, and we are very close to further engagement and contracts with them there at these fields. There are several fields, not only one, but in California. Also, we are doing trials now with the produced water from the Permian.
The same company comes up and like to try our technology there for the Permian area, which is Northwest Texas, New Mexico, and these areas around there.
All right. Good. The final question, can you say something about the contract potential for the projects where you are participating in, U.S. onshore oil and gas?
Yeah. I, you know, it's big. As of now, we will need to focus and serve those who actually brought us in there and accepted to bring in our new technology. It was hard to get breakthrough and get in there. It was not easy game even we told them a lot of nice things. Now they have seen with their own eyes throughout a six-phase qualification and verification program. It's quite comprehensive that you need to pass all this to be accepted. This is the case. You know, luckily, we get some paid now for that because we are very firm and confident about what we are doing, and we know that it works on the different type of produced water over there as well. Potential for it is huge.
They use the walnut shell filters, which is a 50-year-old technology. A very inefficient, we know. Doesn't say, recirculate, say, circular economy on this one. You need to throw away the walnut shell substance, I would call it, after a short time, maybe two years, three years. Our NORWAPOL will stay there for 15+ years. We know that for sure. It's economically CapEx and OpEx and everything, and environmental results are in advance of what we have shown them and delivered it. Potential, well, it's huge.
I cannot give you any numbers on that, but it's widely known that U.S. produce some in excess of 5.5 million barrel of oil from the onshore fields, as they have ramped up the last, say, 10, 12 years and took over the lead of oil production in the world, ahead of Saudi and ahead of Russia. I don't know if that helped you, Nils.
No. Very good. Thank you, Stein. That was the last question. I think we'll conclude the Q&A and, if you have any closing remarks, you know, take it away.
Okay. I would like to thanks all attendances and as you see, things starts moving now, also start generating revenue. We are far into commercial products now and acceptance in the markets, and we see that they. This is not a push marketing, it's more like a pull marketing from the client base. We just have to be very disciplined on what we go to and what we do over the next months and quarters to come. We are very enthusiastic more than ever now, and hope that this will show in our in our next quarters to come. Thank you, everybody.