VANCOUVER, British Columbia – April 12, 2021 – Hunter Technology Corp. (TSX-V: HOC; OTCQB: HOILF; WKN: A2QEYH, FSE: RWPM, ISIN: CA4457371090) (“Hunter” or the “Company”), a leading innovator in digital hydrocarbon marketplace transactions for physical oil, is pleased to share select excerpts relating to digitalizing the oil value chain and Hunter’s blockchain technology taken from recent interviews featuring Hunter’s CEO Dr. Florian M Spiegl. The excerpt is based upon a podcast conducted by the Austrian Federal Economic Chamber and other interviews during March and April 2021.
What is the purpose of Hunter Technology, your company vision and mission?
We believe that natural resources are an important foundation of our civilization today and progress in the future. Hunter aims to contribute to a world with sustainable use and trade of these resources, for the benefit of all. We do that by following our mission: to create the most trusted digital marketplaces that efficiently connect resource producers and buyers for optimal prices, transparency, and environmental responsibility. For that, our initial focus is on transactions in physical oil.
With other commodities available, why do you focus on the oil sector?
Two reasons: the immense importance of oil as a resource and the potential to make the trading in this good more efficient, transparent, and sustainable via digitalization. From our history as a company and team, we combine long-standing experience in the energy industry with deep expertise in building digital transaction platforms.
Oil is important but will we not stop using it soon?
Oil continues to be the lifeblood of the global economy. We may not always see it, but its products are vital for our society and many essential products and services we use every day. Not just for transportation but also a wide range of materials, health products, technology goods and fertilizers that help feed the world. Beyond that, the oil industry is a critical source of income for many countries and supports the livelihood of lots of people working in it. While our global reserves in oil are finite and we are transitioning to a low-carbon economy, we will continue to use oil for decades to come. In fact, as an important ingredient in many materials that are needed for sustainable development and innovation, oil and its products will play a crucial role in protecting our planet and supporting climate action.
What is the opportunity in digitalizing oil value chains?
We see vast potential in this. If we look at the world today, numerous sectors and industries already function fully digitally. Software has eaten the world, in many ways. But there remain a few areas that are just starting with this development. Transacting between producers and buyers of physical oil is one of them. If oil is sold by a producer to a buyer today, most of the process is manual, offline, and follows a complex process with many different incompatible systems involved, including fax machines and paper documents. This leads to challenges that we can tackle by lifting the entire process on a digital level, using modern technology. It will unlock tremendous value in this market.
What are the specific problems you are solving for your clients?
The manual and offline marketing of oil as a commodity brings major challenges. Most significantly, it is limiting the market potential for all involved. Players in the market are forced to work with a narrow choice of trade partners given the absence of a complete overview of potential deals. Because of that, many worthwhile transactions never happen. Also, market dynamics are only visible in fragments which makes strategic buying and selling much harder. For trade partners, each transaction is typically a traditional one-to-one relationship when there is great potential to connect multiple producers with buyers in one deal and to continuously discover new trade partners. Finally, the whole process of execution is extremely inefficient, compared to what we see in other industries. All this is rooted in the offline and manual nature of these transactions.
How is this situation different when the process becomes digital?
While we emulate the traditional ways of transacting and naturally follow industry norms and standards, the digital process on our platform OilEx is different in important ways. Imagine a purchaser can discover transaction opportunities not by calling or messaging producers one by one but by looking at an interactive map that provides a complete and real-time overview of supply and demand and offers the ability to quickly drill down into the details of each offer, not unlike you would look for hotels in an online booking platform. Also, automated supply aggregation provides buyers with the option to create larger purchase tickets which producers can fill actively if they match pre-defined criteria. Once potential trade partners have found each other, they can proceed to negotiate a deal on the platform via a secure messaging system. All records required for a deal are digitally available and exchanged. The final agreement is signed electronically as a smart contract and together with all deal documents, is stored securely and easily available in a digital vault. Clearing and settlement happen by receiving confirmation that goods were delivered to the agreed gathering point or logistics hub which triggers electronic payment.
What are the main functions of your platform OilEx that make this change to a digital workflow possible?
Our platforms record and use data across this value chain which is the core of making the process digital. We are developing core components to support each step, with the strategy to bring best practices from other digital marketplaces and industries to our target sector. These include user onboarding and a rating system to ensure trust between parties, offer creation including all required details, interactive maps for deal discovery, secure messaging to negotiate a deal and exchange required documents, digital contracts and electronic signatures, a private document vault holding all deal-relevant records, settlement and payments, and reporting to efficiently support disclosure requirements. With this core digital workflow established we can build additional tailored functions and integrations on top in the future such as custom data feeds for finance providers or carbon offset credits.
How do you reconcile dealing in physical oil and the increasing development towards sustainability?
This is a very important question to me personally. There is no contradiction here, on the contrary.
There is an increased focus on climate-aware strategies from industry players and both institutional and retail investors. With that comes the opportunity for companies in any sector to emerge as winners based on their ability to innovate and adapt their strategies toward a lower-carbon economy. This opportunity is particularly great in sectors that are directly engaged in the use of carbon such as the production and transaction of oil. As economies and consumers, we will not move away from hydrocarbons anytime soon and they play a crucial role in enabling climate action. Hunter's strategy is to go where the impact is greatest. We do not just talk and wish for more responsibility; we offer tools and solutions that maximize impact where it matters most. Our technology will help to support the sustainability of the hydrocarbon sector overall, with several key levers.
First, it is simply about economics. An industry that functions more efficiently has more resources to invest in environmental protection. We have seen that in other sectors, and it will be the same here. This applies in particular to smaller producers. Getting a better deal for their product will help support measures to lower the negative impact of producing it.
Second, data will play a crucial role. With an end-to-end digital process, our platforms help to standardize and reliably record operations and transaction data, for example on the efficiency and carbon footprint of oil production. This will support an increasing need for regulatory disclosure with automated reports for producers. At the same time, rating systems we are developing based on this data will help buyers make environmental responsibility of production a criterion in selecting producers, allowing them to prove that they optimize their buying for lowering climate impact across the procurement supply chain. This data will also be relevant for other parties such as banks and investors.
Finally, a fully digital marketplace allows for innovation in the transaction itself. For example, in areas where it is hard to be completely carbon neutral, carbon offsets will play an increasing role. In a digital process, it is entirely possible to make carbon offsets part of every single transaction, should the trade parties wish to do so. We will integrate market data feeds and seek partnerships to price the cost of a lower carbon footprint into the transaction value on our platform.
With these targeted features our mission is to help our clients in the oil sector to be better positioned than others to benefit from the transition to a lower-carbon economy.
Your solution OilEx is built for small independent producers. Why?
Small independent producers are a significant part of the global oil industry. In the USA alone, the small and private independent producers collectively across more than 2,000 companies produce 22% of all oil and generate around $60,000,000,000 (60 Billion) US Dollars in annual revenue. Each company, on average, is relatively small with less than 2,000 barrels of oil per day in production, around 12 employees and often without a dedicated person marketing the product. So uniquely the USA –the largest oil producer and exporter in the world – sees significant portion of total production coming from small producers.
Hunter is focused to bring its digital innovation to this target group, which tends to have the most significant gap to digitalize the selling of their product compared to the larger companies who started this process earlier. With a fully digital proposition, it becomes possible to aggregate and profitably serve this sector in the industry at scale, providing a corresponding economic opportunity for us.
Hunter acquired the financial and blockchain technology company FinFabrik that you co-founded. How does that support Hunter's mission?
FinFabrik specialized early in developing digital trading platforms for multiple asset classes, using blockchain technology. As a FinTech company, we brought both the people and their expertise as well as deployable solutions to Hunter Technology.
For example, the FinFabrik platform CrossPool enables digital investment in alternative assets. It uses a proprietary permissioned blockchain infrastructure to digitalize the investment process and assets as well as to manage the identity of investors. The experience and expertise we gathered by building this system and the technology itself today help us develop Hunter's solutions such as OilEx and bring it to market faster.
Is there real value in using blockchain technology for what you are trying to achieve?
Blockchain, like any technology, is neutral. It can be used for good and bad and applied to solve real problems or be a mere gimmick. As a rule, we apply blockchain in our solutions where it is the best technology to solve a problem. The standardized, reliable, and trusted recording of production and transaction data is one such area where the qualities of blockchain technology such as immutability and decentralization of records are truly valuable. Another example is digital contracts: by using blockchain to create smart contracts that combine machine and human readability, agreements become digital with the potential for automation of processes. At the same time, leveraging cryptographic signatures ensures legal enforcement.
Beyond that and looking further into the future, there will be more and more innovation coming out of interesting areas such as Decentralized Finance. This will not happen immediately, but we will be well positioned to offer the benefits and opportunities of this space to our clients when the time is right. For that, we are natively building our solutions on blockchain.
Why does data and transparency along the transaction process matter?
The use of data is already established in the hydrocarbon industry, especially for monitoring and planning production. It is not as much leveraged yet for selling and transacting oil, particularly by smaller producers and even entire countries.
In this context, data and transparency naturally create better trust and allow efficiency via standardization.
Take the use case of sovereigns, for example, on which we are actively working now. The Supply Chain Analytics service of our platform allows a sovereign to precisely and transparently track and monitor the production, storage, and export of their oil. For some countries, this is by far the most important part of their economy. So much, that they are striving to diversify. To do so, they need predictable income from the export of oil resources, but this is hampered by a lack of visibility along the export supply chain. By more holistically tracking how oil flows from permissions and reserves to production and all the way to export, administrations are empowered to be in full control of their natural resources and optimize revenues, for example from production and export taxation.
On top of that, countries that start tracking their oil production and transactions more precisely using modern technology can present real proof of their governance improvements and actions, for example, efforts to lower the environmental impact of their country's production or to demonstrate their commitment to transparency.
What are your priorities this year?
The first six months are all about building and delivering a product with a great market fit, reflecting the market convictions we have and following the insights we generated from industry research. We do this in close collaboration with industry experts, our advisers, and potential future clients and by leveraging our internal expertise in technology and the energy industry.
The second half of the year will bring the most important milestone for us: the first live transaction of physical oil between independent producers and purchasers on our digital marketplace OilEx. This will serve as a proof point of our vision and our ability to deliver. After that, OilEx will be live in a Private Beta with selected partners, and we will accelerate platform development based on the valuable insights from continuous real-world transactions and the engagement with our early clients. With the end of the year, OilEx will go publicly live in our target markets of serving small producers and connecting them to purchasers, brokers, and traders in a fully digital end-to-end process.
Which long-term goals have you set?
Over the next three to five years, we will take up market share in the specific area of physical oil transactions between smaller producers and purchasers, on a global scale. We will use our technology to support clients and go after new opportunities in this highly dynamic sector. Industry change will be our friend and we will actively explore the expansion of our platforms to additional services and potentially other resource categories.
Podcast interview conducted by the Austrian Federal Economic Chamber and published on its websites and social channels.
Video interview conducted by Star Finance GmbH and published via Stock Telegraph.
Both interviews are available as direct links on our website.
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Cautionary Statement Regarding Forward-Looking Information.
This news release contains certain statements which may constitute forward-looking statements or information (collectively, "forward-looking statements") regarding Hunter’s business development plans. Forward-looking statements are statements that relate to future, not past, events. In this context, forward-looking statements often address expected future business and financial performance, including factors beyond Hunter’s control, and often contain words such as "anticipate", "believe", "plan", "estimate", "expect", and "intend", statements that an action or event "may", "might", "could", "should", "will" or be "on track to" be taken or occur, or other similar expressions. All statements, other than statements of historical fact, included herein are forward-looking statements. By their nature, forward-looking statements involve known and unknown risks, uncertainties and other factors which may cause the actual results, performance or achievements, or other future events, to be materially different from any future results, performance or achievements expressed or implied by such forward looking statements (including execution risk, market risk, industry risk, market reaction, the impact of general economic conditions and competition from other industry participants, as well as stock market volatility). In this news release, forward-looking statements relate to, among other things, Hunter’s business development plans as well as Hunter’s future performance as it develops its business. Although Hunter believes that the expectations in its forward-looking statements are reasonable, they are based on factors, estimates and assumptions concerning future events which may prove to be inaccurate. Those factors and assumptions are based upon currently available information. Such forward-looking statements are subject to known and unknown risks, uncertainties and other factors that could influence actual results or events and cause actual results or events to differ materially from those stated, anticipated or implied in the forward-looking statement. Such factors include, but are not limited to: risks relating to delays, development and marketing risks, unforeseen requirements resulting from the COVID-19 pandemic, commodity prices, inability to access, on favorable terms, sufficient capital from internal and external sources, the ability to access, hire and retain employees; regulatory changes and impacts, timing and completion of the Company's online platforms as well as general business, economic, competitive, political and social uncertainties. As such, readers are cautioned not to place undue reliance on the forward-looking statements, as no assurance can be provided as to future results, levels of activity or achievements. The forward-looking statements contained in this news release are made as of the date of this news release and, except as required by applicable law, Hunter does not undertake any obligation to publicly update or to revise any of the included forward-looking statements, whether as a result of new information, future events or otherwise. The forward-looking statements contained in this document are expressly qualified by this cautionary statement. Trading in the securities of Hunter should be considered highly speculative. There can be no assurance that Hunter will be able to achieve all or any of its proposed objectives. Please review Hunter’s SEDAR filings including its management discussion and analysis available under the Company's profile at www.sedar.com for a more fulsome discussion of risk factors affecting Hunter.