Many energy companies use marketing strategies to portray a greener-than-reality image. The small cap we’re watching is one of the rare players with a genuine emphasis on a net zero carbon footprint combined with a solid strategy focused on renewable fuels and innovative and sustainable technologies space – Viking Energy Group, Inc. (OTCQB:VKIN).
Company Overview
Viking Energy Group, Inc., previously an independent exploration and production company, has pivoted from being a pure oil & gas participant and has started to execute on a growth-oriented diversification strategy that is starting to transform the organization. Through recently acquired majority-owned subsidiaries, Viking now provides custom energy and power solutions to commercial and industrial clients in North America. The company also holds an exclusive license to a patented carbon-capture system in Canada, and as recently disclosed, has a controlling interest in an entity that owns the intellectual property rights to a proprietary Medical & Bio-Hazard Waste Treatment System utilizing Ozone Technology.
Value Added Acquisitions
With a series of value-added acquisitions, Viking Energy is strengthening its already-established platform and recognizable brand to position the company for additional expansion throughout North America. One of their recent investments was the August 2021 acquisition of a majority interest of around 60.5% in Simson-Maxwell Ltd, a leading manufacturer and supplier of industrial engines, power generation products, services, and custom energy solutions. In business for over 80 years, Simson-Maxwell combines innovative technology with superior products to contribute to global energy sustainability. Its diverse workforce at seven branch locations services over 4,000 maintenance contracts as it helps meet the energy and power-solution needs of the company’s broad customer base.
Later in August announced it had signed a licensing agreement with ESG Clean Energy, LLC, developers of clean energy solutions and net zero carbon footprints for distributed power generation. The agreement will allow Viking to use ESG’s patents and know-how in the field of stationary electric power generation, including methods to use heat and capture CO2. The license is exclusive in Canada and non-exclusive for up to 25 locations in the U.S. The ESG Clean Energy System is truly distinctive as it generates clean electrical energy from internal combustion engines and uses waste heat to capture 100% of the carbon dioxide emitted from the engine without sacrificing efficiency. The process in turn facilitates the production of precious commodities (e.g. distilled/ de-ionized water; UREA (NH4); ammonia (NH3); ethanol; and methanol) for sale. This is an excellent move by the company in the direction of sustainability in an era when most oil majors are struggling to control their carbon footprint and should definitely win them some brownie points with their stakeholders.
In November 2021, Viking Energy entered into a Membership Interest Purchase Agreement to acquire a group of companies which are in the process of engineering, developing, constructing, and bringing into commercial operations a processing plant located in Reno, Nevada. This plant is designed to produce renewable diesel, also known as green diesel. Renewable diesel fuel is a biofuel that is chemically identical to petroleum diesel fuel and is produced using renewable feedstocks rather than crude oil, utiliuzing a variety of thermochemical processes, including hydrotreating, gasification, and pyrolysis. This acquisition could be a game changer for Viking Energy as it would mark their presence in the biofuels market which is expected to be a fast-growing market in the future. It would certainly help them expedite their growth strategy and add a whole new dimension to the valuation of the company’s stock.
Most recently, Viking Energy announced it had acquired a 51% interest in an entity that owns the intellectual property rights to a proprietary Medical & Bio-Hazard Waste Treatment System utilizing Ozone Technology. Designed to treat bio-hazardous and regulated medical wastes using ozone as a deactivating agent, the Ozone system is a major step forward in waste treatment technology and benefit multiple institutions and organization ranging from hospitals and laboratories to military facilities, resorts and hotels. The market for medical waste treatment is upwards of $20 billion annually and Viking reports it is already in discussions with potential clients for this vital and rapidly growing process.
Final Thoughts
Viking Energy’s stock price trajectory has been volatile like any other microcap of its size. It is worth mentioning that the company has maintained its track record of delivering on its mandate and has made the most out of the rising oil prices. Its current annual revenue run rate is around $40 million and could increase significantly with new acquisitions and the commercialization of the carbon capture technology. The stock is currently trading at hardly 1.8 times price-to-sales and around 15 times enterprise-value-to-EBITDA and we clearly see immense scope for multiples expansion. We are bullish on Viking Energy Group and we believe that this energy player could really provide excellent returns in the medium to long term horizon.
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