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Shell destroys analytics firm Arria NLG?

Screen Shot 2015-04-13 at 16.04.38From an article by Ben Martin published 30 April 2015 by The Telegraph

Oil major deals blow to Aim minnow

What was a good day for Royal Dutch Shell investors was a disaster for shareholders in an Aim-listed minnow that depended on the oil major for most of its revenues.

While B shares in Shell gained 25½p to £20.94½ on better than expected quarterly profits, Arria NLG cratered 22½p, or 72.6pc, to 8½p after the software business shocked investors with the announcement that the oil company, its biggest customer, had scrapped its contract.

Last May, Arria unveiled a three-year deal with Shell in which the FTSE 100 business had agreed to pay as much as $10m to use its artificial intelligence-driven technology, software that analyses vast amounts of data and within seconds produces written reports. On Thursday, Arria revealed that its services were now longer required by Shell.

As well as having “a material adverse impact” on Arria’s trading and revenues, Shell’s decision also meant the company had on Wednesday been forced suspend talks with investors over a crucial fundraising, discussions that had been “predicated on revenue expectations which included the continuation of the Shell contract”.

Arria said it would continue in its attempts to pull together financing, but there was “no certainty” it would secure the funds needed to remain a going concern. It was only in December 2013 that Arria made its debut on London’s junior market, in a float that valued the business at £102m. After Thursday’s plunge, its market capitalisation stood at just £8.8m. Arria now joins a host of other Aim companies, such as tailor Bagir and Shoe Zone, to have burnt investors not long after listing.

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By Margi Murphy1 May 2015: Computerworlduk.com

Extracts

An analytics firm that uses artificial intelligence to write English-language reports said its largest customer, Shell, has pulled the plug on its technology until it is “better placed to exploit the benefits”.

The three-year contract, worth up to $10 million (£6 million) allowed the oil giant to use Arria’s natural language engine to support decisions on the oil firm’s offshore platforms in the Americas.

In a statement the tech firm said the termination, “does not reflect the value it [Shell] sees in Arria’s technology, to which Shell has responded positively and which is demonstrated by the significant development work done to date. The directors of Arria understand that when Shell is better placed to exploit the benefits offered by Arria’s technology will Shell consider re-establishing the relationship with Arria.”

Shell refused to comment on any contractual matters this morning and did not mention Arria in its financial results released yesterday.

It has previously discussed its big data strategies openly. Primarily an SAP shop, it announced that it would use the in-memory engine Hana to create a new well and reservoir facility management tool. It also signed a long-term contract with the German vendor to use Hana data analytics in the cloud until 2020.

Analyst Anthony Miller at TechMarketView commented: “The company yesterday announced the loss of a contract with its largest customer, Shell, which has also resulted in the suspension of discussions for a critical fundraising. Management has therefore raised the flag on Arria’s prospects as a going concern.

“They say when one door closes another opens, but unfortunately the reverse is the case for AIM-listed Arria NLG.”

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