Ocean Power Technologies Inc. (NASDAQ: OPTT) saw its shares more than triple on Wednesday following a new Asian lease agreement. The company announced that it has entered into a PB3 PowerBuoy lease agreement with Mitsui Engineering and Shipbuilding (MES), which is valued at approximately $975,000. The PB3 PowerBuoy leased by MES is planned to be deployed off Kozu-island in Japan following a planned stage gate review.

With this agreement being valued at just under $1 million, and the company’s market cap sitting right at $10 million, a move of this magnitude does not necessarily make sense just looking at the numbers. However, when considering the potential for further expansion in Asian markets Ocean Power Technologies (OPT) looks solid.

Prior to the agreement, the Thomson Reuters consensus estimate predicted that this company’s fiscal 2017 revenues would total $4.7 million, with a net loss of $2.23 per share.

Under the agreement, OPT also will provide engineering support, associated deployment planning and logistics and ocean performance data collection and analysis. OPT and MES also will jointly develop and test an advanced control algorithm with the goal of assessing increased ocean wave energy capture and electric power generation for potential customers in Japan and surrounding countries. Work on the project began in March 2016, following the signing of a letter of intent by OPT and MES.

George H. Kirby, president and CEO of OPT, commented:

This first commercial agreement with MES is a significant and exciting commercialization milestone for OPT.  MES has been a strong strategic partner in the development of the PowerBuoy, and this milestone will allow MES to demonstrate the flexibility of the PB3 power and communications platform in sea conditions off the coast of Japan.  We believe that the deployment under this Agreement could provide access to a potentially huge market in Japan and the surrounding areas, and we’re looking forward to potentially leveraging these events with other interested parties.  Market applications could include national defense and security, such as early detection and warning systems for subsea and surface threats, or oil field management and metocean applications for the oil and gas industry and scientific communities.

So far in 2016, the OPT has underperformed the broad markets, with the stock down 27%, excluding Wednesday’s move. Over the past 52 weeks, the stock is down 77%.

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Shares of OPT were trading up 250% at $5.36 on Wednesday, with a consensus analyst price target of $6.00 and a 52-week trading range of $0.95 to $6.79.

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