Plexus Inks Licence Agreement with Jereh

Plexus has entered into a licence agreement dated 1 July 2015 with Yantai Jereh Oilfield Services Group (‘Jereh’), to facilitate the rental, sale, and manufacture of Plexus’ wellhead equipment into the major Chinese, wider Asian, Brazil, Indian and Middle East oil and gas markets.

Plexus has also finalised and entered into a share subscription agreement with Jereh International (Hong Kong) Co., Ltd (‘Jereh HK’), with formal completion to occur on receipt of funds from Jereh HK.

Licence Agreement

Under the terms of the Licence Agreement, which follows the framework agreement signed at the Beijing Oil Show and announced on 26 March 2015, Jereh has been granted an exclusive licence in China and other designated Asian territories, as well as Brazil, India, and the Middle East, to manufacture and supply Plexus’ products utilising Plexus’ trademarks, patents, technology, know-how, engineering, standards and other intellectual property and technical services.

Plexus is entitled to a range of royalty percentages from Jereh in respect of the rental and sale of different Plexus POS-GRIP wellhead equipment applications made under the Licence Agreement.

Several of the Licence Agreement relationship arrangements are already underway with Plexus holding training workshops at Jereh’s operational headquarters in Yantai, China for its engineers and sales personnel, the company informed.

In tandem, Plexus and Jereh are conducting collaboration meetings to best identify immediate commercial opportunities to further expedite the manufacture and supply of equipment. These early initiatives may include Jereh accelerating such opportunities through the purchase of sets of Plexus’ POS-GRIP wellhead systems manufactured in Aberdeen which would generate early cashflow for Plexus and Jereh under the terms of the Licence Agreement.

Share Subscription Agreement

The Share Subscription Agreement finalises the subscription by Jereh HK for 4,468,537 new ordinary shares in the Company at a price of 180 pence per Share (as announced on 26 March 2015, this price being a premium to the price at the time the parties started discussions regarding the proposed licencing agreement) for a total consideration of £8,043,367.  The new shares will be issued and admitted to trading on AIM as soon as practicable after the Initial Subscription Completion and will result in Jereh being interested in 5 per cent of the enlarged issued share capital of Plexus, the company wrote in a press release.

Plexus’ CEO Ben Van Bilderbeek said, “This agreement with Jereh, which is a world-class supplier of oil and gas field equipment and services, operating in more than 60 countries, moves Plexus from a supplier of specialist wellhead equipment for exacting applications, into the main stream volume market, where the ability to engineer and manufacture to high standards whilst controlling costs by design and practice, are the necessary ingredients for success. The timing of this union is most appropriate as Plexus is launching its Python™ Subsea Wellhead System at the Aberdeen Offshore Europe Exhibition in September 2015, whilst Jereh is focused on developing its supply chain into Brazil where the subsea applications from our unique technology have the potential of delivering the greatest dividend.

“In addition Jereh is strongly established in China and Asia and is further poised to pursue opportunities for our technology in the Middle East, at a time where this region presents major challenges for Western companies.

“According to Infield the energy analysts, China and wider Asia is in the process of implementing the largest regional offshore capital expenditure programme which, from 2012 to 2018, has been estimated to amount to US$146 bn.  In global terms a World Oilfield Services Market Forecast expects a 47% growth rate in the global oil services market to US$521bn in 2018.

“Plexus and Jereh share the ambition of delivering oil and gas drilling equipment and services, which are best in class in terms of safety, performance and reliability. By incorporating patented POS-GRIP technology, our companies will push the boundaries in terms of wellhead performance and safety standards, where we now can match the integrity of premium casing products in all drilling and production applications. In the field of High Temperature and High Pressure operations, at the surface and subsea, POS-GRIP technology simply sets a standard no other wellhead technology can match.

“Whilst Plexus will continue to expand its global presence in the North Sea, Europe, MENA and Australasia, and has vested interests in Asia with Malaysian and Singaporean sales hubs, we believe this Licence Agreement can over time generate substantial revenues from the partnership with Jereh, who have an exceptional proven track record as licensees for major partners around the world.

“Finally I would like to thank Chairman Sun and his excellent team at Jereh, who have worked closely with the Plexus team to ensure a smooth completion process following the signing of the Framework Agreement between Kunxiao Wang, President and Co-founder of Jereh,  and myself at the Beijing Oil Show in March 2015.”