Hazer and KBR enter global deal to accelerate licensing and commercialization
- Binding strategic alliance with KBR, a world-leading engineering group and global technology licensor set to supercharge Hazer’s commercialization strategy
- Hazer is KBR’s exclusive partner for marketing and licensing of methane pyrolysis technology
- Clear revenue visibility targeting multiple license deals within 6 yr, materially derisking Hazer’s business plan
- Capital-lite licensing model maintained; KBR A$3-MM work program contribution preserves Hazer’s robust funding position
- Strengthens Hazer’s market penetration into high-growth market segments of ammonia and methanol, and regions including North America and Middle East
Hazer Group Ltd. has entered into a binding alliance agreement with Kellogg Brown and Root LLC, a global leader in technology and engineering solutions, for the commercial deployment and licensing of Hazer’s proprietary methane pyrolysis technology.
KBR is a world-renowned engineering and technology company delivering engineering and cutting-edge technology licensing solutions to companies and governments across energy, chemicals, infrastructure and defense. KBR has licensed > 260 grassroots ammonia plants since 1943. Over 50% of the world’s ammonia is produced using KBR’s ammonia process.
KBR also brings a strong track record in commercializing breakthrough industrial technologies. Notable partnerships include ExxonMobil for next-generation catalyst development, and Mura Technology (including a US$100-MM strategic investment) to scale its proprietary plastic recycling solution world-wide.
Under the Alliance, KBR will be Hazer’s exclusive global partner for the marketing, licensing and deployment of Hazer technology to customers in the ammonia and methanol markets. KBR and Hazer will also work closely to pursue licensing opportunities in decarbonizing hydrogen markets beyond these exclusive markets.
KBR’s President, Sustainable Technology Solutions, Jay Ibrahim, said: “KBR's proven global expertise in deploying sustainable technology solutions complements Hazer's leading methane pyrolysis technology, making us ideal partners. Our market assessment and due diligence have highlighted Hazer's potential to decarbonize the global ammonia and methanol sectors. We are excited to partner with Hazer to provide a compelling low-carbon hydrogen production solution to meet growing global demand."
Hazer’s CEO and Managing Director, Glenn Corrie, said: “We are excited to be joining forces with KBR to commercialize Hazer’s world-leading clean hydrogen technology on the global stage. This is a transformational transaction for Hazer coming at a critical time when the world urgently needs affordable, low-emissions hydrogen to decarbonize legacy hard-to-abate industries. Building on the momentum of our successful Commercial Demonstration Plant and technology test program, which laid the foundations of commercialization last year, this partnership represents a strong endorsement and the next logical step in delivering on our strategic roadmap and unlocking long-term value for shareholders.
“KBR has the scale, capability and reputation to help accelerate the deployment of Hazer’s technology at industrial scale. We see immediate potential in the ammonia and methanol sectors – industries with significant CO2 footprints and strong demand for clean alternatives. KBR’s market leadership, global reach and execution strength make them an ideal partner to bring our vision to life.”
Strategic alliance to commercialize Hazer’s leading methane pyrolysis technology. Under the alliance, Hazer and KBR will collaborate on the up-scaling, marketing and licensing of the Hazer technology for commercial deployment.
Under the terms of the agreement, KBR will be Hazer’s exclusive licensing partner for the ammonia and methanol markets while working closely in other hydrogen sectors. The initial term of the alliance is 6 yr with an option to extend subject to the achievement of performance metrics. The parties have agreed to collaborate on the development of a design package for Hazer facilities targeting hydrogen capacities of > 50,000 tpy as well as the global sales, marketing and licensing of Hazer’s technology. Hazer will be KBR’s exclusive methane pyrolysis technology provider.
The total cost of the Alliance work program is anticipated to be in the range A$3 MM–A$5 MM, of which KBR will contribute approximately A$3 MM over the work program period. The alliance is underpinned by performance objectives with a target of securing multiple firm licensing opportunities during the initial term.
In respect of royalty and licensing fee sharing, the company will keep the market informed as license arrangements are signed. Hazer’s pre-existing portfolio and opportunity pipeline is not subject to the terms of the alliance. An incentive structure applies in the event KBR secures a license for the first commercial unit secured within three years. There is no financial impact at this stage as no client agreements are in place.
In other terms, the agreement can terminate if licensing performance metrics are not met. Hazer retains full ownership of its existing intellectual property. The agreement otherwise contains terms customary for an arrangement of this kind.
Strategic rationale and impact on Hazer’s business plan. This landmark strategic alliance with KBR, a globally recognized leader in technology licensing, marks a transformational step in Hazer’s commercialization strategy. It provides a clear pathway to commercial scale unlocking the vast potential of the company’s technology. At present, Hazer has a customer pipeline comprising of over 40 potential license opportunities in addition to currently announced projects. This transaction enables the acceleration of the company’s business plan by adding multiple technology licensing opportunities within the next 6 yr. Additionally, it substantially boosts the ability to scale and deploy its technology at an unprecedented pace, dramatically increasing the likelihood of achieving the company’s goal of 10 licensing deals in the next decade.
Material impact on Hazer’s portfolio and business plan:
- New revenue streams: Creates access to global ammonia and methanol markets, significantly expanding market penetration.
- De-risks and accelerates project portfolio deployment: Leverages KBR’s resources, execution capability and market reach to fast-track industrial-scale delivery of Hazer technology.
- Capital-efficient growth: Maintains Hazer’s robust funding position. Early phase project revenues and KBR’s contribution to the work program minimizes Hazer’s funding requirements. Capital-lite licensing model drives early free cash-flow generation and reduces balance sheet risk.
- Market leadership and first-mover advantage: Positions Hazer at the forefront of low-emissions hydrogen supply in two of the world’s largest existing demand markets.
Disrupting a large, established and CO2-intensive market. Hydrogen is critical to ammonia and methanol production, representing over 50% of global hydrogen demand (~54 metric MMtpy) with the two markets having a combined value of US$120 B. The current production process used to supply hydrogen to these markets is extremely CO2-intensive, responsible for >500 metric MMtpy of CO2 emissions globally.
Under the alliance, Hazer’s technology will deliver clean and affordable hydrogen supply as the critical feedstock for the ammonia and methanol industries. With KBR’s market leadership, the alliance enables the Hazer process to be positioned as a “bolt-on” low-emissions alternative for both existing (brownfield) and new (greenfield) deployments across a large global market.
Ammonia and methanol are also increasingly recognized as preferred clean fuels for marine transport (and potentially future power generation) presenting further growth opportunities for Hazer under the alliance.
Indicative activity plan and next steps. With the signing of the alliance agreement, the parties will commence development of a detailed activity plan. Key activities in the first 12 months are expected to include:
- Developing of a process design package (PDP) for industrial scale Hazer facilities
- Preparing the sales and marketing strategy
- Developing the joint license agreement framework
- Market engagement and licensing activities
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