Offtake Agreement for 135,000 tonnes of PlatDrill

Graphene NanoChem PLC

("Graphene NanoChem" or the "Group")

Offtake Agreement for 135,000 tonnes of PlatDrill to Scomi Oiltools

Graphene NanoChem (AIM: GRPH), the performance nanochemicals and advanced materials company, is pleased to announce the signing of the licensing agreement and the guaranteed offtake for the entire production of PlatDrill under the Scomi-Platinum joint venture.

The 50/50 production joint venture ("Scomi-Platinum JVCo.") between Platinum NanoChem Sdn Bhd, a wholly owned subsidiary of Graphene NanoChem, and Scomi Oiltools Sdn Bhd ("Scomi Oiltools"), a subsidiary of Scomi Energy Services Bhd, which was previously announced on 7 April 2014 is to construct and operate an integrated 45,000 tonnes per annum ("tpa") production chemicals facility, including a 30,000 tpa PlatDrill production plant and a 30 tpa graphene nanomaterials facility in Port Klang, Malaysia ("Port Klang Plant") dedicated for supply into the oilfield chemicals market.

PlatDrill is a graphene-enhanced biodegradable drilling fluid, which offers significant operational benefits over traditional substances with improved properties such as better lubricity, load bearing capability and higher viscosity stability. 

Highlights

· Offtake contract locks-in guaranteed sale, over five years, of 135,000 tonnes of PlatDrill to commence once the Port Klang Plant has been commissioned, with an option for Scomi Oiltools to renew for a further 5 years

· Technology licensing agreement guarantees royalty payments for 15 years to Graphene NanoChem

· Graphene nanomaterials production capacity increased from 30 tpa to 50 tpa

· The Port Klang Plant due to come on line in Q2 2016

Scomi-Platinum JVCo. will employ Graphene NanoChem's technology for the production joint venture and the parties have entered into two 15-year royalty bearing, technology licensing agreements for the exclusive licensing of the base oil and graphene nanomaterials technologies to Scomi-Platinum JV Co. for the production of PlatDrill.

The integrated facilities will be constructed in Port Klang Plant and are expected to have an initial capacity of 30,000 tpa of PlatDrill, 15,000 tpa of specialty chemicals for oilfield chemical applications (ester quat and imidazoline) and an increased graphene nanomaterial production capacity from the initial 30 to 50 tpa. Under the terms of the master supply agreement, following the financing, construction and commissioning of the Port Klang Plant, Scomi Oiltools has committed to purchase and Scomi-Platinum has committed to sell 100% of the PlatDrill produced from the Port Klang Plant for 5 years with an option to renew for another 5 years.

Scomi-Platinum JVCo. is planning for the start up of the Port Klang Plant in Q2 2016 and is currently in discussion with several financial institutions to finalise the debt financing package for the joint venture.

Graphene NanoChem further expects to announce the signing of the specialty chemicals component of the production joint venture soon.

Jespal Deol, Chief Executive Officer of Graphene NanoChem, commented: "This strategic joint venture with Scomi is a quantum leap forward for our oilfield chemicals business, it demonstrates the value of our technology and products and sets a clear path for rapid worldwide growth in this sector.

"This partnership provides us with a ready made market through Scomi's strong presence in the oil and gas service sector. We also now have a platform to expand the production capacity for PlatDrill with guaranteed offtake, as well as the opportunity to diversify into other higher margin specialty products within the sector. Pending Port Klang Plant coming online in Q2 2016, Scomi Oiltools' current PlatDrill requirement will be serviced directly by Graphene NanoChem."

Wan Ruzlan Iskandar Wan Salaidin, President, Market Units of Scomi commented:

"The collaboration with Graphene NanoChem enables Scomi Oiltools to be a provider of game changing, cutting-edge and environmentally green drilling solutions which enable time and cost savings for our customers. Green based chemical systems with graphene enhancement allow for increased drilling efficiency, higher wellbore stability in preparation for optimised production. Waste treatment will be more cost efficiently done given the bio-degradable quality of the mud and cuttings.

""Our test results of PlatDrill-R, have shown remarkable thermal and electrical stability, surpassing the performance of other known base oils in the market place.

"We are also now in the midst of finalising the mud formulation utilising PlatQ lubricants, as a new addition to our technology solutions offering for commercial deployment. Our internal tests have demonstrated market-leading enhancement in torque reduction and rate of penetration, yielding more than 20% in Oil-based Muds and more than 80% in Water-based Muds."

"The PlatDrill and PlatQ Series are the first products utilising nano graphene technology being deployed by our sovereign oil and gas customer. Southeast Asia will be our intial launchpad in establishing these products' presence and we anticipate rapid acceptance upon the sharing of the success of our early adopting customers. We are also exploring the potential of nano graphene technology for multiple applications across the various stages of oil and gas exploration, drilling, completion and production in the value chain."

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About Graphene NanoChem

Graphene Nanochem plc is a technology commercialisation company that operates two commercial platforms, the Advanced Chemicals platform that manufactures renewable chemical products for high growth sectors and the Advanced Materials platform that focuses on graphene nanomaterials applications for selected industries targeting high performance use.

Headquartered in Malaysia, Graphene Nanochem was admitted to the AIM of the London Stock Exchange on 26 March 2013, following the reverse acquisition of Biofutures International plc, and trades under the symbol GRPH.L.

To find out more, please visit www.graphenenanochem.com.

About Scomi Oiltools

Scomi Oiltools is one of the world's leading providers of high performance drilling fluids solutions with an order book of RM5.4 billion (£1.0 billion) With a combined group experience of more than 60 years and global presence at 42 locations in 21 countries, Scomi Oiltools possesses the formulation expertise, global presence, customers, products distribution channels, back office infrastructures and logistical capabilities needed to effectively develop the global market share for PlatDrill in the immediate and long term.