Hillcrest Energy transitioning from dirty fossil fuels to clean technology

Formerly called Hillcrest Petroleum, it is funding its clean-tech transformation with oil production revenue Developing technologies to boost the performance of applications requiring precise control of rotating electric machines CEO says Hillcrest’s clean energy initiatives have “limitless potential” What Hillcrest Energy does: Hillcrest Energy Technologies Ltd (CSE:HEAT) (OTCMKTS:HLRTF) (FRA:7HI.F) is transitioning from fossil fuel production to clean-technology innovation and intellectual property (IP) development. Formerly called Hillcrest Petroleum, the company is funding its transformation with oil production revenue from its legacy West Hazel oil field in Saskatchewan. Hillcrest is now developing clean energy technologies that advance the performance of any application requiring precise control of rotating electric machines, namely electric motors and powertrains to increase the power/speed/torque performance of an electrical vehicle (EV) or extend its range. Such technology could have applications in the aeronautical and nautical industries as well. The Vancouver-based company also sees high-value opportunities in the power-systems market for both businesses and residential communities where energy efficiency and energy storage solutions are fundamental to achieving carbon neutrality and energy self-sufficiency. Hillcrest's motor and generator control system technology can effectively generate, store and deploy clean power from renewable sources such as electromagnetic electricity generators and wind turbines, among many others.  In 2020, the company gained a foothold in the clean-tech market with the creation of ALSET Innovations Ltd, a joint-venture with Oropass Ltd, under which both companies will license technology that has been developed in Canada over the last 20 years and shown to increase electrical generation efficiency by as much as 80% in lab tests. Hillcrest also formed another clean-tech joint venture, with Extreme Vehicle Battery Technologies Corp (CSE:ACDC), a battery technology company which has exclusive North and South American as well as European and African distribution rights for patented battery management systems (BMS) and energy storage systems (ESS). In addition, the company owns ANIGO Technologies Inc, an engineering product development company and developer of proven electric machine control software specifically designed for use with electric motors, electric generators, and other integrated power systems How is it doing: For Hillcrest, April 2021 marked a major turning point in its transition from dirty tech to cleantech.   In the space of one week, the company announced its name change and the landmark acquisition of ANIGO as Hillcrest promised to continue to target similar strategic partnerships that can scale quickly and align with its interests.  Around that time, Hillcrest also closed on a $5 million equity facility which, in addition to $1.27 million raised in January, will help finance its transformation, and it started trading on the Canadian Securities Exchange under the new ticker symbol ‘HEAT’ to underscore its new strategy and business model. ANIGO's software IP has the potential to greatly enhance the performance of any application requiring precise control of rotating electric machines. That ‘control’ could also be useful in emerging technologies such as the blockchain, Internet of Things (IoT), autonomous vehicles, and other applications. When the company acquired ANIGO, it also got Ari Berger who grew and commercialized ANIGO's IP over the last several years. Berger is now Hillcrest’s chief technology officer and the company has said he will continue building on ANIGO's existing technology to deliver new Hillcrest-owned IP and technology. The company also signed a five-year technology collaboration agreement in April with Systematec GmbH, a German specialist engineering innovator and component designer to Airbus, Audi, BMW, Continental, Volvo Truck Corporation, and other hybrid-auto/EV and electrical equipment manufacturers.   Technical teams on both continents will jointly manage engineering activities to leverage Hillcrest's electric machine control software and develop high-value power electronics and electromechanical IP and technology for commercialization. All products and IP developed through the collaboration will be owned by Hillcrest.  Hillcrest is also advancing its two joint ventures -- ALSET and Extreme Vehicle Battery. Under the ALSET partnership, the company holds a 50% interest and expects to receive between 25% and 50% of total net value generated from licensing, marketing, and deploying the electrical generation efficiency technology, as well as management and advisory fees.  Prototype applications of the technology have successfully been tested on an electric motorcycle. If scaled up to an EV, there is the potential to extend the range from 400 miles to over 700 miles from a single battery charge. ALSET also plans to license the technology to companies manufacturing electricity generation equipment like diesel generators and wind turbines. Under the Extreme Vehicle Battery partnership, both companies will contribute their respective clean energy IPs, technology, specialized technical capability, and management to develop and commercialize scalable renewable energy management systems to service the BMS (ie EVs) and ESS industries. For energy management, potential commercial applications include residential and business communities moving towards a carbon-neutral, self-sufficient eco-status. In the meantime, the company will continue to pump oil at its West Hazel oil field in Saskatchewan to generate revenues to help fund its transition from dirty black to clean green. Four active wells are currently producing around 110 barrels of oil per day and a new well is in the works for 2021 -- which is expected to deliver about $70,000 per month in additional net cash flow at current oil prices. And as part of its commitment to responsible operations, Hillcrest plans to conduct significant field remediation activities earlier than required under current regulations -- which will reduce its long-term abandonment liabilities and underscore the wider ongoing objective of reducing the company’s environmental footprint. Inflection points: Anticipate revenue from ALSET JV Expect to drill a fifth oil well at West Hazel Target strategic clean-tech partnerships that can scale quickly   What the boss says: “Our pivot from traditional oil and gas production toward a more diversified business model that transforms earnings into investment into clean energy technologies is aggressive and important. We intend to maximize revenue from the field which is providing seed funding to scale-up activity and focus on creating transformative energy technologies,” Hillcrest CEO Don Currie said recently. Contact the author: patrick@proactiveinvestors.com Follow him on Twitter @PatrickMGraham