Two Commercial Milestones and Operational Expansion
It was a big week for the KMX team. Two significant commercial transactions were finalized, and the technical team continues to make strides with our North American operational expansion.
Following some market cooling in late 2024, we are seeing a significant increase in interest in KMX’s Vacuum Membrane Distillation (VMD) technology. The renewed focus on critical mineral national security and the growing awareness for the need to desalinate oil & gas produced water is driving a wave of demand for our technology.
On the commercial front: On Monday, an exclusive license agreement with Stardust Power for the use of our technology in the lithium market was announced. On Tuesday, a letter of intent with TETRA Technologies for the purchase of three KMX units for oil & gas produced water desalination was also announced.
In addition to these two major commercial milestones, the KMX team continues to make strides expanding our North American operational capabilities with the further build-out of our team, the manufacturing of new VMD equipment, and preparations for our new laboratory. This operational expansion is intended to support the next leg of KMX’s growth.
Stardust Power Exclusive Lithium License:
KMX’s exclusive license agreement with Stardust Power combines our powerful VMD technology for lithium with a partner that has multiple use-cases across its hub-and-spoke asset-base.
As shown in Figure 1, Stardust is developing a vertically integrated North American lithium supply chain spanning upstream, midstream, and downstream lithium operations.
KMX’s versatile technology represents various strategic advantages for Stardust across its supply chain. As detailed by Roshan Pujari, Stardust Power CEO, during Stardust’s 3Q24 Earnings Conference Call, “We see the opportunity to insert the KMX VMD technology at multiple spaces in our flowsheet”.
Figure 1: Stardust Power Lithium Supply Chain
Source: Stardust Power, Inc., 1Q25 Investor Presentation
TETRA Technologies – LOI for Package of Pilot Systems:
Our LOI with TETRA for three KMX systems significantly expands the TETRA Oasis total desalination solution (TDS) pilot fleet during an inflection point of interest in desalinating oil & gas produced water.
The LOI follows the recent introduction of TETRA Oasis TDS, an end-to-end oil & gas produced water desalination solution, and TETRA’s successful commercial pilot project for the desalination of produced water for a major Delaware Basin oil and gas operator.
As shown in Figure 2, KMX’s VMD technology plays a central role in the desalination of produced water within the TETRA Oasis TDS (see “Desalination” section in Figure 2), following TETRA’s proprietary pre-treatment process.
Figure 2: TETRA Oasis TDS – Overview
Source: TETRA Technologies, Inc.
Demand for TETRA Oasis TDS is driven by: 1) the increasing frequency and size of earthquakes taking place in the Permian Basin (as shown in Figure 3 below), 2) a decrease in pore space and geological disposal availability, and 3) increasing regional water stress.
As a result, innovative and best-in-class oil & gas operators are evaluating desalination opportunities to decrease the amount of produced water being injected into disposal wells, alleviating earthquake risks and contributing to local freshwater supplies. TETRA Oasis TDS provides these market leading oil & gas companies an end-to-end desalination solution.
Figure 3: Saltwater Disposal Wells are Driving Earthquakes in the Permian Basin
Source: U.S. Geological Survey (earthquakes); U.S. Energy Information Administration (Delaware Basin); TexNet, Lium, LLC, Wall Street Journal, April 28, 2024: “In America’s Biggest Oil Field, the Ground Is Swelling and Buckling”
Industry studies have indicated that the handling and treating of produced water is a $4 billion annual market opportunity in the Permian Basin alone. As shown in Figure 4, roughly 6.3 billion barrels of produced water are injected into salt-water disposal wells annually, representing a significant desalination opportunity.
Figure 4: Permian Basin Produced Water Market (barrels produced per year)
Source: Rystad Energy
Up Next:
Next, we are excited to share details on our North American operational expansion, including our new laboratory and additional commercial pilot capabilities. We also hope to share new details on our diversification efforts amidst our ongoing buildout in our core lithium and oil & gas markets.
– Zac
Zachary Sadow
Chairman & CEO
KMX Technologies