Vialogy a Share to Watch

Online Stocks and Shares Trading - Vialogy

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Vialogy (Lon : VIY) is a technology company that is causing a lot of interest due to the fact that it, in the form of Dr. Sandeep Gulati, appears to "have invented a better mousetrap". Their better mousetrap is called QRI (Quantum Resonance Interferometry) and it is not used for catching mice but for the detection of underground oil and gas reserves.

QRI is a breakthrough technology developed by Vialogy that uses innovative software algorithms for active signal processing, the technology "enhances signal-to-noise-ratios by rapidly determining whether a signal is present in the noisy data".

QRI is between 10 and 100 times more effective than current passive signal-processing techniques at detecting signals in noisy environments. This minimizes false alarms and event dropouts, "making the technique highly specific and reproducible".

QRI is incorporated into 3 solutions, one of which is QuantumRD®, a "powerful new technology for the discovery, validation, and recovery of oil and gas reservoirs".

QuantumRD® can result in operational cost-savings by:

• permitting oil recovery using the minimum number of wells
• identifying and positioning hydrocarbon deposits
• optimizing infill well locations

Normally, out of every 10 wells an oil company drills 8 will be dry and therefore represent a great drain on time and money. As stated above, QRI is 10 to 100 times more effective, which should clearly result in great savings for oil and gas companies.

Does the Vialogy technology work ?
Well, US oil company Atascosa was interested enough to find out. It signed a deal with Vialogy and asked them to interpret its seismic data using QRI. Vialogy was able to tell Atascosa not only where to set up its rig but also what it could expect to find underground. Vialogy received a fee for its services but it also insisted on receiving 5% of any oil that was produced.

Last March Atascosa found oil exactly where Vialogy predicted it would. It is estimated that the reservoir discovered holds in excess of 2 million barrels of oil - 5% of which goes to Vialogy i.e. 100,000 barrels the current price of a barrel of oil is I believe $70.

Atascosa was so impressed they drilled a second well based on Vialogy's recommendations. This time the result was even better!

Atascosa's CEO John Mullins, said about the Galba Prospect find : "We're very pleased with the success of this well. We have increased our lease positions at the prospect, and are planning to further grow our collaboration with ViaLogy on Galba and other prospects. Our geology team has been working with the ViaLogy scientists for some months now, and we're highly impressed with the technology behind QuantumRD. The accuracy of the results is remarkable and the payoff is reducing the risk of dry holes. The quality of the information relating to the size and content of the reservoirs enables us to position the wells to extract the maximum amount of hydrocarbons."

The press release at the time stated "Under its contract with Atascosa, ViaLogy will receive a 5% Back-In-After-Payout (BIAPO) working interest. This means that after costs ViaLogy will receive over $300K over the life of this first well (assuming oil price at $40 per barrel)."

It is quite probable that other oil companies will want to make use of Vialogy's technology, which is why people are so excited about the ptoential.

According to The Herald newspaper in Scotland, ViaLogy may announce further contracts for its equipment when it announces its yearly figures. Seymour Pierce expect losses of around £5.6m to be announced too but they give the shares as a buy at the current level of around 6.12p and expect a rapid build-up of business.

ViaLogy recently raised £2m for its expansion plans in a share issue at 4p.

The share was tipped by The Times as a tiddler to watch back in July 2008 and has recently been tipped as a High Risk BUY by Red Hot Penny Shares who said "I have seen plenty of exciting scientific innovations in my time, but nothing to beat this. The scale of the opportunity is enormous, and so is the value of Vialogy’s revolutionary QRI software. High Risk BUY."

Name: Vialogy EPIC: VIY
52 Week High/Low: 6.38p/1.50p
Market Cap: £23.88m
Buy Limit: 7p
12 Month Target Price: 20p

I'm not a tipster but Vialogy certainly looks interesting if you can take the risk. Also I never buy ahead of results so I'll be waiting till the dust settles before I decide what to do.

Vialogy 3 Year Chart showing 200 day MA in Black and Volume

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