LOS ANGELES, CA — (Marketwire) — 11/29/12 — Sionix Corporation (OTCQB: SINX) provides a letter to its shareholders.
Dear Shareholders,
You will recall that in our letter of August 23rd we discussed Sionix– continuing commitment to provide water treatment products and services to energy-related customers, as well as other industries. Sionix has assessed the current and future landscape of opportunities and treatment needs in the Williston area of North Dakota. After careful consideration, the Company has made significant changes and efforts to address this important market.
Many of you read the Wall Street Journal article of 11/19/12 “Drillers Begin Reusing Frack Water” which addressed the adoption of a reuse/recycling model for fracking fluids. Certain energy regions have already begun this practice, and many believe the vast water usage in North Dakota makes this region particularly apt for recycling rather than the disposal practice that has existed.
Sionix believes that our attention and efforts in this region should be focused on the treatment of frack and production water, rather than drilling mud, as had been pursued by the Williston Basin I, LLC venture established earlier this year. This was a mis-step.
While treatment of drilling muds at the drill site is a potentially high-value activity, the complexity and technical demands of the task (as well as the process being too conceptual to have yet established goals and protocols), would have taken Sionix far from the proprietary advantage of our DAF technology. Along with input from our marketing associate McFall Inc., we have decided to delay pursuit of this activity, to be revisited when our technical resources and the protocols are more established.
To that end, Sionix and the minority investors of Williston Basin I, LLC, agreed to close this venture. Certain members and investors wished to remain involved with Sionix and we exchanged and issued $700,000 of convertible notes to these parties. The LLC distributed its remaining assets to investors who chose to not exchange, and has been dissolved.
Sionix has acted upon our belief in the frack water recycling model discussed in the Wall Street Journal article referenced above. In the Williston Basin region of North Dakota, Sionix has entered into an agreement with a local operator of disposal injection wells. This agreement allows Sionix to test and treat any frack or production water delivered to the well for disposal, prior to its injection. This assures Sionix of a daily supply of said fluids from various oil wells throughout the area. There are approximately 840 disposal wells currently in operation in North Dakota.
During recent weeks Sionix has prepared its DAF technology and complementary treatment equipment for this Williston Basin pilot project. We have established and set goals and initial testing/treatment procedures, prepared the site and its utilities, and have shipped our equipment to North Dakota. We expect to begin testing and processing of frack and production waters in a short period of time.
Finally, in support of the need for solid operating data that customers can rely on, we have asked Board member Dr. Henry Sullivan to coordinate Sionix– testing and treatment protocols, aligning our activities with standards recognized by the E & P industry. Dr. Sullivan is working with Sionix engineers and scientists, as well as an experienced external consultant, to create measures and reports that will help establish a range of treatment methodologies and best practices consistent with our goals.
We believe that this pilot project will demonstrate Sionix– capabilities in the region. We also believe that the pilot project will help Sionix identify certain potential services and revenue streams that will benefit Sionix shareholders, and also serve the region–s goals of reusing water and reducing fluids management costs for oil producers.
The Sionix Board of Directors and our management and employees believe that we are in the right place at the right time, and will continue to update our shareholders when major project milestones have been accomplished.
Sincerely,
James W. Alexander, Interim Chairman of the Board
Sionix designs innovative and advanced MWTS intended for use in energy, government facilities, healthcare facilities, and emergency water supplies during natural disasters, housing development projects, and various industrial processes including subterranean fracturing used in oil and gas drilling. These systems can be located adjacent to contaminated water sites or as a pre-treatment for reverse osmosis and other membrane applications. Industries involved in dairy, agribusiness, meat processing, mining, poultry operations, and many others can benefit from Sionix– cost-effective, easily maintained, portable water treatment systems. For more information about the company, go to .
All statements in this press release that are not statements of historical fact are forward-looking statements, including any projections of earnings, revenue, or other financial items, any statements of the plans, strategies, and objectives of management for future operations, any statements concerning proposed new products, services or developments, any statements regarding future economic conditions or performance, statements of belief and any statements of assumptions underlying any of the foregoing. These statements are based on expectations and assumptions as of the date of this press release and are subject to numerous risks and uncertainties, which could cause actual results to differ materially from those described in the forward-looking statements. The risks and uncertainties include, but are not limited to, whether Sionix Corporation can raise capital as and when it needs to, whether the water purification systems will generate significant sales, whether it can compete successfully in its market and industry, and other factors beyond the control of Sionix Corporation, including those detailed from time to time in the reports filed with the Securities and Exchange Commission. Sionix Corporation assumes no obligation and does not intend to update these forward-looking statements.
David R. Wells
President and Chief Financial Officer
T: (704) 971-8403