Exhibit 99.1
 | PRESS | |
| RELEASE |
SYNTROLEUM ANNOUNCES FIRST QUARTER RESULTS
Continued Progress toward Project Execution
For Immediate Release
Tuesday, April 27, 2004
| Contact: | Ron Stinebaugh | |
| Syntroleum Corporation | ||
| Houston – (281) 873-6392 | ||
| Tulsa – (918) 592-7900 | ||
| www.syntroleum.com |
Tulsa, OK—Syntroleum Corporation (NASDAQ: SYNM) today announced unaudited financial results for the first quarter ended March 31, 2004. First quarter 2004 revenue increased to $5.9 million, including the sale of catalyst materials in the amount of $5.6 million and joint development revenues of $0.3 million, compared to total revenue of $0.8 million for the first quarter 2003. The company reported a net loss for the first quarter of $6.4 million, or ($0.16) per share. This compares to a net loss of $16.3 million, or ($0.48) per share, in the first quarter of 2003.
First quarter operating expenses totaled approximately $11.8 million, including $3.0 million for cost of sales of catalyst materials, $1.1 million related to project costs, and $1.9 million of expenditures related to the DOE Catoosa Project. This compares to first quarter 2003 operating expenses totaling $17.3 million, including $0.1 million relating to project costs and $10.8 million of expenditures on the DOE/Catoosa project. The DOE/Catoosa project is a 70-barrel per day gas-to-liquids plant constructed jointly by Syntroleum, the U.S. Department of Energy (“DOE”), and Marathon Oil Company (“Marathon”). The plant is supplying demonstration fuels to government vehicles and for engine testing under the DOE’s Ultra-Clean Fuels Program.
Operating expenses for the first quarter 2004 also include $1.8 million for research, development and engineering activities and $4.0 million for general and administrative and other costs. Operating expenses for the same quarter of 2003 also included $2.3 million for research, development and engineering activities and $4.1 million for general and administrative and other costs.
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Syntroleum Announces First Quarter Results
April 27, 2004
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The Company also announced today in a separate release that it has reached an agreement with the Commonwealth of Australia (“Commonwealth”) to resolve all issues between Syntroleum and the Commonwealth regarding the suspension of the Sweetwater Project. Under this agreement, the amount of funds that were advanced to the Company under the Commonwealth’s Strategic Investment Coordination program, and held in escrow since August 2000, are to be returned to the Commonwealth, as well as interest earned on these funds and associated costs since the announced suspension of the Sweetwater Project in September 2002. The escrow funds have been included on the Company’s balance sheet as Restricted Cash since the time they were advanced by the Commonwealth and offset by deferred revenue, debt and a deferred credit.
As a result of this agreement, the Company has reclassified these items as a Settlement Liability of $25.5 million at March 31, 2004, of which $24.0 million is held in escrow and included on the Company’s balance sheet as Restricted Cash. Beyond the $24.0 million in escrowed funds that will be returned during the second quarter, the Company will pay an additional $1.5 million to complete this settlement related to the interest and associated costs since suspension. The income statement impact of this settlement is approximately $610 thousand and is reflected as other income (expense) during the first quarter 2004 for the reimbursement of interest and associated costs, net of Australian taxes. Once the funds for this settlement are transferred back to the Commonwealth, our total assets and our total liabilities will be reduced equally by $25.5 million. The Commonwealth will retain its licensing rights to the Syntroleum Process and the Company expects to work with the Australian government to realize additional value through new GTL projects in Australia, including applications of the GTL Barge.
The Company’s cash balance at March 31, 2004 was $30.7 million compared to a cash balance of $14.6 million at March 31, 2003. These amounts do not include the restricted cash discussed above. The Company had a net cash outflow for the quarter ended March 31, 2004 of $2.0 million compared to a net cash outflow of $47 thousand for same period 2003. The net cash outflow during the 2003 period included a $3 million equity private placement. This also compares to a net cash outflow of $5.1 million during the first quarter of 2002. The decrease in net cash outflows over the past two years is the result of the monetization of real estate assets and reductions in operating costs.
“We are making substantial progress towards achieving our short, mid and long-term project development goals, all of which are focused on utilizing our competitive advantage in the monetizing of stranded natural gas. We have secured numerous leases and are reviewing others across the United States related to our short-term goal of processing stranded sub-quality gas,” stated Jack Holmes, the company’s President and Chief Operating Officer.
Syntroleum Announces First Quarter Results
April 27, 2004
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“During the recent quarter, Dragados Industrial and TI Capital have joined with us in signing a memorandum of understanding to advance Syntroleum’s previously announced barge mounted gas-to-liquids project (“GTL Barge”), thus furthering progress for our mid-term goal. Together with Syntroleum, the companies are extending technical work and completing a full feasibility study for the GTL Barge. Sovereign Oil & Gas has also united with Syntroleum to assist us in acquiring and developing worldwide stranded natural gas fields that would be ideal locations for a GTL Barge,” continued Mr. Holmes.
“A forward progression towards our long-term goals has occurred as well. The Catoosa GTL demonstration facility began operations and we recently announced our first shipment of diesel fuel from the facility. The facility contains all of the components required for a commercial scale plant. Syntroleum and Marathon are working closely at this facility as we continue to support Marathon in its GTL efforts. We are also supporting our various other licensees who are pursuing major international projects”, added Mr. Holmes. “Our current progress and continued focus on our short, mid and long-term project development goals has given us a solid foundation as a key player in the GTL and energy industries.”
The Company’s first quarter 2004 conference call will take place, Tuesday, April 27, 2004 at 4:00 PM 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 accessingwww.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.
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(Tables Follow)
This document includes forward-looking statements as well as historical information. Forward-looking statements include, but are not limited to, statements relating to GTL Barge projects, other proposed projects, sub-quality gas projects, the Sweetwater Project, the Syntroleum Process and related technologies and products. When used in this document, the words “anticipate,” “believe,” “estimate,” “expect,” “intent,” “may,” “project,” “plan” “should,” “could,” and similar expressions are intended to be among the statements that identify forward-looking statements.
Syntroleum Announces First Quarter Results
April 27, 2004
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Although Syntroleum believes that its expectations reflected in these forward-looking statements are reasonable, such statements involve risks and uncertainties and no assurance can be given that actual results will be consistent with these forward-looking statements. Important factors that could cause actual results to differ from these forward-looking statements include the potential that debt or equity financing for anticipated GTL or related NGL or oil and gas projects may not be available, the schedule for development, construction and operation of proposed GTL plants may not be met, anticipated appropriation and expenditure of federal monies does not occur, commercial-scale GTL 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 the Syntroleum Process 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, our ability to obtain interest in natural gas properties for our sub-quality gas monetization projects, the ability to implement corporate strategies, including the continued availability of adequate working capital, competition, intellectual property risks, Syntroleum’s ability to obtain financing and other risks described in the Company’s filings with the Securities and Exchange Commission.
® “Syntroleum” is registered as a trademark and service mark in the U.S. Patent and Trademark Office.
Syntroleum Announces First Quarter Results
April 27, 2004
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Syntroleum Corporation and Subsidiaries
First Quarter (Unaudited)
(Amounts in thousands, except per share data)
| First Quarter | ||||||||
| 2004 | 2003 | |||||||
Revenue | ||||||||
Joint Development | $ | 252 | $ | 795 | ||||
Catalyst Materials | 5,674 | — | ||||||
Other | 2 | — | ||||||
Total Revenue | 5,928 | 795 | ||||||
Operating Expenses | ||||||||
DOE Catoosa Project | 1,905 | 10,802 | ||||||
Project Costs | 1,058 | 87 | ||||||
Catalyst Materials Cost | 3,033 | — | ||||||
R&D/Engineering | 1,770 | 2,261 | ||||||
G&A and Other | 4,005 | 4,129 | ||||||
Total Operating Expenses | 11,771 | 17,279 | ||||||
Income (loss) from Operations | (5,843 | ) | (16,484 | ) | ||||
Investment and Interest Income | 384 | 312 | ||||||
Other Income (Expense) | (899 | ) | (287 | ) | ||||
Taxes | (12 | ) | (20 | ) | ||||
Income (loss) from Continuing Operations | (6,370 | ) | (16,479 | ) | ||||
Income from Discontinued Real Estate Operations | — | 159 | ||||||
Net Earnings (loss) | $ | (6,370 | ) | $ | (16,320 | ) | ||
Earnings (loss) Per Share (Basic and Diluted) | ||||||||
Earnings (loss) from continuing operations | $ | (0.16 | ) | $ | (0.49 | ) | ||
Earnings (loss) from discontinued real estate operations | $ | (0.00 | ) | $ | 0.01 | |||
Net Earnings (loss) | $ | (0.16 | ) | $ | (0.48 | ) | ||
Weighted Average Shares Outstanding | 39,133 | 33,694 | ||||||
Syntroleum Announces First Quarter Results
April 27, 2004
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Syntroleum Corporation and Subsidiaries
Consolidated Balance Sheets (Unaudited)
(Amounts in thousands)
March 31, 2004 | December 31, 2003 | |||||||
Assets | ||||||||
Cash and Cash Equivalents | $ | 30,704 | $ | 32,695 | ||||
Restricted Cash – Sweetwater Project | 24,039 | 24,010 | ||||||
Other Current Assets | 2,085 | 5,562 | ||||||
Total Non-current Assets | 5,132 | 4,968 | ||||||
Total Assets | $ | 61,960 | $ | 67,235 | ||||
Liabilities and Stockholders’ Equity | ||||||||
Current Liabilities | $ | 4,321 | $ | 5,620 | ||||
Liability Settlement – Sweetwater Project | 25,539 | — | ||||||
Current maturities of debt and deferred credit | — | 13,546 | ||||||
Current maturities of convertible debt | 22,959 | 21,842 | ||||||
Non-current Liabilities | 23 | 78 | ||||||
Deferred Revenue | 26,822 | 38,273 | ||||||
Minority Interests | 706 | 706 | ||||||
Total Liabilities | 80,370 | 80,065 | ||||||
Total Stockholders’ Equity | (18,410 | ) | (12,830 | ) | ||||
Total Liabilities and Stockholders’ Equity | $ | 61,960 | $ | 67,235 | ||||
Syntroleum Announces First Quarter Results
April 27, 2004
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Syntroleum Corporation and Subsidiaries
Cash Flow Statements (Unaudited)
(Amounts in Thousands)
Quarter Ended March 31, | ||||||||
| 2004 | 2003 | |||||||
CASH FLOWS FROM OPERATING ACTIVITIES: | ||||||||
Net Income (Loss) | $ | (6,370 | ) | $ | (16,320 | ) | ||
Income from discontinued real estate operations | — | (159 | ) | |||||
Income (Loss) from Continuing Operations | (6,370 | ) | (16,479 | ) | ||||
Adjustments to reconcile net income (loss) to net cash flows from operating activities: | ||||||||
Depreciation and amortization | 144 | 169 | ||||||
Foreign currency exchange | 202 | 1,769 | ||||||
Non-cash compensation expense | 818 | 2 | ||||||
Gain on sale of assets and real estate | (23 | ) | 7 | |||||
Changes in assets and liabilities | 2,410 | 4,359 | ||||||
Net cash used in continuing operations | (2,819 | ) | (10,173 | ) | ||||
Net cash provided by discontinued operations | — | 550 | ||||||
Net cash flows from operating activities | (2,819 | ) | (9,623 | ) | ||||
CASH FLOWS FROM INVESTING ACTIVITIES: | ||||||||
Purchase of property and equipment | (311 | ) | (48 | ) | ||||
Proceeds from sale of property and equipment | — | 23 | ||||||
Increase in restricted cash | 104 | (8 | ) | |||||
Proceeds from investments | 70 | 32 | ||||||
Net cash used in continuing operations | (137 | ) | (1 | ) | ||||
Net cash used in discontinued operations | — | — | ||||||
Net cash flows from investing activities | (137 | ) | (1 | ) | ||||
CASH FLOWS FROM FINANCING ACTIVITIES: | ||||||||
Proceeds from sale of common stock and option exercises | 199 | 3,000 | ||||||
Proceeds from convertible debt and long term debt | 1,117 | 8,342 | ||||||
Purchase and Retirement of Treasury Stock | (227 | ) | — | |||||
Net cash used provided by continuing operations | 1,089 | 11,342 | ||||||
Net cash used in discontinued operations | — | (60 | ) | |||||
Net cash flows from financing activities | 1,089 | 11,282 | ||||||
FOREIGN EXCHANGE EFFECT ON CASH | (124 | ) | (1,705 | ) | ||||
NET CHANGE IN CASH AND CASH EQUIVALENTS | (1,991 | ) | (47 | ) | ||||
CASH AND CASH EQUIVALENTS, beginning of year | 32,695 | 14,611 | ||||||
CASH AND CASH EQUIVALENTS, end of year | $ | 30,704 | $ | 14,564 | ||||