Oasys Water to double revenue in 2015 – from 10 to 20 million USD

In a recent WaterWorld article (“Forward Osmosis: Rethinking a Maverick technology“), Jim Matheson – CEO and president of Oasys Water – was interviewed on the company’s forward osmosis commercialization activities. Here are the main take home messages from the interview:

  • Oasys Water moved into their commercialization phase in early 2014 and the year saw a total revenue of 10 million USD. The company focuses on difficult to treat waters with high TDS where traditional pressure driven technologies, such as reverse osmosis, are not applicable.
  • The company’s main product is the Membrane Brine Concentrator (MBC) system, which we have mentioned before in our coverage of last year’s IDA YLP forward osmosis webinar. Oasys’ MBC system is currently being used in industrial applications to treat fracking waste waster as well as waste water from flue gas desulphurization. In both cases, the MBC system is able to draw fresh water out of initial waste feed waters with more than 80000ppm TDS while concurrently concentrating the waste feed waters to a point where very little water remains. At this point, Zero Liquid Discharge (ZLD) can be achieved by running the waste water concentrates through a crystallizer.
  • The bulk of Oasys’ business is still in the US, but with a recent project in China’s Zheijiang province and an new office in Sydney Oasys are poised to increase their revenue from the Chinese and Asia-Pacific markets within the near future. The ambitious growth strategy is needed to fulfill the company’s goal of doubling  its yearly revenue to 20 million USD by the end of 2015.

 

Modern Water writes of 12,8m£ and repositions its Membrane Division

UK based Modern Water is another pioneer of forward osmosis technologies. But while Oasys focuses on treating difficult industrial waste water, Modern Water has until recently (see below) been commercializing forward osmosis system for municipal drinking water through seawater desalination. Hence, Modern Water’s main competitors used to be traditional desalination technologies (reverse osmosis and various means of distillation) while Oasys Water mainly competes against thermal evaporators.

According to Modern Water’s 2014 financial report, the company has been experiencing delays closing contracts in their Membrane Division indicating that desalination players are still slow to accept forward osmosis based seawater desalination solutions. The lack of revenue in the Membrane Division throughout 2014 combined with a decreasing market capitalization has resulted in Modern Water’s decision to write off 12,8m£ in goodwill and intangible assets – an amount that surpasses the company’s current market cap of 11,08m£.

What this means – in reality – is that Modern Water no longer sees any tangible value of the resources spent building knowledge and know how in their Membrane Division (edit May 16th 2015: based on new information received from an attendee at Modern Water’s AGM, ForwardOsmosisTech is no longer of this opinion)

Added May 16th 2015: As pointed out by ForwardOsmosisTech’s contact who recently attended Modern Water’s AGM, the decision to write off intangibles in the Membrane Division (coming in part from the purchasing of Surrey Aquatechnology and investments in Poseidon Water and Cymtox back in 2007-2008) was taken as a direct result of the recent decline in Modern Water’s market capitalization. As presented at the AGM, this however, doesn’t mean that Modern Water is disbanding their Membrane Division or reducing its operational activities. Modern Water continues to have ambitious plans for their Membrane Division, which is reflected in their recent decision to shift the commercial focus of the Division more towards industrial waste water treatment.

In a bid to turn things around, Modern Water have taken the strategic decision to reposition their Membrane Division towards becoming a general provider of water treatment solutions– in effect directing focus away from their forward osmosis based desalination systems. (edit May 16th 2015: based on new information received from an attendee at Modern Water’s AGM, ForwardOsmosisTech is no longer of this opinion).

Added May 16th 2015. According to presentations at Modern Water’s latest AGM, the repositioning of their Membrane division encompasses the following cornerstones:

  1. Appointing a new Non Exec Chairman (Alan Wilson) to replace Neil McDougall who recently left. Alan Wilson has extensive industrial contacts especially in the Oil $ Gas sector.
  2. Commercial focus for FO solutions on the following industrial applications: pre-treatment for thermal desalination, produced water in the Oil & Gas sector, flue gas desulphurisation, Zero Liquid Discharge (ZLD).
  3. Including non-FO products in their portfolio, such as packaged RO units (AquaPak).
  4. Continue to file and secure patents for their FO technology and processes.
  5. Promoting FO commercialization as a funding member of IFOA.

ForwardOsmosisTech’s take on recent developments in the FO market

We are of the opinion that the mixed fortunes of Oasys Water and Modern Water in 2014 are almost entirely due to differences in market focus:

  • Oasys Water target treatment of difficult industrial waste waters, where competing thermal evaporator solutions use 25-50% more energy according to the recent Nova Next article “Purifying the Dirtiest Waters“. This makes for a very strong value proposition of the company’s MBC systems.
  • Modern Water have (until recently?) targeted the holy grail of water treatment applications, namely seawater desalination, where competing technologies – such as reverse osmosis – are already operating at very high efficiencies. Hence, the value proposition of Modern Water’s FO based desalination solution is less obvious.

As mentioned in an earlier article on the efficiency of forward osmosis desalination, ForwardOsmosisTech believes that the future development and commercialization of low-energy draw solution regeneration will indeed provide FO based desalination with the required edge to outperform traditional means of desalination. Once this happens, the market opportunities will be enormous. However, in the meantime, companies aiming to commercialize forward osmosis technologies will fare better by following the example of Oasys Water and focus their efforts on treating difficult waste waters where current technologies are expensive and inefficient.

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