It’s a very rewarding trading day for Recon Technology, Ltd. (NASDAQ:RCON) investors with shares up over nearly 30%, making the stock Wall Street’s bull of the day.
The reason? The Chinese business software maker announced that it will provide its proprietary chemical compound agents and microbiological treatment agents and relevant services for oily sewage treatments to Qinghai Oilfield Company, a PetroChina subsidiary. Recon’s revenue of the Project is expected to be RMB 13.11 million (approximately USD $2 million) over the course of one year, subject to the quantity of the Products actually used by Qinghai Oilfield. Recon expects to begin recording revenue under the Project in the current quarter. The Project represents a significant increase in size and scope over the Company’s previous wastewater treatment agreements.
All goods to be delivered in the Project will be developed and rendered by Recon. Recon is applying patents for its own bio-stimulants, a kind of microbiological treatment agents needed in the Project and has been granted several patents for invention of oily wastewater treatment devices.
“This is a major progression in our partnership with Qinghai Oilfield, and an indication of the upside potential of Recon in the oilfield environmental protection market,” stated Mr. Yin Shenping, CEO of Recon, “Our oilfield waste water treatment business has continued to expand rapidly, as agreements have continued to grow in terms of size and number. In fiscal 2017, we grew our revenue in this business by over 371%.”
Mr. Yin continued, “The market potential in wastewater represents a significant opportunity for Recon in the coming quarters, as many of the investments made by our Company during the downturn in oil prices have begun to materialize into increasing orders in the past six months. The principal driver of growth in this market is increased regulatory requirements amidst the need for greater environmental protection, which is creating a need for our large-oilfield clients to utilize our products and services to improve their waste services. We have leveraged experience, data analysis, and research to develop solutions for these large-scale oilfield companies in China, many of which we have had relationships with for over a decade. The increasing amounts of agreements represents more than simply what the amounts themselves represent, as the overall perception of Recon is changing from merely an oilfield service company to a hi-tech company in our marketplace .”
Recon Technology engages in the development and marketing of oilfield equipment, automation systems, tools, chemicals, and field services to petroleum firms. It operates the digital oilfield project, and provides unconventional resources exploitation, surface engineering, and down-hole engineering.