Orbital UAV secures $2m contract for continuation of heavy fuel drone engines

We are three months into 2023, and drones are already fueling a $6 billion per annum industry.  With Russia and Ukraine bringing unmanned warfare to the fore, some countries are brainstorming anti-drone mechanisms. Others are jumping on the bandwagon and hoping to access better unmanned aerial vehicles (UAVs). And manufacturer of military UAV engines Orbital UAV (ASX: OEC) is happy to lend a hand. 

The Company has signed a $2.08 million continuation contract with one of Singapore’s largest defence companies to see through its UAV engine development program. The initial contract was signed in March 2020. The latest round of funding will help wrap up the Design & Development and Verification & Validation phases of the program.

CEO and Managing Director of Orbital UAV, Todd Alder, said, “The contract continuation represents another positive milestone in this new UAV engine program for our prestigious Singapore customer. Engineering work continues to progress as planned, moving us towards initial production later this year.” 

Orbital UAV produces heavy-fuel engines for unmanned aerial vehicles. Because they use heavy fuel, the engines are more efficient and budget-friendly. In July 2022, the Company signed a $3.5 million contract with the Singaporean company to progress into the second phase of the development. This followed the initial engine design, development and integration contract signed in 2020 and the successful delivery and acceptance of three prototype engine systems delivered across 2021. 

Orbital UAV has established itself as a global leader in the design and manufacture of unmanned aerial vehicle (UAV) engine systems. The Company’s patented heavy fuel injection technology has achieved hundreds of thousands of flight hours for multiple global customers and continues to set benchmark performance. 

Alder added, “Heavy fuel engine capability remains critical to the successful deployment of systems operating within the UAS space. We continue to see that requirement grow and our engine development program with our Singapore customer is a perfect example of this global demand.”

Production of the new engine is set to start in the first half of FY24. The manufacturing of this engine will take place in Australia at Orbital UAV’s existing production facility, where they are already building two other engine models.

“Orbital UAV has the capability and capacity to supply the world’s largest UAV manufacturers,” added Adler. 

“The addition of our Singapore customer’s engine model to our existing production lines will continue to build our global reputation and demonstrate our superiority in this field.”

Orbital UAV’s heavy-fuel engines have been getting many a pat on the back recently. Arguably one of the biggest votes of confidence for the Company was the Western Australia government converting its $3 million debt into a grant. The Singapore defence company’s continuation contract is yet another notch in its belt. 

The continuation contract is all set to go with immediate effect and will continue into FY24. This contract is expected to bring in $0.5 million in FY23, and the rest of the balance will be collected in FY24.