EXHIBIT 99.1
PRESS RELEASE
Penn Octane Corporation Signs April 2004 and May 2004 Contracts
For Sale of LPG to PMI
PALM DESERT, CA - MAY 6, 2004. Penn Octane Corporation (NASDAQ: POCC). On March
31, 2004, Penn Octane Corporation's (the "Company") contract for the sale of LPG
with P.M.I. Trading Limited ("PMI") expired ("Expired Contract"). The Expired
Contract provided for PMI to purchase a minimum monthly amount of LPG of
approximately 17.0 million gallons, subject to certain seasonal adjustments. On
March 31, 2004 and April 30, 2004, the Company and PMI entered into one-month
agreements for the sale of LPG for the periods April 1, 2004 through April 30,
2004 and May 1, 2004 through May 31, 2004, respectively ("Monthly 2004
Contracts"). Under the terms of the Monthly 2004 Contracts, the minimum amount
of LPG to be purchased by PMI is 13.0 million gallons. During the period April
1, 2004 through April 30, 2004, the actual amount of LPG purchased by PMI was
approximately 13.1 million gallons.
As previously disclosed in its recently filed 10-Q for the quarter ended January
31, 2004, the Company is continuing to negotiate for the extension and/or
renewal of the Expired Contract. There is no assurance that the Expired Contract
will be extended and/or renewed, and if so, that the terms will be more or less
favorable than those of the Expired Contract. Until the terms of a new long-term
contract are reached, the Company expects to enter into additional monthly
agreements similar to the Monthly 2004 Contracts.
The Company believes that the reduction of volume commitments for April 2004 and
May 2004 is based on additional LPG production by PEMEX being generated from the
Burgos Basin field in Reynosa, Mexico, an area within the proximity of the
Company's Mexican terminal facilities.
Mr. J.B. Richter, CEO stated that "the Company is still a low cost supplier of
LPG for the area and will continue to be a viable source for PMI. In the
meantime, the Company is taking steps to reduce costs related to its supply to
help offset any actual reduction in LPG purchases which may occur as a result of
the new contract currently being negotiated".
About Penn Octane Corporation
Penn Octane is a leading supplier of Liquefied Petroleum Gas (LPG) to
Northeastern Mexico. Penn Octane leases a 132-mile, six-inch pipeline which
connects from a pipeline in Kleberg County, Texas to its terminal in
Brownsville, Texas, which historically served as a trans-shipment point for
truck delivery to Mexico. Until the proposed spin off previously disclosed is
consummated, the Company will continue to own and operate a 21-mile pipeline
which connects the terminal in Brownsville to a storage and distribution
terminal in Matamoros, Tamaulipas. The Company also utilizes a 12-inch propane
pipeline which connects certain gas plants in Corpus
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Christi, Texas to its pipeline in Kleberg County. The Company's network is
further enhanced by the 155 miles of pipeline it has rights to use to transport
LPG to and from its storage facility of 500,000 barrels in Markham, Texas that
enhances the Company's ability to bring LPG to Northeastern Mexico.
Certain of these statements in this news release are forward-looking statements,
including statements related to future contracts with PMI and the overall supply
of LPG available in Mexico. While these statements reflect the Company's
beliefs, they are subject to uncertainties and risks that could cause actual
results to differ materially. These risks include lower than expected demand
for imports of LPG and/or lower than expected sales of LPG to PMI. If no
agreement for LPG sales to PMI is reached, or if an agreement is reached whereby
the terms, volumes and/or margins which are significantly less favorable than
historical amounts, the Company would suffer material adverse consequences to
its business, financial condition and results of operations. Additional
information regarding risks affecting the Company's business may be found in the
Company's most recent report on Form 10-Q and Form 10-K.
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