PRESS
RELEASE
SYNTROLEUM ANNOUNCES THIRD QUARTER RESULTS
For Immediate Release
Tuesday, October 25, 2005
Syntroleum Corporation
Tulsa – (918) 592-7900
www.syntroleum.com
Tulsa, OK(Syntroleum Corporation (NASDAQ: SYNM) today announced unaudited financial results for the third quarter ended September 30, 2005. Third quarter 2005 revenues were $0.7 million compared to $0.2 million during the third quarter of 2004. The increase in revenues is the result of additional joint development projects with the United States Government. A net loss of $12.1 million, or ($0.22) per share, was recognized for the third quarter of 2005, a decrease from the net loss of $12.5 million, or ($0.27) per share, for the third quarter of 2004. The Company has invested capital of $15.3 million in oil and gas activities and capital expenditures during 2005, an increase of $11.9 million over the same period last year. The Company’s cash balance at September 30, 2005 was $82.0 million, reflecting the receipt of $81.5 million during the year from the sale of common stock and option and warrant exercises. This compares to a cash balance of $31.6 million at December 31, 2004.
Third Quarter 2005 vs. Third Quarter 2004
The Company incurred expenses for the quarter ended September 30, 2005 of $5.5 million related to research, development, and engineering programs, including $2.5 million of expenditures at its Catoosa Demonstration Facility, compared to $6.0 million for these activities in the quarter ended September 30, 2004. General, administrative and other expenses for the quarter ended September 30, 2005 were $4.9 million, compared to $5.7 million of general, administrative and other expenses for the same period last year. Non-cash charges for the quarter ended September 30, 2005 totaled $3.3 million, including $2.8 million in depreciation, depletion, amortization, and impairment expense and $0.5 million of non-cash equity compensation, compared to $1.4 million of non-cash items for the quarter ended September 30,
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Syntroleum Announces Third Quarter Results
October 25, 2005
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2004, consisting of $1.2 million of non-cash equity compensation and $0.2 million of depreciation, depletion, amortization, and impairment expense.
Nine Months ended September 30, 2005 vs. Nine Months ended September 30, 2004
Revenues for the nine months ended September 30, 2005 were $7.2 million, including $5.8 million related to fuels delivery, compared to $6.3 million for the same period in 2004. Revenues in the 2004 period included $5.7 million relating to the liquidation of catalyst materials. The Company incurred a net loss of $24.3 million, or ($0.46) per share, for the nine months ended September 30, 2005, a decrease of $6.4 million compared to the same period in 2004 when a loss of $30.7 million, or ($0.72) per share, was incurred.
The Company incurred expenses for the nine months ended September 30, 2005 of $14.6 million related to research, development, and engineering programs, including $7.0 million of expenditures at its Catoosa Demonstration Facility, compared to $17.2 million, including $10.2 million of expenditures at the Catoosa Demonstration Facility, for these activities during the nine months ended September 30, 2004. General, administrative and other expenses for the nine months ended September 30, 2005 were $17.2 million, compared to $15.8 million of general, administrative and other expenses for the same period last year. Non-cash items for the nine months ended September 30, 2005 totaled $8.0 million, including $4.2 million in depreciation, depletion, amortization, and impairment expense and $3.8 million of non-cash equity compensation, compared to $3.6 million of non-cash items for the nine months ended September 30, 2004, consisting of $0.4 million for depreciation, depletion, impairment, amortization, and impairment expense and $3.2 million of non-cash equity compensation. Other income for the nine months ended September 30, 2005 was $4.0 million, compared to $0.2 million of other income for the nine months ended September 30, 2004. The increase resulted from the bonus payment from other participants in the Company’s Aje field development project offshore Nigeria.
The Company’s third quarter 2005 conference call will take place Tuesday, October 25, 2005 at 10:00 AM EDT, during which Syntroleum’s senior management will discuss financial results for the period, progress on the Company’s commercial developments and other important activities. A web cast of the call will be available via the Internet by accessing www.syntroleum.com. Listeners should allow a few minutes for registration into the web site. A replay of this conference call will be available on the web site under the Syntroleum Investor Relations tab for a period of one year.
Syntroleum Corporation owns a proprietary gas-to-liquids process for converting natural gas into synthetic liquid hydrocarbons. The Company plans to use its GTL technology, as well as other third party gas processing technologies, to develop and participate in gas monetization projects in a number of global locations.
Syntroleum Announces Third Quarter Results
October 25, 2005
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(Tables Follow)
® “Syntroleum” is registered as a trademark and service mark in the U.S. Patent and Trademark Office. |
Syntroleum Announces Third Quarter Results
October 25, 2005
Page 4 of 7
Syntroleum Corporation and Subsidiaries |
Consolidated Statements of Operations (Unaudited) (Amounts in thousands, except per share data) |
| | Three Months Ended September 30, | | Nine Months Ended September 30, |
| | 2005 | | 2004 | | 2005 | | 2004 |
Revenue | | | | | | | |
| Joint Development | $ 616 | | $ 215 | | $ 7,044 | | $ 612 |
| Catalyst Materials | - | | - | | - | | 5,674 |
| Gas Sales | 9 | | - | | 70 | | - |
| Other | 92 | | - | | 98 | | 3 |
| | | | | | | | |
| Total Revenue | 717 | | 215 | | 7,212 | | 6,289 |
Operating Expenses | | | | | | | |
| Catalyst Materials Cost | - | | - | | - | | 3,033 |
| Lease Operating Expenses | 2 | | - | | 16 | | - |
| Catoosa Demonstration Facility | 2,456 | | 3,764 | | 7,039 | | 10,161 |
| Pilot Plant, Engineering, and R&D | 2,980 | | 2,228 | | 7,586 | | 7,026 |
| Depreciation, depletion, amortization, and impairment | 2,787 | | 150 | | 4,168 | | 440 |
| G&A and Other (includes non-cash equity compensation of $552 and $1,234 for the three months ended September 30, 2005 and 2004, respectively, and $3,788 and $3,151 for the nine months ended September 30, 2005 and 2004, respectively.) | 4,955 | | 5,656 | | 17,163 | | 15,786 |
| | | | | | | | |
| Total Operating Expenses | 13,180 | | 11,798 | | 35,972 | | 36,446 |
| | | | | | | | |
Income (Loss) from Operations | (12,463) | | (11,583) | | (28,760) | | (30,157) |
| | | | | | | | |
| Investment and Interest Income | 785 | | 178 | | 1,731 | | 682 |
| Interest Expense | (430) | | (454) | | (1,275) | | (1,338) |
| Other Income (Expense) | 25 | | (616) | | 4,023 | | 169 |
| Taxes | - | | - | | - | | (12) |
| | | | | | | | |
Net Income (Loss) | $ (12,083) | | $ (12,475) | | $ (24,281) | | $ (30,656) |
| | | | | | | | |
Earnings (Loss) Per Share (Basic and Diluted) | $ (0.22) | | $ (0.27) | | $ (0.46) | | $ (0.72) |
| | | | | | | | |
Weighted Average Shares Outstanding | 55,443 | | 45,729 | | 52,888 | | 42,474 |
| |
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Syntroleum Announces Third Quarter Results
October 25, 2005
Page 5 of 7
Syntroleum Corporation and Subsidiaries |
Consolidated Balance Sheets (Unaudited) (Amounts in thousands) |
| | | | | |
| | | September 30, 2005 | | December 31, 2004 |
Assets | | | | |
| Cash and Cash Equivalents | | $ 82,024 | | $ 31,573 |
| Restricted Cash | | 3,776 | | 221 |
| Other Current Assets | | 2,937 | | 2,162 |
| Property and Equipment, net | | 13,353 | | 7,733 |
| Total Non-Current Assets | | 3,050 | | 3,062 |
| | | | | |
| Total Assets | | $ 105,140 | | $ 44,751 |
| | | | | |
Liabilities and Stockholders’ Equity |
| Current Liabilities | | $6,095 | | $ 5,458 |
| Deferred Revenue (current) | | - | | 5,873 |
| Convertible Debt | | 25,496 | | 24,221 |
| Other Non-current Liabilities | | 93 | | 115 |
| Joint Venture | | 3,229 | | - |
| Deferred Revenue (non-current) | | 21,405 | | 21,702 |
| Minority Interests | | 706 | | 706 |
| | | | | |
| Total Liabilities | | 57,024 | | 58,075 |
| | | | | |
| Total Stockholders’ Equity | | 48,116 | | (13,324) |
| | | | | |
| Total Liabilities and Stockholders’ Equity | | $ 105,140 | | $ 44,751 |
| | | | | |
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Syntroleum Announces Third Quarter Results
October 25, 2005
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Syntroleum Corporation and Subsidiaries |
Consolidated Statements of Cash Flows (Unaudited) (Amounts in Thousands) |
| Nine Months Ended September 30, |
| 2005 | | 2004 |
CASH FLOWS FROM OPERATING ACTIVITIES: | | | |
Net Income (Loss) | $ (24,281) | | $ (30,656) |
Adjustments to reconcile net income (loss) to net cash flows from operating activities: | | | |
| Depreciation, depletion, amortization, and impairment | 4,168 | | 442 |
| Foreign currency exchange | (298) | | (494) |
| Non-cash compensation expense | 3,790 | | 3,151 |
| Non-cash interest expense | 1,275 | | 1,338 |
| Non-cash settlement of Australia liability | - | | 408 |
| Gain on sale of assets or interest in projects | (3,558) | | (23) |
| Changes in assets and liabilities | (4,814) | | (5,420) |
| | Net cash flows used in operating activities | (23,718) | | (31,254) |
| | | |
CASH FLOWS FROM INVESTING ACTIVITIES: | | | |
Purchase of property and equipment | (909) | | (778) |
Oil and gas related expenditures | (14,374) | | (2,633) |
Proceeds from note receivable | 5 | | - |
Proceeds from interest in project | 9,440 | | - |
Change in restricted cash | (3,555) | | 22,568 |
Proceeds from investments | - | | 121 |
| | Net cash flows used in investing activities | (9,393) | | 19,278 |
| | | |
CASH FLOWS FROM FINANCING ACTIVITIES: | | | |
Proceeds from sale of common stock and option and warrant exercises | 81,487 | | 31,765 |
Joint venture acquisition costs | (500) | | - |
Proceeds from joint venture | 3,178 | | - |
Proceeds from issuance of convertible debt | - | | 682 |
Proceeds from settlement of note receivable from officer | - | | 100 |
Settlement of Australia Liability | - | | (14,477) |
Purchase and retirement of treasury stock | (599) | | (238) |
| | Net cash flows provided by financing activities | 83,566 | | 17,832 |
| | | |
FOREIGN EXCHANGE EFFECT ON CASH | (4) | | (95) |
NET CHANGE IN CASH AND CASH EQUIVALENTS | 50,451 | | 5,761 |
CASH AND CASH EQUIVALENTS, beginning of period | 31,573 | | 32,695 |
CASH AND CASH EQUIVALENTS, end of period | $ 82,024 | | $ 38,456 |
