Yes an engineer but lets call it a TECH Engineer. Compressed air technology is its main business, develops industrial air compressors and Gas seals and whats more it provides them for the OIL and GAS industry.
Very close to commercialisation now with its compressors and seals and todays deal ( see below ) should bring that very close.

Charges upfront payments, continuing royalties and development contracts so revenues are not lumpy.

It as a market cap circa off the top of my head 20 million(hope my calculator is now working) and as circa of 5 million cash on the books, very nice.

Some very big names as customers.

Heres todays announcement...........

Corac Group Plc
26 May 2004


For Immediate Release 26 May 2004


Corac Group plc ('Corac')

Joint Industry Programme for Downhole Gas Compression

Corac, the intellectual property and licensing company specialising in
compressor technology, is pleased to announce the signature today of a Joint
Industry Programme ('JIP') for the development of its unique, patented downhole
gas compression technology.

Following the recent successful completion of a Shell funded feasibility study
which evaluated both the technical and economic viability of the technology,
considerable industry interest has been generated, culminating in the addition
of a further four major international oil and gas operators to the project.

The participants of the JIP comprise ConocoPhillips, ENI, Husky Energy,
Repsol-YPF as well as Shell, all of whom have gas assets worldwide which they
believe could benefit from this game changing technology. As well as covering
the development costs for the next phase, the participants will also make
substantial resource available to ensure the final product specification meets
the requirements of the industry.

Corac's downhole gas compression concept involves the coupling together of a
number of axial compressor modules in a single compression train for
installation in the well bore in close proximity to a gas reservoir. In this
location, a modest uplift in pressure results in a very significant increase in
gas production compared with conventional methods using surface compression,
thereby accelerating gas production and cash flow from a producing asset.
Potential production rate enhancement of up to 40% has been demonstrated through
the application of downhole gas compression during a number of gas field case
studies carried out over recent months.

Placing the compressor downhole could also have the effect of being able to
lower the reservoir abandonment pressure which in turn would materially increase
the ultimate recovery from a gas field, thereby further enhancing the economic
benefit from the installation of this novel application of existing technology.

Phase 1 of the JIP is scheduled for completion by the end of 2004, with further
engineering and development work leading to the manufacture and testing of a
prototype downhole in a producing gas well within the following two years.

Commenting on the JIP, Professor Gerry Musgrave, Chairman, said:

'The support from such eminent oil and gas companies vindicates Corac's
development to date of the downhole gas compression project and gives the Group
another product line to bring to the market using its core technologies. It is
the start of a major business development opportunity which is expected to have
significant international ramifications throughout the upstream natural gas
industry.'ENDS.

Although loss making at the moment it shouldnt be very long before this one turns the corner.

Outlook

The Company has a loyal, talented workforce dedicated to the innovation and
exploitation of the technology. Successful trials have demonstrated the
commercial performance in Corac's industrial air compressor and its seals. The
Board is striving to deliver the right manufacturing and sales licences which
will yield the best returns in the long term.

We are confident that a number of deals, which have been subject to recent
intensive negotiation, will be successfully concluded in the near term.

Short to medium term investment, and anyone interested should DYOR and please remember you are responsible for the timing of your buying and selling actions.

cheers GF.

In this market the news of further delays can only be taken as negative.

did i miss something? .... i saw no mention of any delays

Repsol trial delayed in Argentina was to be first, ENI trial will not happen before first quarter of 2009 according to RNS.

we obviously saw different announcements!

completely oversold imo, released interims on a bad day at the office, still expecting another order from Repsol, and announced working in conjunction with a "major" oil/gas service supplier. Gearing up for big things and must be a mountain of upside from here. The design was altered slightly to accomodate the well in Italy hence delay of testing to next quarter - its all still happening, except now you can get in for half price of two months ago... im adding

nevertheless, halifax's comment is valid ..... it was extracted from the interim report

BigTed----very tempting to average down on CRA (paid 72p for mine) as it is with many other aim stocks I hold, but I feel there are better (blue chip) opportunities around and this may be the time to start picking some of them up, so I bought into BT.A this morning. Good luck all.
2517

very easy to get tempted, but this boiunce may easily prove short lived as is certainly very fragile, certainly until the US nincompoops and self-serving politicos get their acts together

also, as nothing of any significance is likley to emerge from CRA for at least 6 months, there is surely no hurry to buy, though i shall continue to hold

hmmm possibly, however, with only 86m shares issued and the possibilities that follow a successful trial, it will only take a rumour of the order from Repsol for their trial and the so will surely take off again regardless of the condition of the markets at the time. Don't forget market cap is a paltry 40m Eni I believe have identified a field where, upon successful trial would want a further 12 machines, and thats just for starters without the other jips! Do the maths...

but that always assumes CRA's magic machine actually performs as on the tin

BigTed-----volume up as is the sp, looks like you were right to add.
2517

Back from holiday yesterday and been able to catch up properly today, added 20k earlier and just in time i think at 45p&46p, rumour is of announcement of some contract tie up with Baker Hughes, not sure how strong substance is, but if the case, would expect these to rocket... truth is the DGC cannot be allowed to fail now - its too important and besides - as stated before we know they work as a flow loop test has been continuosly running now for some 18 months... the only question i have is on the maths - ie is 40% extra gas a bit far fetched. I guess you have to make up your own mind but i dont believe there is better risk/reward anywhere on the market imo

quite tight to deal in today though i managed to add a few to my small holding (along with the goats, cows and pigs!) ..... this stock's a bit illiquid which can be a pain

the estimates of the extra lift of gas raised by operation of DGC vary from 25%-50% (source: CRA web-site), so 40% is at the top end of estimates.

The variation is due to a number of factors, like depth of well, reservoir pressure, borehole diameter etc etc.

25% is a very strong figure that cannot be achieved with other methods and is worth a small fortune to gas operators.

always supposing that CRA's magic pump performs as promised, and that of course still waits to be seen ..... but a bit of my own money says it's a reasonable bet

Cynic how do you differentiate between CRA,HAWK ,SEO,VIY etc none of them have delivered anything yet in the way of sales/profits....it is still jam tomorrow I am afraid.

HAWK prob less so than most ..... SEO is totally crap as i have always posted there ...... CRA at least has a good idea that is out on proper trial ..... VIY has a huge amount to prove (i only hold 1k)

THE COUNT--->ALL

My Q&A with CRA.


PART 1.

I met with Gerry Musgrave, at the offices of Corac last Wednesday in the afternoon, after threatening him with a long meeting back from the last AGM.

The meeting started off with a brief company demonstration, and then we tucked into the many questions I had prepared. A lot of these I knew the answers to, but for the sake of completeness and comprehensiveness, I went into quite a bit of detail. We have already discussed much of the material I will be posting on this board, but again, for completeness, I will try to include everything so apologies if I bore you all further this Friday afternoon.

I came away feeling as positive as ever.

It also is quite clear that announcements on both DGC and IA are very close, although try as I may, I couldnt force the good Prof to divulge times. So I tried a different approach instead.

I said, given the delays you have already seen, and given that you should now be more aware of the potential pitfalls and hurdles in sorting out these type of contracts, can I at least ask you if we will have to wait beyond Christmas for announcements. I felt I gave him so much leeway there that I could try and get a commitment. He assured me that we were expecting news long before Christmas, but as always, take it at face value and dont try to read more into that. From talking to him for a few hours, I think it is literally just round the corner as B****** has been saying... but Ive learned not to get too carried away with expectations and timings because in these markets, I take nothing for granted.

There are also orders now due any day on the IA side. It was hinted that ideally, they would like to announce the new JIP partner along with orders for more IA units. I think this is precisely what we will get.

I think this is the biggest news and I am merely seconding what B****** has been saying, but I got this as a direct result of a face to face meeting.

I will now, in the second part of my post, go into detail with the many questions I asked, and there should be a few very interesting snippets in that as well. And yes... it all sounds very exciting, short, medium and longer term, but more of that later.


So for now, Ill stop there and say... END OF PART 1. PART 2 to follow shortly.

Regards,

THE COUNT!

PART 2

Fundamentals

Q) Very basically, how does a compressor work and what are the current main applications?

A) We compress air by spinning an impellor, and due to the shape of the blades, this results in taking air of a certain volume and compressing it into a smaller volume as the air goes along the plane of the blades.

An important distinction to make here is that air can be compressed, whereas liquids are pumped. This is an important distinction and one which a particular analyst Gerry was presenting to clearly didn't understand. When presenting on CRA, he was questioned by an anlayst who claimed that there were gas companies using compressors down their wells. Gerry had to put him straight without over embarrasing the chap by explaining to him that currently, even gas companies may put pumps (ESPs) down wells to a certain depth but this was only to pump water out of the well and certainly NOT gas....you can't pump gas. The analyst, up to that point, was adversely influencing others at the presentation.

Gerry did stress again, that ESPs (Electric Submersible Pumps) were fairly ubiquitous in the industry, but we are the only show in town when it comes to the DGC.

That certainly warmed my loins a little!!!



Q) Can you very basically describe what a water injected screw compressor does and how this differs from a dry screw one?

A) Our old granny's mincing machine consists of a screw compressor....it's actually an Archimides screw (well done to those ancient Greeks!!!). Compressors consist of 2 of these Archimedes screws working together to drive air and compress it. In oil compressors, the surfaces are lubricated with oil....and of course, this can easily contaminate the air. Atlas Copco and Ingersoll Rand have strong patent positions in the use of dry screw compressors using no oil. But clearly in the latter case, there will be much wear and tear, and less so in the former case. So it is quite understandable how these companies want to fiercely hang on to their current business models as the replacement of parts, and the maintenance of machinery must be a license to print money.

And then we also have water screw compressors which use water for lubrication.

Our technology means no surfaces touch so we can see why it can be so revolutionary, given the present state of this market.



Q) A really basic question. What is the function of a bearing? And what advantages do our air lubricated bearings give us? I presume much reduced friction for a start.

A) Simply put, a bearing is all about supporting a moving part within a fixed part. For example, we have 4 wheel bearings in a car (unless you are Del boy and Rodders, in which case it is 3).

With our air bearings, surfaces do not touch thus generating a lot less heat and a lot less friction. This equates to an ability to obtain much higher rotational speeds and much smaller motors.

We control the patents to this technology.



Industrial Air

Q) Where are we now with Industrial air?

A) Initially, CRA were trying to go along the path of trying to persuade the biggest boys, Atlas and Ingersoll, to move from dry screw tech to our tech. We currently turbo boost water screw compressors. But as I mentioned above, their existing business was far too lucrative for them to want to change it easily. For instance, Gerry told me that just replacement of the screws alone could cost up to 60% of the original purchase price....and that was every 2 to 3 years. On top of that, there was the replacement of oils and filters as well.

Obviously, these companies were not interested, so instead, CRA had to move from a market of replacing current compressor technology to a smaller niche market of turbo boosting existing compressors, installed or otherwise. That way, we develop our own very significant niche business and existing suppliers keep their existing business...in fact our technology allied with theirs should put them in an advantageous position.

We chose to turbo boost water compressors only because water screws give you a high pressure capability because they have a sealing of water, and our machines give you high volume so the 2 combined give you the best of all worlds.

With PET blowers, they needed to get a pressure of 60 bar (= 60 atmospheres). We could not get that with our compressors...they have to use a piston to get up to those pressures. There are 4 stages to this process and we replace the first 2 stages. And the icing on the cake is that they also now get a 20% saving on energy costs as well. This represents an ingenous move of our position to one which creates a marriage made in heaven where everyone can benefit. Well done Corac!!!!

The company has actually moved from an energy saving of 15% when these trials started to 20%, so they have been making material improvements all the time.

We had trials with companies all last year, and this year, we put in pre-production models into end customers and now we will start to pick up actual orders. We had end user trial in 3 sites...in Austria, China and Taiwan.

We are expecting Far East orders any time now...and this could even reach 10 or so units. It was stressed that this would be an order (or orders) and delivery would certainly not be achieved by Christmas. But that was still very good news. This presummably is what they would like to add to the announcement for DGC.

On top of that, the Austrian trial is going very well too, and that should eventually lead to further orders. They are different size units there.

IIRC, the far east units should sell for around 50,000 Euro. I discuss margins further down.

There is going to be a further stategy meeting with Fu Sheng in about a month's time. This is to discuss taking the business forward and presummably they will want to get a better picture of possible volumes and also explore ways to further cost cut.

Finally, the big boys, who walked away originally, are now cetainly beginning to sit up and take notice of what we are doing. I think one of them could be talking ot us again.



Q) If the compressor majors are not interested in our product thus forcing you to go down the route of boosting those compressors already in use, have you not considered instead, to set up our own sales force and sell our own system and compete with these guys head on? Wouldnt this be a far more profitable route to take?

A) Gerry said they would never do this as they would require a world wide sales force and this is clearly not on for a company such as ours.



Q) Industrial air division. When we last visited you a couple of years ago, I do believe we were told then that we should be expecting first orders shortly. That was 2 years ago. What exactly has been the hold up since?

A) They have had orders, but these were for 1's and 2's and were from Fu Sheng and LMF.

Now we have been out to end users, we are exepcting volumes to pick up.

As an example, last year, Fu Sheng sold 2,000 water screw compressors. Gerry expects us to pick all of that business up but it could take 3 years. That still doesn't sound too bad to me.



Q) In Sep 07 results, you said, it bodes well for the future as evidenced by a number of other industrial conglomerates engaging with us with a view to adopting our technology. What progress, if any, has been made by these other industrial groups?

A) These 'others' were Ingersoll Rand and Atlas Copco. He admitted to failing to move them. CEO's in very large companies look mainly to what they can do over 3 months rather than something that might take 18 months. They are very slow to move, but they will certainly notice what we are doing with the smaller players.


Q) In Sep 07, you also mentioned that there should be an escalation of orders... what has happened here? And now, a year later, you have repeated your anticipation of further orders. It sounds as if you were expecting much quicker progress than we have been getting. Are we really struggling here?

A) It is a very conservative industry. I guess most are, and certainly at the top level as they don't want to jeopardise their comfort zones until they have to.



Q) What sort of margins do we expect on IA currently, and with further cost saving efficiencies that come with volume growth, what could this be pushed up to?


A) I wasn't too clear on what was said here but I believe I am right in saying current margins on IA stand in the 5% - 10% bracket, with circa 5% applying to the larger LMF units and circa 10% for the Fu Sheng ones. He did say that the eventual target the company had set itself was 25%.

This is not gross profit. These are figures for the bottom line!

To achieve this, it requires a redesign coupled with volume orders to get the required economies of scale, which applies especially to the system electronics. I'm not sure if the redesign had already been done or they were working on it. But all in all, it sounded very good.

They do believe they can get a very good price for IA if they decide to sell it off.


Q) How many IA units can we currently produce and test before needing new premises?

A) We can currently produce, at our present premises, 1 unit a week for the Fu Sheng orders and 1 unit a month for the LMF ones.

When our order book is well stocked up, we will then move to new purpose built premises as has been mooted before in previous news releases.

END OF PART 2.