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.

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.

PART 3

DGC

Q) What exactly does a compressor do? How is the DGC expected to work? How does this differ from the work of surface compressors? How will this extract more gas from the reservoir?

A) We are basically sucking up the gas and creating the required pressure differential at the mouth of our well for the gas in the seam to move to us...I think!!!



Q) Why did Shell walk away if this technology is so disruptive?

A) Shell were actually original JIP partners and they paid for the feasibility study from their own funds. But they were basically greedy....they didn't really want to share this with anyone else. When they saw it was do-able, they realised they needed a diversity of wells and expertise and muscle. So they said we needed to get more JIP members. We did, and then Shell got into some trouble internally, IIRC, they were overstating their assets, and this forced an internal rethink which held things up a bit. They stated that it was still 3 - 4 years away to fruition and it was being paid out of their R&D budget and they got a bit stroppy basically. The members of the JIP all sat round the table, told Shell they were big enough to get on with it, gave a deadline to Shell to stump up or get out...and so Shell got out.

Sorry if it all doesn't follow totally logically, but I couldn't remember all the detail in exact chronological order and there may be a bit of writer's license there.

They do have the option to return, but then they also have to pay up their share of the costs so far incurred. They are certainly watching this space.

I am sure now that we are close to commercialisation, they will be tempted to come back to the table at some point soon. But that's only my opinion.



Q) What is holding up the finalisation of a new JIP deal exactly? I know you have been asked this question on numerous occasions, but I want to hear it again from the horse's mouth, so to speak.

A) Allowing for all legals as well, they fully expected this agremeent to be finalised by August. Wouldn't confirm it was Baker Hughes, but also didn't bat an eyelid or deny it when I mentioned it. Read into that what you will. He basically confirmed it was a service company as they want the added expertise of installation to further minimise any risks of things going wrong because of faulty installation and the like. But at the same time, they didn't want to be tied up to any single company.

There were tough negotiations here as it was a big company with a big company mentality and they wanted all sorts of things such as exclusivity and the like and this resulted in some very tough negotiations. But all this was actually sorted out between the companies by July and then it went to their lawyers in New York and then things slowed up. He did express frustration and sarcastically or not, said that it sometimes could take a month just to change 3 words in the agreement. I asked if he was confident that we were definitely on the final pass now and he said he was totally confident but would not call it 100% absolutely. From this I think it was obvious that it is imminent, but you never can tell until you get the bloody thing signed.

Unless people are really going to make a big issue about the actual timing, give or take a few days, there is certainly a near definite deal there. I couldn't force the guy to say more than that no matter how I tried.



Q) Jerry, what are the main technological issues still left to overcome or are we now on the last lap just validating the thing and stress testing?

A) No, there are no major technical issues left to resolve. But this still does not mean they cannot go on refining the product from the feedback they get and their actual installation experience.

This is a flowing well though, and there is enough in the budget to keep on putting it down the whole and taking it back out again to resolve any issues that may arise. What he is fearful of though, is that they may put it down and only get as an example say, a 10% enhancement to flow rates rather than an expected 25%+. Even though they will have various monitoring devices on the DGC, CRA would want to bring it back up to check why it is not giving us what we were expecting, but ENI would want to leave the DGC down the well because even at 10%, it is so lucrative.

These are the sort of hiccups that quite possibly might occur...albeit the nicest possible ones. Gerry said he suspects if it is working, that it will stay down there. After they watch it working for a period of 3 months say, they will then most likely want to order a further 10 units for this field alone. Bear in mind at this point what other posters have also said, that we will be able to benefit these companies by allowing them to actually operate with less wells. This anticipated further 10 DGCs is for a field which currently has 25 operating wells. It would thus allow them to cap the remaining wells.

This really is highly lucrative and mind boggling stuff if I may say and should remind us all why we are here. Yes, of course, we should certainly get frustrated with any slippage, but it certaily would not constitute a show stopper.

We also have people out in Australia talking with a company about doing an actual field trial down there on one of their fields. but I'm not sure how close or far away this is. I guess they are looking at the current feasibility but the interest is certainly very strong. This is, as I understood it, on top of our present expectations.



Q) How do you think this could affect the market for gas supply around the world and therefore how do you see it affecting price of gas?

A) Gas is just one energy source. The world is very hungry for energy. The Chinese had to shut down certain industries, and it wasn't just to cut down on the pollution, it was in order to keep the Olympics adequately supplied with their energy needs. Gas is the cleanest fuel after nuclear. There is massive pent up demand in China alone.

People talk of going back to coal, shale oil and other sources of energy. This is all very dirty compared to gas. If anything, we may drive, in Europe, the conversion of many power stations over to using gas.

In 2005, a report found there were 500,000 gas wells out there. Since then, the price of gas has gone up 10 fold. Since then, there has been a lot more drilling and a lot more finds as it has become more cost effective. The new wells can all accomodate our DGC. He stressed very strongly that he is not in the least bit worried about the market for gas and that if we show it works, we will pick up orderrs without any doubt.

In Texas alone, we could do 4,000 wells.!
In Texas alone, we could do 4,000 wells.!!
In Texas alone, we could do 4,000 wells.!!!


Q) What sort of problems have had to be ironed out with the DGC in the last year or so?

A) Insulation was one. Now all sorted.

The electronics...but not a redesign or anything like that, just their packaging to cope with ever greater temperatures. I mentioned that we had a particular prize idiot on this board who went on about delivering the power to the unit deep underground and he really just sighed and rolled his eyes up. He obviously was aware of this idiot as people had been in touch about him. He confirmed they were delivering the power by DC and that this was not a problem whatsoever.

I also asked about the patenting of the electronics to our system. He said they would never look to patent this in case they gave out any clues on how they are achieving the results they are getting.


Q) Are you now totally confident in power delivery to the system, and at great depths?

A) Answered in previous question unequivocally.



Q) What sort of real life conditions were being reproduced at Spadeadam? How accurately do you think these trials emulated real life scenarios?

A) This emulates the real life scenario as close as anyone can. I think he said that Spadeadam is one of only 3 units worldwide that can do this.

I then asked him about what he touched on earlier...the unlikely scenario of us only getting 10% extra. He said all our analysis and modelling quite clearly suggests otherwise. But there could be mitigating factors, especially in our first trial. We are putting 3 DGC modules downwell. If one were to conk out, then we might only get 2/3 the expected output, but even then, we could get round that by other means such as speeding up the other 2.

The added fact that we might have spare capacity in each DGC unit to get round problems like this also fills me with even more confidence. All in all, it sounds pretty good all round thus far.



Q) The response from partners was quite underwhelming. There was no excitement in the quotes used. Why and was this deliberate? Or were results not quite as spectacular as originally anticipated?

A) It was anything but. These are large companies, and anything that goes out publicly has to go through PR and Legal channels so everything is toned down to keep it all nice and safe and not to create undue or premature expectation. It's all sanitised in other words.


Q) What sort of show stoppers can you still envision downhole or is it the case that once the decision is made to go downhole, we are pretty much done technologically and it is just a case of determining in more detail the benefits of the technology?

A) Nothing major is envisaged, but 'there is always room for improvement'. Technological improvement is never done.

He pointed out the difference in what they were doing to Repsol a year ago and what they were doing now with ENI. I believe the units have been shrunk quite substantially. I saw pics of the different modules and you could clearly see the difference.

I also asked about big bits of debris smashing our blades, but he assured me that in these downhole situations, all you get are finer particles.



Q) Given the vast potential on offer here, why have you not got a queue of other gas producers knocking at your door with enquiries and offering to join the present JIP? How many different parties are currently very interested.

A) They currently have 3 more majors interested. At least one is very major...and he said he wasn't referring to Shell here, although I couldn't draw him any further. The attitude of the big boys 3 or 4 years ago was one of 'this is a technology that's useful at the end of a well's poducing life so we ain't interested now'.

There has been a quite major shift in attitude now. They are now talking to us for possible global scenarios. I should add at this point that we should not get very excited, as these big boys can take ages to move, but heck, it can't get much bigger than this.



Q) Given that any services company stands to make many millions on supporting DGC installations, what is it that is holding back a deal and has been doing so for many months. We were talking of this deal back at the AGM. it has been quite a few months since.

A) Again, the reply is that the industry really is quite consevative. The industry likes other players to prove things first, and then they think they can come and grab it all for themselves afterwards. Something along the lines of....."we are Shell/BP/Exxon, we'll offer you a 100% more and you will let us have it".

Once proven,though, wider take up can be quite dramatic....as currently evidenced with ESPs.



Q) I have seen it written that the first live well is a lot less demanding in heat and pressure terms than the current loop flow test. Is this true and if so, does it make it that much more likely that the test will be successful?

A) 'Balls' to that! They have total control over the loop so they can re-create any possible scenario. He did confirm that the ENI well is only 60 degrees C, but because it is a low flowing well (not very deep), they have to create bigger pressure differentials to get the gas flowing....which in turn will somehow generate ('exit'?) temperatures of up to 150 degrees C. So it does not make it any less demanding as a result.



Q) If a major company had need of 100 DGCs, why would they pay up rather than launch a takeover bid?

A) He said this was a very good point and there was no real answer against it happening. Which is why we need to get a move on in moving our SP higher to try and guard against a lowly SP take out. But he did point out that the biggest threat would not come from oil and gas major asset holders....it was more likely to come from the companies that service the industry.

I then proceeded to tell him that many PIs were very greedy, and if led by him, we could help to resist a hostile takeover. He did take this on board, but he then also tried to point out the current reality. He asked that we might currently resist a price of say, 100p, but what would the story be at 150p? Could we honestly say that we would stay in? I toook his point too, but we both agreed that we hoped nothing like that would happen until we had a chance to move things substantially higher.

He pointed out that the institutional holding is about 30%, with angel investors holding another 30% (+private individuals with large holdings). PIs with small holdings stood at around 15%. The directors, including John Gunn, about another 15%.

I personally believe that there is good scope to defend against lowly bids based on this.



Q) What are the arrangements between JIP members? Do they share any costs?

A) Each JIP member wants to conduct field trials and we liase with all of them. They do not share data directly with each other. They certainly would not allow a competitor engineer at their site to witness how they are doing things.

But CRA collect all data and then they are the conduit by which information is shared between JIP members. He did say CRA get paid for this service.



Q) What sort of minimum yield enhancement lower figure would we need to ensure take up?

A) It does depend on the actual well itself, but in virtually all scenarios, payback would be well within a year.




Q) Will any monies be paid up front by the new JIP partner?

A) Yes. Would not expand on that.



Q) What is the latest expectation for a live trial commencement date?

A) It still stands at Q1 of 2009. He wishes they could speed things up a bit more, but we are dealing with large service companies and they are not noted for dealing with these things in a particularly speedy way.



Q) Do we have any UK or other interest at actual government level?

A) Australia.



Q) Have you not approached the JIP members to ask them to take an equity stake in something they have helped develop? This could also protect against a hostile bid approach. I would be totally surprised if they were not interested in taking a stake in such a disruptive technology which they helped create.

A) The big boys have seperate companies that specifically make investments for the benefit of their parent company. But they usually are interested in taking stakes in excess of 10%. Then they start to make demands such as a seat on the board....and if you give it to one, you give it to all. You then lose control of your company. So the answer to this one was 'no'.

We have enough headaches as it is without worrying about the 30% we give to this lot, and then they will start to lay down rules and orders such as, 'we can't sell it ot Exxon, Shell etc.'. It does make sense.



Q) If the trial is successful, how long do you think before firm orders are placed? I ask this particularly because of our experience on the IA side.

A) It is possible that it takes a bit longer, but unlikely. This has gone on for 5 years now so it is expected that these companies are very keen to get their hands on working product as soon as possible, especially in the current climate. This is what the indications have been thus far.



Q) Baker Hughes have a patent for extracting stranded gas. How does it differ from ours?

A) They have various patents for this, but nothing that crosses over into our domain. They have a method of fracturing strata to lock tightly held gas for example.

They did attempt to do what we do a few years ago, but they didn't have the bearing technology to pull it off and failed in the process.


END OF PART 3.

THE COUNT--->ALL

OK, I have put the finishing touches to my report. This 4th part is the final section but it may not say quite as much as the previous ones, but for the sake of completeness, I post it.

I especially like the section on LNG and the possible 10 applications so far. This obviously looks like a further area of great promise for CRA.

Regards,

THE COUNT!


PART 4

Other applications

Q) What added benefits can CRA technology bring to industrial refrigeration?

A) We offer total enclosure and can deal with any gas. Apparently no current industrial refrigeration unit can offer total enclosure.

And once again, the overall size of our units comes into play as well.


Q) What size is this market?

A) The market is $10 billion in size.



Q) How far have you got in commercialising this technology? Who are you talking to?

A) There are about 5 big players in the world and we will not progress any further with this unless we have one of those firmly on board. We are currently talking with one potential partner and there is a second showing initial interest, but this is not CRA's highest priority at the moment, given all the action with DGC and IA elsewhere.

But as always, talking with big companies almost invariably means very slow progress....but nevertheless, we are talking.

In the recent past, we were talking to a company that was very interested in progressing this, but the talks lasted about 6 weeks before they were bought out by a Japanese company.



Q) What sort of other areas could we eventually deploy our compressor technology to? Are any of these off the drawing board at all?

A) He spoke, with what seemed great excitement about using our technology in the area of Liquefication of Natural Gas (=LNG). In fact, this now, with hindsight, looks absolutely awesome as a technology in itself . I do know for instance, that gas can be transported over distances now by liquefying it (using our technology as an example) and thus reducing its volume to a tenth of what it was. Our units can liquefy gas too.

CRA have identified, within this area alone, at least TEN different applications. He then proceeded to describe just 2 of them. The advantages our machine could give here, apart from the energy saving ones, is that our units are totally enclosed and are much smaller than current LNG technologies physically.

They are talking to a number of fairly large players in some areas already.

i) In the USA for example, a real hot topic of conversation recently, given the surges in oil prices, has been to extract coal bed methane. This is methane gas that exists in geological strata in and around their coalfields. This gas stretches over many miles... hundreds of square miles I think he said. Currently, to extract this, you need to drill holes in the ground, you then would need mini gasometers over each and also pipework stretching over hundreds of miles. This is quite impractical and there would be gas leaks with lots of pong wafting off into the atmosphere and possibly polluting nearby communities too. our units are sealed with no gas leaks. We could utilise a small CRA unit at the mouth of each 'well' and liquefy the methane and store it in small barrel like containers until a big tanker comes round on a weekly basis and collects it.

But this is still early stage.

ii) When LNG is transported on big tankers over the ocean, the shaking of the liquid inside its containers (brought on by the waves and especially so in choppy seas), causes heat and thus re-gassification of some of the fluid. This results in pressure build ups which can be very dangerous. some 'naughty' countries, such as the Chinese, simply flare this off into the atmosphere. This obviously results in gas loss so costs them money, along with other environmenal issues. Other countries use current technology to reliquefy. Our units can sit within the liquid and if it has been a particularly choppy night on the high seas, with much shaking and therefore much regassification of the fluid, we can simply just speed up our uit to reliquefy more volume.

We are talking to a company currently and hopefully they will see the threat this will pose to them and force them to quickly sit down and come to some sort of deal with us.

So these are just 2 of 10 areas of application of our technology in the LNG field alone. This all came as a pleasant surprise to me.



Q) Can DGC inject gas downwell as well? If so, could this be used to inject excess CO2 downhole for example. If so, are you discussing this with anyone? I am sure governments would be very interested in this given the current political climate. Are there any advantages in using DGC for this over other methods?

A) They have talked to Portland Group on this, who are currently thinking of storing excess CO2 in big caves in Portman Bill (I think), but there doesn't seem to be any killer advantage to using our technology in this particular application. Surface compressors can be used for this to blow gas down a pipe.



Q) I have seen the Investors Chronicle mention Power Electronics product potential. Can you explain this and the sort of markets we could target?

A)Yes, there is certainly potential here. We are operating electronics quite comfortably in temperatures in excess of 100 degrees C. CRA have pioneered some of the packaging and they have minitiarised components too. These are power electronics for motors and there a a lot of possible applications.


General

Q) How long will the present cash last?

A) They have 2 years comfortably, and that doesn't include any new deals or sales. We also should receive the bulk of the payment for the ordered DGC in the present financial year.



Q) Up to what price do you think you can defend a hostile takeover at? Have you considered talking to some of your bigger shareholders to try and form some sort of defence mechanism against any hostile bid?

A) How long is a piece of string? Of course they would look to defend against anything they considered cheap, and they would talk to shareholders as par for the course.



Q)Within the legal small print of the JIP agreement, are there specific clauses which protect against any JIP partner making some sort of hostile bid approachafter all, they will be aware more than most, of the capabilities and potential value of the DGC?

A) In general, oil and gas majors do not buy companies like ours. Any bid approach is much more likely to come form a service company.



Q) Why was Sian Westerman employed and what contribution has she made so far? Do you also now understand why the shares fell when her appointment was announced?

A) I told him that I knew why the shares came off, but more importantly, did he? I said it's a pity they are not allowed to give out their RNS statements to real investors to proof read and give their immediate opinions. He said he really despaired as he is never allowed to say fully what he wants to say by the powers that be. Rothschild had the last word in what was said about Sian.

Sian is the MD of the equity arm of Rothschild. They have done a hell of a lot of work with BP, Shell and British Gas. She reaches to the very top of these companies....she can have dinner with the chairmen of these groups...and that is the level we need to have access to. The operational level is fine as far as contacts are concerned, and where presentations are made. But at the very top, Gerry said he could share his vision with these guys and they can help make things happen by overriding the MD and others below whose primary concern may be where their next bonus may be coming from and thus play safe.

She is a lawyer by training and so is very able to advise on things such as contracts.and has done so.

When he was casting the net out for another director, he got dozens of applications from ex senior employees of large corporates such as Shell, but he wasn't interested as they had spent most of their working lives working within very large corporations and this was not the experience he was after. Also people in the stockbroking business came forward, but again he wasn't interested. and then he was introduced to Sian.

After a couple of meetings and presentations, she thought our technology was wonderful but feared that because she did not know enough about the science and engineering, and that therefore, she might not be quite as useful as we might need. Gerry said 'nonsense...we don't need any more scientists and engineers'...and that was that basically.



Q) When you said you were holding up rather well in our recent phone chat, I couldn't help but feel that you might be lulled into a false sense of security. I knew that your SP was just a big house of cards in the very short term and that if you didn't deliver another JIP partner by the results, there would be a sell off. But I stayed quiet. Now you can see what your SP was built on....you can never take it for granted and you must now try to deliver much more regular newsflow. Your company reports need bulking up...they are far too minimalist. Stick some pics in there for example.

A) He basically accepted most of this but refused to give out RNS statements just for the sake of it as so many other companies on AIM seem to do. He said that an RNS should only really convey very material information, not an order, for example, for 3 IA products. He did say he would try and add more of the finer details via their website.

He accepted what I said about the company reports. But will they change anything...I don't know.


END OF REPORT.

while the latest RNS (see below) is nothing spectacular, i guess it indicates that the current field trials are at least gong well.



Corac Group plc (AIM: CRA), the intellectual property, engineering and licensing company specialising in compressor technology, is pleased to announce a Joint Development Agreement ('JDA') with Centrilift, a Baker Hughes company. The JDA is established to fulfil the requirements of the Joint Industry Programme field trials announced on 9 June 2008, where the first Downhole Gas Compressor ('DGC') unit will be deployed by Eni SpA in Italy.

Centrilift is the world's leading manufacturer and supplier of downhole power cables, connectors and electrical submersible pumps ('ESPs') for oil well applications. Under the terms of the JDA, Centrilift will adapt their cables and connectors used for their ESPs into equipment suitable for the Corac DGC. Their experienced personnel will form part of a joint team enabling both companies to refine their respective designs to achieve a production-ready system.

Following an initial twelve month period, Corac and Centrilift have agreed to enter into a joint marketing and licencing agreement to enable Centrilift to sell DGCs and related equipment into the international gas market through Baker Hughes' worldwide sales and support network.

nothing spectacular, just a tie up with the third largest services company in the world, ten a penny those sort of announcements!
LOL!

i know all about BH as they are a client of ours ..... however the tie up per se does not produce pennies ..... i am also uncertain of the meaning and implication of the "initial 12 month period" and when that starts and finishes

SP keeps drifting down perhaps in line with the market, but is no news good news?

actually the tie up does produce pennies, there is a release on CRA's web-site re the BH deal that gives slightly more detail

http://www.corac.co.uk/home/news/corac-announces-jda-with-baker-hughes

in which it states the deal gives CRA additiional income.
I understand this is a decent upfront payment, but not something BH wanted putting in the RNS.

re the 'initial 12 months', that has already started, a few months ago.
The meaning, or purpose of this, is for BH to design a production ready system of cabling and connectors etc
following this, BH will be selling and marketing DGC units on a world-wide basis. The deal includes things like minimum sales figures.
All in all, a very good deal indeed.

thank you for the elucidation ..... all we need now is for the "magic machine" to indeed perform as promised

that would be nice!
Given that they have been testing and modifying for around 18 mnoths now, the degree of confidence is very high, but nothing is guaranteed, ofcourse.
my own view is it will be a question of how well (no pun intended!) it works.
I feel sure that they can get the unit to perfrom adequately, just a question of how well it does from the outset and how long to fix any possible gremlins they might find.

Should shareholders be concerned if gas prices fall? At 1m a well would potential sales be affected?

Anyone remember Hoot ramping Corac at the grand national a few years ago? Classic!

Yes!

I've still got the clip!

Unfortunately it didn't do much for the share price. I seem to recall it being in the high 30's back then.

post it up - or email it to me for me to post up. would love to see it again.

G

Hi Gausie

I've emailed it to you.

Thanks N - will post it up.