Syntroleum Announces Operational Highlights and Second Quarter Financial Results.
* Initiated the Dynamic Fuels site selection process and authorized expenditures related to process design and front-end engineering and development.
* Successfully completed a 2,500 hour test run at Eastman Chemical's Kingsport, Tennessee facility on Syntroleum's proprietary technology that converts coal to clean synthetic fuel.
* Using Syntroleum's fuel, the U.S. Air Force completed certification of Fischer-Tropsch synthetic jet fuel for use in the B-52H Stratofortress.
* Decreased negative cash flow used in operating activities from continuing operations by 41 percent for the first six months of 2007 versus the same period in 2006.
"Our focus is on executing our 50/50 venture with Tyson Foods, Inc., successful testing of our Fischer-Tropsch technology at Eastman Chemical's facility, certification of our synthetic jet fuels by the U.S. Air Force, and reducing our expenses," said Jack Holmes, CEO of Syntroleum. "We have made demonstrable progress on these fronts that will ultimately lead to improved financial performance of the company."
Biofining(TM)/ Dynamic Fuels, LLC (Dynamic Fuels)
* Letters have been sent to the governors of five states where possible Dynamic Fuels plant sites have been identified. It is the goal of Dynamic Fuels to finalize a site selection by November 30, 2007.
* The Dynamic Fuels management committee held its initial meeting on July 11, 2007. Among other things, the committee approved Authorizations for Expenditures in the amount of $4.4 million related to the completion of the process design package, front-end engineering and development, and site selection. The next management committee meeting is scheduled for August 15, 2007.
* Syntroleum has now received, successfully tested, and qualified 80 different bio-feedstocks using its Biofining(TM) technology, up from 54 at the end of the first quarter of 2007.
* All of the bio-feedstock needed to produce 500 gallons of renewable jet fuel (R-8 Research Fluid) has been received. The feedstock consists of 45 percent poultry oil, 18 percent each of yellow and brown grease, 9 percent flotation grease, and 10 percent mixed fats. The processing of this feedstock is scheduled to begin in the middle of the third quarter and be completed by the end of 2007, at which time the fuel will be delivered to the Department of Defense for testing.
* Syntroleum has filed for eight patents related to its Biofining(TM) technology with three more currently in stages of development.
Coal-to-Liquids / Gas-to-Liquids
* Syntroleum completed a 2,500 hour test run of its proprietary cobalt catalyst with live coal-derived syngas at Eastman Chemical Company's facility in Kingsport, Tennessee. This long-term test has successfully demonstrated the effectiveness of Syntroleum's Fischer-Tropsch cobalt based catalyst with proven coal-derived synthesis gas clean-up and treatment processes for use in a coal-to-liquids application. Once the analysis of the test data has been completely compiled in the third quarter of this year, Syntroleum will publish formal results and conclusions.
* The US Air Force announced on August 8, 2007 the completion of its certification of a 50/50 blend of synthetic Fischer-Tropsch jet fuel and conventional jet fuel for use in the B-52H bomber aircraft fleet. Syntroleum was the sole provider of the synthetic Fischer-Tropsch jet fuel used in the certification procedures for the B-52H, and will be the first company to provide the Air Force with renewable synthetic jet fuel made solely from fats when it completes the 500 gallon order later this year.
* After a management restructuring at Sinopec, spurred by the June, 2007 resignation of the company's chairman, Mr. Chen Tonghai, Syntroleum and Sinopec have re-engaged in active discussions aimed at finalizing definitive agreements related to a gas-to-liquids and coal-to-liquids technology transfer and development agreement in China.
* Energy Infrastructure and Resources Pty. Ltd. (EIR) of Australia, paid Syntroleum $500,000 in the second quarter as a site reservation fee for rights to acquire a gas-to-liquids site license for the Sunstate GTL Project that EIR is developing in southern Queensland, Australia. The Sunstate GTL Project is nominally 17,000 barrels per day of ultra clean synthetic liquid hydrocarbons from coal seam gas feedstock using the Syntroleum[R] Process to make Synfining[R] Diesel for the Australian domestic market.
* Baard Energy, LLC (Baard) paid Syntroleum approximately $500,000 to conduct a coal-to-liquids feasibility study, which Syntroleum completed and delivered to Baard during the second quarter. Baard, an energy project development company located in Vancouver, Washington, is developing the Ohio River Clean Fuels (ORCF) Project, an over $4 billion Fischer-Tropsch coal-to-liquids (CTL) project located in Columbiana County, Ohio. The ORCF CTL Project is a nominal 50,000 barrels per day facility to produce ultra clean diesel and jet fuels.
* Syntroleum teamed with Black & Veatch Corporation as our design engineer for the commercial design package of the Fischer-Tropsch Reactor (FTR) used in the Syntroleum[R] Process. The FTR method and mechanical design package was completed in the second quarter of 2007.
* African Energy Equity Resources Ltd. (AEERL) has recently informed Syntroleum that it has executed a subscription agreement with a Norwegian investor and that the funding of the investment is only subject to certain preemptive rights from existing shareholders. Syntroleum is in discussion with AEERL to extend the deadline for payment of the remaining $7.2 million plus interest it owes to Syntroleum, in order to allow the funding process to be completed.
The Company reported a net loss of $9.6 million, or ($0.17) per basic and diluted share, for the current quarter compared to a net loss of $15.7 million, or ($0.28) per basic and diluted share, for the second quarter of 2006. The Company had net income of $5.2 million, or $0.09 per basic and diluted share, for the six months ended June 30, 2007, compared to a net loss of $28.6 million, or ($0.51) per basic and diluted share, during the same period of 2006. Revenues for the current quarter were $0.7 million compared to $0.3 million for the second quarter of 2006. Revenues for the six months ended June 30, 2007 were $14.5 million compared to $0.7 million during the same period of 2006.
The increase in net income during the current year compared to the same period in 2006 is the result of several factors, including: one-time non-cash revenue of $13.7 million and a non-cash gain from the extinguishment of debt of $10.7 million related to a Consolidation and License Agreement entered into with Marathon in January 2007; decreased expenditures associated with the demonstration plants being placed in standby mode and therefore not incurring significant operating costs; and the sale of interests in all international oil and gas assets resulting in a gain on the sale of assets in discontinued operations of $2.3 million in the current year. The Company's cash balance at June 30, 2007 was $27.1 million. This compares to a cash balance of $33.5 million at December 31, 2006.
The company had cash out flows from operating activities of continuing operations of $12.2 million for the six months ended June 30, 2007 compared to $20.8 million for the same period last year. This decrease in cash outflows from operating activities represents a 41% decrease in negative cash flow for 2007.
Jack Holmes, CEO of Syntroleum is scheduled to present at the Wall Street Analyst Forum's 18th Annual Analyst Conference in New York at 11:50 a.m. EDT on Wednesday, August 15, 2007. To access a live webcast and presentation slides, please go to www.syntroleum.com and click on "News and Events/Presentations and Webcasts." You will then be directed to log-in at the conference website in order to listen to the webcast.
Syntroleum Corporation owns the Syntroleum[R] Process for Fischer-Tropsch (FT) conversion of synthesis gas derived from biomass, coal, natural gas and other carbon-based feedstocks into liquid hydrocarbons, the Synfining[R] Process for upgrading FT liquid hydrocarbons into middle distillate products such as synthetic diesel and jet fuels, and the Biofining[TM] technology for converting animal fat and vegetable oil feedstocks into middle distillate products such as renewable diesel and jet fuels. The Company plans to use its portfolio of technologies to develop and participate in synthetic and renewable fuel projects in a number of global locations.
This document includes forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995, as well as historical facts. These forward-looking statements include statements relating to the Syntroleum[R] Process, the Synfining[R] Process, our renewable fuels Biofining[TM]technology, plans to use the Company's various technologies, operational activities of the Company, commercialization of the Company's technologies, certification of Fischer-Tropsch and renewable fuels, anticipated cost reductions, anticipated cash outflows, anticipated expenses, anticipated revenues and the Company's financial position. When used in this document, the words "anticipate," "believe," "estimate," "expect," "intend," "may," "plan," "project," "should" and similar expressions are intended to be among the statements that identify forward-looking statements. Although we believe that the expectations reflected in these forward-looking statements are reasonable, these kinds of statements involve risks and uncertainties. Actual results may not be consistent with these forward-looking statements. Syntroleum undertakes no obligation to update or revise forward-looking statements to reflect changed assumptions, the occurrence of unanticipated events or changes to future operating results over time. Important factors that could cause actual results to differ from these forward-looking statements include the potential that debt or equity financing for anticipated plants or related natural gas liquids or oil and gas projects may not be available, the schedule for development, construction and operation of proposed plants may not be met, anticipated appropriation and expenditure of federal monies does not occur, commercial-scale plants do not achieve the same results as those demonstrated on a laboratory or pilot basis or that such plants experience technological and mechanical problems, the potential that improvements to Syntroleum's various technologies currently under development may not be successful, the impact on plant economics of operating conditions (including energy prices), construction risks, risks associated with investments and operations in foreign countries, our dependence on strategic relationships with manufacturing and engineering companies, volatility of energy prices, the ability to implement corporate strategies, including the continued availability of adequate working capital, competition, intellectual property risks, our ability to obtain financing and other risks described in the Company's filings with the Securities and Exchange Commission.
[R] "Syntroleum" is registered as a trademark and service mark in the U.S. Patent and Trademark Office.
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|Article Type:||Financial report|
|Date:||Aug 10, 2007|
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