Probex Outlines Expected Economics for Wellsville, Future Plants; Forecasts Strong Returns
HOUSTON–(BUSINESS WIRE)–May 16, 2002
Probex Corp. (AMEX:PRB), an energy technology company, today said that it expects revenues from its planned Wellsville, Ohio, reprocessing plant to be approximately $50 million annually, based on a West Texas Intermediate crude oil price of $22.50 per barrel, with margins of over 50%.
Speaking at the Houston Capital Conference of the National Investment Banking Association (NIBA), Probex Chairman, President and Chief Executive Officer, Charles M. Rampacek, said: “Earnings before interest, taxes, depreciation and amortization (EBITDA) are expected to vary from approximately $24 million to in excess of $30 million a year depending on crude oil prices.
“A key economic driver for Wellsville and other future facilities,” Rampacek added “is low feedstock costs. Probex anticipates that it will produce high quality lubricating base oils and associated products for less than crude oil refineries pay for feedstock alone. Spent lubricating oils, such as motor oil, are our feedstock. So our primary feedstock cost becomes gathering the used oils and transporting them to our plants. And because our reprocessing facilities are not complex, our operating costs are also expected to be low. Altogether, we anticipate that our total cash costs per barrel will be approximately one half that incurred per barrel for a crude oil refiner.
Rampacek noted: “The total project cost of Wellsville is expected to be approximately $120 million. This includes all the engineering and construction costs, the start-up costs, the technology and market risk coverage facility, interest during construction, debt service reserve and all applicable legal costs and fees associated with the project financing. Subsequent plant costs are expected to be significantly lower as a result of lower design and engineering costs, elimination of the technology and market risk coverage facility, and much lower fees and expenses associated with the financing.”
Rampacek added: “We have an enormous market opportunity available to us. In the United States alone, there are currently 1.4 billion gallons of transportation lubricating oils that are sold annually. About 1 billion gallons of spent lubricating oil are collected annually in the United States. Once collected, about 80% of that oil is sold to utility plants, industrial plants, and asphalt plants where it is burned to generate heat and electricity. Only about 20% of spent lubricating oil is eventually reprocessed to produce lower quality lubricating oils and associated products. That is because there are very few reprocessors in the United States and we do not believe that there are any reprocessors that are currently capable of producing base oils that meet the new high quality motor oil standards. Our new Probex technology meets the new high quality standards, without creating waste by-products” he told the NIBA gathering.
“Our plan is to build 5 similar sized plants in the U. S. during the next several years,” Rampacek noted. “We will strategically locate these near high population areas in order to take advantage of the low cost spent oil feedstock. We have completed evaluations for Northeast and Gulf Coast locations and are currently negotiating an option on the land for the Gulf Coast site. Although the U. S. is our primary focus for the next 3-4 years, there are substantial opportunities throughout the world. As an example, there is a pending bill under which the European Union countries would require 25% reprocessed oil in every liter of motor oil sold. There are also some countries, such as France and Germany, that are providing subsidies for plants that reprocess spent oils. In addition, Probex is continuing to actively pursue a joint venture opportunity to construct our first plant in Europe. If successful in developing this joint venture, the European facility would be our second plant, starting up directly after our Wellsville plant. We have also received other potential opportunities and expressions of interest from companies located in other parts of the world. We plan to actively pursue these opportunities once we have successfully constructed, started-up, and demonstrated our first world-scale commercial plant in Ohio,” he said.
Probex is a Dallas-based energy technology company that specializes in the production of high quality lubricating base oils and associated products from collected spent lubricating oils. The Company’s patented, environmentally beneficial ProTerra(R) technology has demonstrated unparalleled advantages in the highly economic creation of premium quality base oils capable of meeting new motor oil standards without creation of waste by-products. The goal of Probex is to become a world leader in the production of premium quality lubricating base oils and associated products from collected spent lubricants through timely commercialization of its ProTerra technology. For more information about Probex, visit the company’s web site at: www.probex.com.
THIS PRESS RELEASE DOES NOT CONSTITUTE AN OFFER TO SELL OR SOLICITATION OF AN OFFER TO PURCHASE OUR SECURITIES. ANY OFFER OF SECURITIES MADE BY US OR ANY OTHER PERSON ON OUR BEHALF MAY BE MADE ONLY PURSUANT TO MATERIALS AND OTHER OFFERING DOCUMENTS PREPARED BY US AND DELIVERED TO QUALIFIED PURCHASERS EXPRESSLY FOR USE IN CONNECTION WITH SUCH PLACEMENTS, AND ANY SUCH OFFER SHALL BE MADE IN COMPLIANCE WITH, OR PURSUANT TO AN EXEMPTION FROM, SECTION 5 OF THE SECURITIES ACT OF 1933. THE SECURITIES OFFERED BY THE COMPANY WILL NOT BE REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, AND MAY NOT BE OFFERED OR SOLD IN THE UNITED STATES ABSENT REGISTRATION OR AN EXEMPTION FROM REGISTRATION REQUIREMENTS.
Certain statements contained herein may be considered “forward-looking statements” as defined in the Private Securities Litigation Reform Act of 1995. These statements are based upon the belief of the Company’s management, as well as assumptions made beyond information currently available to the Company’s management, and may be, but not necessarily are, identified by such words as expect, plan, anticipate, target, and goal. Because such “forward-looking statements” are subject to risks and uncertainties, actual results may differ materially from those expressed or implied by such forward-looking statements. Factors that could cause actual results to differ materially from the Company’s expectations include financial performance; conditions in the lubricating oil industry; the Company’s ability to obtain financing for working capital and its anticipated acquisitions and plant development; failure to successfully or timely execute or conclude contracts, agreements and reports; market acceptance of the Company’s products and technologies; changes in local, national or global economic conditions, and similar variables. Also refer to the cautionary statements contained in the most recent Forms 10-KSB and 10-QSB which may be obtained under “Investor Relations-SEC Filings” on the Company’s web site or by writing or calling the Company at One Galleria Tower, 13355 Noel Rd., Suite 1200, Dallas, TX 75240; (972) 788-4772.
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