Oracle Power (LSE:ORCP) — Investor Presentation

0:01 Good afternoon, and welcome to the ORACLE POWER PLC Green Hydrogen Project Investor Presentation. Today's presentation, that is based on the last circa fifteen minutes and provide an update on the project. Throughout this recorded presentation, investors will be in listen only mode. Questions are encouraged, can be submitted at any time by the Q and A tab situated in the right hand corner of your screen. Simply type in your question and press send. The company may not be in a position to answer every question received during today's meeting. However, the company review all questions submitted and publish responses where it's appropriate to do so. Before we begin, we'd like to submit the following poll, and I'd like

0:32 to hand you over to Najid Memmon, CEO. Alright. Am I ready to go? Please do. Thank you. Alright. Okay. Hi. Hello, everyone, and thank you for listening to our presentation on our very important and significant project, which is a green hydrogen project that we are developing in Sindh, which is Southeast Pakistan. Well, recently, just two days ago, we made a very significant announcement of we acquired a large package of land, almost 7,000 acres, 28.3 square kilometers to set up our projects. Now this basically is the beginning of of the actual development on ground, and this is, you know, the the most important sort of development and milestone in the the the sort of the series of work that we have already done and we will be doing. So this is that which sets us up now to go forward.

1:41 And I'm just gonna take the opportunity today and go through the sort of the status of the project, where we are, what we plan to do, and what this really means for the project itself, for hydrogen globally, and for, most importantly, our company.

2:02 So the project is being developed by our subsidiary, is called ORACLE POWER, and that is owned by us, which is ORACLE POWER, and owned by the private office of his highness, Sheikh Ahmed, in Dubai. And we have his highness's support for this very, very important development. And he has been, directly supporting the development of this project given the importance and significance of this commodity globally. And so that's how it's been structured. And I would like to say that the you know, one of the reasons why we've been so successful already in a very short span of time is because of his sort of, you know, of his support in principle and unconditional support towards the development of this project. So we are very grateful to him for that, and we can then work much more and work at a faster space because of his support.

3:01 So that is a bit of the structure, of how we are set up to do the project. And that also, by the way, is, is, is important for our supporters and investors to understand that through him, we are not only derisking the project, we are also improving the the sort of the prognosis and what it actually will become. And, also, it mitigates the risk that ORACLE POWER takes on as a company by investing in this project. So, you know, a very, very good foundation to develop the project. What is the project actually? So we are setting up our target is to set up a 400 megawatt electrolyzer capacity production plant, which will produce green hydrogen and green ammonia. And this will be done using green energy, renewable energy, and the the sort of the plan, the the prefeasibility that's all been done, and the sort of the conceptual ideas which are now being, developed further that have, sort of, indicated and, sort of provided the the sort of the basic ingredients that we will be setting up a 700 megawatt capacity solar plant, 500 megawatt wind, and then, of course, it'll be supported by a whole battery station.

4:17 And our target is to produce 55,000 tons of green hydrogen a year, annual production. Now in terms of scale and size, this is a very large project, because the the you know, if we were to compare it to projects which are currently being set up or are being planned, we are, at par, if not bigger, than most of them. And the biggest one in the region is in Saudi Arabia, which is, like, two gigawatts of electrolyzer capacity, and we have 400 megawatts. And I keep saying, so we want fourth the size of the biggest sovereign backed project in the world for green hydrogen. And, you know, the importance of this commodity and as it is going, the most countries are now encouraging the development of of big large projects, and that's the only way they can be viable and competitive, of course. So so, you know, our our sort of plan and our targets are commercially solid and commercially viable when it comes to the deployment of the technologies in place and also the way this project is going to move forward.

5:28 Once and so we've planned to sort of set up the hybrid station, which is a renewable solar and wind, the electrolyzers, synthesis plants, and then, of course, this is coupled with the whole transportation and storage section and components. So that's the way this project is going to be set up. Now the most exciting and the most important part that I would like to share today with everyone here is what we've already got and where we stand today. So we set up this project. We announced this project in 2021, October 2021, and we are in December 2022. What we already have is, phenomenal when it comes to how green hydrogen projects have been moving and for that matter, any energy space project. So we've moved very fast.

6:17 We have, an LOI for the setting up of 1.2 gigawatts of renewable power, which is 700 of solar, 500 of wind. So we've got this LOI. We've got the permission to actually use this for the generation of a 400 megawatt capacity electrolyzer facility as well as sell the surplus to the grid or to any other buyer, which also is very, very valuable because up until now, the way energy was being used through renewable was direct consumption. So we are gonna use it to make hydrogen, but we can also use it directly and put it onto the grid, which is the standard form of renewable energy generation up until now. But we still have that option, and that can also be done alongside. And we certainly will consider doing that for our surplus power.

7:04 We've got that. So we've got this LOI all done and ready to go in terms of permissions. The next most important thing, in fact, the most important thing or critical thing was land, and that's what we've got now. We've been given a lease of land for 7,000 acres, which as I said, is is very large. It's like a big like a town, like a almost like a village. I mean, my it it's huge. 28 square kilometers. And that is where we go to house our massive renewable plants as well as our electrolyzers, synthesis plants, etcetera. So now we've got this land, and this is what we announced. And, this land sets us up to become one of the largest, as I said, hydrogen projects in The Middle East and Asia, and, of course, the largest in Pakistan, the largest green hydrogen production facility in the region. And this is the another thing that needs to be conveyed is the quality, the the sort of the the characteristics of this land. What is it, and why is this so important, and what this actually means? So the land is located in a wind corridor, in the Garojimpir Wind Corridor, which is a World Bank study related designated wind corridor, which has one of the best wind resources in the world. And it has an annual generation capacity of more than 44,000 megawatts annually, close to 50,000 megawatts.

8:29 And it's proven, which is also extremely important. So here, we're not risking anything because in the vicinity of our land, just within a 10 kilometer radius, there are commissioned projects, projects which have been developed and commissioned and are supplying electricity to the grid through wind. And, of course, to the south part of our land, there are solar projects which have already been commissioned. So three fifty megawatts commissioned around us within just 10 kilometers. Like, from our land, you can actually see these projects and I mean, if you really wanna go for a hike, you can even walk. So they're extremely close. So all proven. And then within, like, this entire corridor, there is more than one gigawatt of commissioned renewable power, which is already on grid. So this is proven.

9:14 And another very important thing from the investor point of view, and that should give them confidence, are these are projects which have benefited from international sponsors like the IFC or the DAG or the CDB, etcetera. These international banks and donors and and equity has come in from these international sponsors. So this land, this area, for its resource, is established and has been derisked, which is extremely important. And this is why this part of the world actually is, you know, is a part of the world where a project like this will be certainly successful. Then moving on, the other bits that we have very, very close to our land is the infrastructure, which is worth mentioning. So we're very close to two ports, and these are the two largest ports in the city of Karachi, which is the largest city. And we are just a few kilometers from this largest city, and these two ports and I'll talk a bit more about them. But so these two ports are there because we are targeting the export market as well, so this is very essential for us.

10:23 And then we have the railway line, which is also very important for transportation, which is just 10 or 12 kilometers away, and then we also have the grid. So as I was mentioning earlier, that we can supply this to the grid, etcetera. So that is also extremely important. Now all of these ingredients really make for a very, very solid commercially viable proposition as well as, a project which looks to be revenue making very early on. So we will be able to not just produce competitively, but also transport and sell both for the domestic market as well as for the international market. And the hydrogen that we're targeting, we are targeting very pure hydrogen, as well as slightly less pure depending upon whether we want it for mobility applications or we want it for industrial use.

11:11 And we expect our first production to be scheduled for, like, you know, 2026 because that's how long it takes to actually get the project going and to have all the constructions, sort of in line. So we are looking very good in terms of where we are placed and how we are going to proceed. This is extremely important because, I mean, there are green hydrogen projects that are being talked about, but not all these projects will either see the light of day or will they be successful. So this, actually, this map shows you where we are and the red parts. Like, so that's where we are. That's the province of Sindh within Pakistan. And these are the heat maps showing you the radiation and the conditions.

11:58 So where we are, the Sindh province has an average of more than three hundred days of sunlight per year with an estimated 1,800 to 2,200 kilowatt an hour per meter cube. So this is, you know, the the the extent of the solar capacity. As far as the wind is concerned, this wind corridor is 9,700 kilometer squared. This whole thing is is huge, this, wind corridor, and has an estimated cross annual wind capacity, as I said, and it says 60,000 here. So clearly, you know, it's much more than what I even said earlier. And it is mostly an average wind speed, which is greater than the wind speeds that are seen in other regions. This is important because this is what makes the project, sort of useful, viable, interesting, and investable.

12:49 Otherwise, you would not attract the kind of monies that are needed. The project has to make sense. These are just some sort of, you know, data points for the project and for our project site, and this is probably the first time that our investors and our supporters are seeing where the site is. This is where we are going to be. This is what we have acquired, and this is the sort of the coordinates and land. And if you can see, all those green bits those those green sort of points here are all the established wind power plants. Here, this water body is very important because we need water. This is the largest lake or freshwater reservoir, which is not too far from us at all, and this reservoir will support supply the water that we will need for the project. So that is also very important. This is all the grid stations and all the established power plants.

13:41 I say all of this just to emphasize that we are in a very, very viable and suitable area for the development of this large and important project. What are we gonna do with this hydrogen and how when it sort of comes online and etcetera? As I said, domestic market for fertilizer, for gas, for ammonia, industrial use, for international markets. Of course, free pneumonia moving is the best way to move it, so we're going to be moving it in that way. We are already in conversation with companies in Korea, with governments, with companies in Germany, and, of course, the market globally is growing. I mean, from India right across to The United States and China everywhere, Europe. Every single country now is focused on a green hydrogen development strategy, and the green hydrogen supply chain is going to be vast. There will be a global network. Of course, there are they'll have pipelines.

14:43 They'll have mobility structures, which will be developed, etcetera. But that's all already in play, and we are going to be able to plug into it just at the right time. Something also about our costing and our commercial sort of sense of this is also important because people ask me what does this actually mean in numbers. So, you know, today, if hydrogen is being sold for $10 or $20, depends upon the type of hydrogen and where it is, The target is obviously to compete with with your other fuels, like in your sort of fossil based fuels, and that is what we're transitioning from. So we if we want to compete in the long run, the price has to be super competitive. So there is a target of, like, $3 is what people are saying can be done today, but you should target lower. The good news is that given the cost of energy that we have and given the land and given the sort of the availability of the resource, we are targeting something like $2.

15:37 Now you can do the math, 55,000 tons. And if we target this is a cost production. This is the production price. The sale price, as I said, can be anything between 10 to $15 depending upon where it's going and what the need is. It's like a commodity, like any other commodity market. So the price can only go up, and and so we stand to be in the money, very, very soon and very early on if we are plugged into this global supply chain and the offtake arrangements are already secured globally. People are securing these, and we are also in conversation, as I said. So the numbers look very good for us. Important to also tell you a bit about the ports. As I mentioned earlier, these are two ports which are very, close to where we are. Good news. Ammonia already moves at these ports, so it's not gonna be, something new. Of course, there'll be some some sort of, new infrastructure development that will go along, but this is not not done before. So hence, but the possibility of doing this faster and sooner is very good and very high.

16:42 And then we already Pakistan is already an importer of LNG. Now ammonia will come to terminals, and LNG terminals can be very easily refitted, customized for ammonia movement. So we already have that in play. And so from our investment point of view, all of this adds up and makes the project that much more easier to plug into because we have to do less on ground. I was just in conversation with some scientists and some people and hydrogen scientists today, etcetera. The one big thing that's going to prevent hydrogen projects from actually seeing the light of day is their their lack or no partnership with the big technology leaders in this space.

17:31 And Thyssen Group is right on top of that list, and we have them. We have them with us not through just the feasibility, but to work with us through the process. I cannot emphasize enough the importance and the extent to which this derisks our efforts and the actual commercial viability of the project. Because from electrolyzers to the manufacturing, to the synthesis, to the processes, etcetera, If you have a leader like Thyssenkrupp with us, I mean, Siemens also doing electrolysis, etcetera, there are few out there. But to have any one of them and the point here is that they are overstretched, by the way. Thyssenkrupp and I probably have said this somewhere else, but I will repeat myself. Thyssen Group CEO, when I met him at the time of our signing, said, you know, we get thousand requests. We turn most of them down. We only take on projects where we feel there's a potential, and then when we take them on, we take them to the end. So this is a solidly important partnership for us, and we really are counting on this association to take us right to the very end, and to the development and beyond construction of our project.

18:42 We are checking all the boxes, and we are not leaving anything sort of not done or not done in time. So as far as the certification processes are concerned, we've also got an arrangement with a green certification agency, which will certify green hydrogen to be carbon free. By the way, this will be done for the entire project. This is green hydrogen. It'll be done for green ammonia. It'll also be done for renewable power, etcetera. Because one part of this project is that it fits in to the global energy transition. It fits into the climate goals. It fits into the compliance goals of all national governments. So there is that credit that we will also be able to target, and we will and we will also be, a part of that market. It's very important for us to be certified and be ready to be a part of that market as well. And because there aren't enough projects out there, the volumes are very low for those who understand this whole market.

19:42 We'll be plugging in directly into this as well. Just a snapshot of our, you know, engagements. POWER China, the biggest EPC contractor in the world, advised us at the very beginning, our renewable plants, etcetera, what sizes, etcetera. And it's great to have them on board because they've done the job and they do the job on ground in Pakistan. In the wind corridor where we are, one gigawatt, probably 900 megawatts have been set up by them, I e, constructed. So great partnership to have there. Thyssenproof, as I mentioned, certification. On the carbon side as well, we are already in conversation with the company in The UAE. And that's so, you know, that that's really a snapshot, and I hope it has sort of given everyone out there a feel and an idea, of what this is, its magnitude, and its reality.

20:37 It is set up to be one of the largest green hydrogen projects plugging into one of the most important future fuel commodity supply chains. So this is not a small idea, and this is not a small project by any means. And on that note, I mean, I'm very happy to take any questions. I'm very grateful for your support, and I'll be even more grateful if you were to to sort of, you know, buy into to this prospect based on what this really means globally today and going forward. And I thank you once again for all the support that you give to our company and, for your patience. Thank you so much.

21:22 Right. Thank you very much indeed for the presentation. Just want to take a few moments to review those questions submitted today. I'd just like to remind you the recording of the presentation along with a copy of the slides and the published Q and A can be accessed via your investor dashboard. Nei, one question that we did have, which I'd like just to pose to you before perhaps moving some of the live questions we've had through is, can you comment on what we should be expecting as next steps and future milestones going forward?

21:46 Certainly. So as I said, the most important thing has been achieved. We've got the land now, and we have already begun begun commencement process. When I say that, I'm saying that we are in very advanced negotiation for our topographies, our geotechnical studies, our environmental assessments. So all of this, the derisking and ensuring that we are in the right space, all of these studies. And this is all the the sort of the great development, goals that the investors are going to benefit from because we will very soon in the next few months, cover all of this ground and really derisk it on ground at in terms of a project which is then ready to get onto ground. In parallel, of course, we will be, building our, off take arrangements as well as our financing nexus, etcetera. So all of that is coming together.

22:35 And the sooner that happens, the sooner you see this project taking off in terms of actual construction. And so that's where we are headed, and all of these milestones are gonna add more value. And I can say one thing. This value is going to be added exponentially for sure. So that's how it's going to move, and so all of these milestones will be disclosed as and when, but they are a part of a normal energy sector development process, and that's where we are headed. So, a lot of work to be done, but a lot of great news coming out as well, hopefully. Fantastic. Thank you very much indeed. I know we were looking at sort of fifteen to to twenty minutes of the presentation, which we have gone over. But if I may just ask you just to click on that q and a tab and if there are any questions that you are in a position to take, please, if you could just read them out and then give your response, that'd be great. Thank you.

23:22 Yes. Sure. So, I mean, obviously, some someone's asked me about country risk and international sponsors, etcetera. So I I I addressed that slightly earlier, but I will reiterate. I said that where this project is located, you already have international sponsors in play. IFC has sponsored a project maybe a few kilometers away. DG, which is the German investment corporation now, they have sponsored a project literally, I would say, two, three kilometers away at Lakeside. It's just right there. So and there's Chinese development banks, etcetera. So these international sponsors are already there, and there is enough trust in the resource as well as in the deployment of resource in the energy space in Pakistan. Yes. There are issues, but these are these are issues everywhere.

24:14 I mean, look at the energy sector in The UK. You know, subsidies currently, you know, bills are skyrocketing, etcetera. So there are problems. I mean, this is a global scenario. And, you know, Pakistan too has a balance payment problem, etcetera, etcetera, and that delays payments and so on. But but it's a sovereign. So, you know, these things get sorted, and these things take a bit of time. So as far as that is concerned, this industry is tested in terms of renewable power production and commissioned and sponsored by international firms, companies, banks, etcetera, etcetera, and governments. So I think that we are in a in a sort of a fairly reasonably tested and tried area. So I wouldn't worry too much about that. And plus, close to the ports, exporting a lot, domestic industry is massive. 220,000,000 people, massive fertilizer industry that we'll be tapping into. Global sort of industrial use for ammonia as well as the gas. We'll be plugging right into it. So that potential is so huge that the cost of that risk that investors would take would be more than overcome by the upside and the potential in the domestic market as well as the potential sale to the overseas markets sitting where we are gonna be sitting.

25:33 And, well, there are questions, of course, about our coal project and our gold projects, etcetera. And, you know, just because we're not presenting them today does not mean that they have died and, no, they have not. And we are still very much, you know, working on them, of course. But in terms of magnitude and in terms of the monies that are being spent, etcetera, and the relevance and the importance, this is a very important project. And those other projects will also be concluded in a way which will be beneficial, and we are working towards them as well. And we keep updating the market, and we shall both for the coal as well as the gold, and I expect to be updating the market on those two projects as well as soon as possible.

26:21 And there are questions about revenues. There are questions about, you know, how we are someone's asking milestones, and will you be setting those out? You know, as as I said, for this project development, we will set out the milestones, and we will put them out so that there is clarity and visibility, which is important, I think, for our investors to see how this project is developing. And certainly, so to answer that, the answer is yes. But it obviously needs to be disclosed to the market adequately. We will RNS that. We will sort of clear that and work through that before just randomly putting these milestones

27:08 out. And other than that, you know, there are questions about shares and, you know, issuance and, you know, this is a high growth company. It will be. I am convinced about it. There are certain risks we are taking, and I know that our investors take those risks as well. But in this case, this is a risk worth taking because the the upside and, you know, this is deep. This is not a superficial project here. This is I mean, I could, yeah, call it like a deep technology project in some ways. I don't know if that is a good way of putting it, but, really, this is a project which fits into a very near future globally.

27:53 And not all of them are going to be successful, and not all of them are going to move this fast. So really to be a part of one of those projects, which will be needed in the world, is a massive opportunity. So so because of that, obviously, there is a requirement to keep moving, and you can't keep moving this fast unless and until you are equipped financially to do so. But the good news here is that we have his highness' support directly for this project. I mean, imagine if I had put in 1,830,000 of our money, ours, yours, mine, ORACLE's, into this land. We just put in 30% of that. And we've got this huge asset, and we are managing this project, and we will lead it, and we are sponsoring it in such a big way. Huge support.

28:39 And that cannot be undermined, and we have a lot of regional support coming in as well. So this is, yes, a way to go, but it's going in the right direction, and we will get there. I think that probably summarizes the kind of questions that I'm seeing up there, but I'm I'll sort of look at these in detail, and we can then send out written answers as well. There's a question about carbon credits. I will pick that up, and I will answer that in detail because I think that requires sort of slightly more explanation and discussion. But but, yes, I did mention that, and I will pick that up and answer that in detail as well. Thank you for that. Thank you very much indeed for for taking those questions. Of course, as you say, you'll be able to review all these questions. We'll able to publish those responses where appropriate to do so. And thank you to all the investors for submitting those questions. Nade, perhaps just before redirecting investors to provide their feedback, just a couple of closing comments, if I may, just before we wrap up.

29:39 Thank you. I'm I'm really grateful to you for this opportunity because this is important. It was important for us to convey what this project is all about, really. And I was just it worries me that it gets drowned. And, I mean, it worries me, but I also understand where where my investors, supporters are coming from. I understand that as well. But at the same time, I did really want to convey the the significance of this project and what this really means and what it means for them to be a part of this. I hope I've not been able to do that or at least partly do that. I remain grateful to all who continue to support us. Thank you so much. That's fantastic. Thank you. And, hey, thank you for updating investors today. Please ask investors not to close the session. It should be automatically redirected to provide your feedback in order that the team can better understand your views and expectations.

30:30 This will only take a few moments to complete, and I know it's greatly valued by the company. On behalf of ORACLE POWER PLC, we'd like to thank you for attending today's presentation. That concludes today's session. Good afternoon to you all.