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Message: Provides Feasibility Study for HYT Upgrading Project
| January 12, 2009 | |
| Genoil Inc. Provides Feasibility Study for HYT Upgrading Project | |
|
CALGARY, ALBERTA--(Marketwire - Jan. 12, 2009) - Genoil Inc. (TSX VENTURE:GNO)(OTCBB:GNOLF) provides updated financial projections for its upgrading project with Haiyitong Inc. ("HYT") in China. This release will be the basis of a presentation management will discuss on an investor conference call later today. The details of the call are listed at the end of this release. The assumptions provided in this news release pertain to the HYT project, are a Chinese government price controlled model and therefore have different economics than projects in other locations. Cost models for Genoil HYT project Background on HYT Project Genoil and HYT have agreed to build a 19,500 bpd Genoil Hydroconversion Upgrader ("GHU(R)") unit. The purpose of this $170 million project is to enable the refinery to use lower cost feedstock. Instead of buying light, sweet crude to refine, HYT will be able to process a mixture of low-value existing refinery residues plus cheaper heavy sour crude oil. It is expected that this process will result in significant cost savings to HYT. The purpose of this release is to demonstrate the economics of the HYT project to prospective financial partners and shareholders as Genoil continues the process of financing the project. Recent uncertainty in the world's economic outlook has created extremely volatile oil product/feedstock prices. Therefore, Genoil has analyzed a wide range of oil/feedstock prices, using data from October 28, 2008 and December 8, 2008. During this time the price of West Texas Intermediate ("WTI"), the world market benchmark for crude oil prices, has fallen by 30%, from $62.80 per barrel to $43.69. Still, the Company's GHU project with HYT remains extremely profitable. Overall Economics of HYT Project
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TABLE 1 World
HYT Prices at HYT Prices at Market Prices
28-Oct-08 8-Dec-08 8-Dec-08
-------------------------------------------------------------------------
US$ Per US$ Per US$ Per
(Million) barrel (Million) barrel (Million) barrel
-------------------------------------------------------------------------
Product sales(i) $530.9 $82.22 $519.7 $80.47 $330.6 $51.19
Feedstock $330.5 $51.18 $275.7 $42.69 $219.4 $33.49
------ ------ ------ ------
Gross profit $200.4 $31.03 $244.0 $37.78 $111.2 $17.70
Operating expenses $ 10.3 $ 1.60 $ 10.3 $ 1.60 $ 10.3 $ 1.60
Depreciation $ 16.8 $ 2.60 $ 16.8 $ 2.60 $ 16.8 $ 2.60
------ ------ ------ ------ ------ ------
Profit before 173.3 $26.83 $216.9 $33.59 $ 84.1 $13.02
interest & taxes
Income tax (25%) $ 43.3 $ 6.71 $ 54.2 $ 8.40 $ 21.0 $ 3.44
------ ------ ------ ------ ------ ------
Net profit before $130.0 $20.12 $162.7 $25.19 $ 63.1 $ 9.77
interest
Cash profit (before $146.8 $22.73 $179.5 $27.79 $ 79.9 $12.37
interest &
depreciation)
Project returns
IRR - after debt 57% 68% 30%
repayment
IRR - before debt 63% 74% 37%
repayment
Bank debt $ 70.0 $ 70.0 $ 70.0
Interest rate 15% 15% 15%
on bank debt
Term of debt (years) 5 5 5
Annual repayment $ 20.9 $ 20.9 $ 20.9 $ 3.24
Note: (i) Product sales per barrel are per feedstock barrel
HYT Project Economics
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TABLE 2 World
HYT Prices at HYT Prices at Market Prices
28-Oct-08 8-Dec-08 8-Dec-08
------------------------------------------------------------
Quantity
(000 US$ Per US$ Per US$ Per
Products bbls) (Million) barrel (Million) Barrel (Million) barrel
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Gasoline 106 $ 9.7 $91.25 $ 8.2 $77.33 $ 3.9 $36.77
Light Diesel 1,883 $173.7 $92.25 $170.6 $90.60 $102.6 $54.50
Heavy Diesel 1,360 $120.8 $88.85 $118.6 $87.26 $ 71.4 $52.49
Gas oil 2,533 $217.3 $85.78 $213.4 $84.25 $143.9 $56.80
Other products 134 $ 9.4 $70.61 $ 8.9 $80.48 $ 8.8 $51.20
Total products 6,016 $530.9 $88.26 $519.7 $86.39 $330.6 $54.96
Feedstock Prices: 6,458 $330.5 $51.18 $275.7 $42.69 $219.4 $ 33.4
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1. World Market prices for products are daily averages of spot prices as reported by the US Energy Information Agency ("EIA"), as follows: a. Gasoline: Singapore conventional premium gasoline; b. Light Diesel oil: Los Angeles, CA #2 Diesel c. Heavy Diesel Oil: Price assumed as same ratio HYT Heavy to Light Diesel Oil price d. Gasoil: Singapore Gasoil e. Other products: prices assumed same as HYT prices for other prices: condensate, sulphur, liquid ammonia, and liquid nitrogen. 2. HYT feedstocks are atmospheric residues and M180 Crude. World market price for feedstock taken as EIA reported average daily spot price for Mexico Maya (for weeks ended December 5 and December 12, 2008), lowest API crude reported regularly by EIA. Note that Mexico Maya is presumably a better quality and more valuable feedstock than HYT feedstocks, since its API is 22, while that of HYT's feeds are only 16.9 for atmospheric residues and 9.8 for M180. Hence, the price of Mexico Maya may overstate the world market price for feedstocks comparable to those at HYT, and hence understate the profitability of an investment using world market prices. The disparity in the price per barrel of oil, regarding the HYT model, compared to the world market price, reflects the Chinese price controls. While there is no certainty that these price supports will be sustained in the future, the Company's ROI at world market prices from this project would produce a 30 percent ROI. Genoil's Chief Executive Officer, Mr. David Lifschultz, stated, "This report is a very important milestone for the Company, as we now have public economic assumptions that demonstrate to HYT, investors and other potential customers the strong economics of Genoil's GHU. This report is the culmination of a lot of hard work and we are excited about its conclusions. "As you can see from the tables above, the HYT project and equally important Genoil's Hydroconversion Upgrader represents a significant opportunity to profitably upgrade heavy oil, despite current low oil prices. In fact, despite a 71% decline from the high WTI of $148.00, the economic model of Genoil's upgrading process is still significantly profitable. Future oil price fluctuations will continue. Despite this, Genoil's Hydroconversion Upgrader continues to offer Chinese customers compelling economic returns. "This is a very difficult environment to seek financing but we are confident that potential investors will understand the compelling economics of the project. We are working with banks, institutional investors and other financial firms to raise the $65.0 million needed to finance the HYT project." Mr. Lifschultz concluded, "One of the fascinating values of Genoil is our portfolio of technologies, which are on the verge of transforming from development to commercialization. We continue to progress in commercializing our GHU and further commercialize our oil/water separation technologies such as our Crystal Sea technology, which has installed units around the world operating flawlessly for over ten years in Romania, the United States for the armed forces, and Australia. Further, the Crystal Sea is approved by the United States Coast Guard for use in all United States ports and inland waterways. At present we are in discussion with traditional shipping customers and non-traditional customers for our Crystal Sea product line of oil water separation technology. We look forward to our future and the opportunity to discuss the Company with investors at our conference call later today." Conference Call Genoil will be hosting a conference call today, January 12, 2009 to discuss the report and to answer questions at 4:00 pm ET. To participate in the conference call, please dial 866-477-2375 (domestic) or 850-430-4175 (international) and use the pin confirmation of 5018 five to 10 minutes before the call is scheduled to begin. A replay will be available from January 12, 2009 until January 19, 2009. The number to hear the teleconference replay is 866-415-9493 (domestic) or 585-419-6446 (international). The replay pin is 5018. The conference call will also be broadcast live over the Internet. To listen to the call via the Internet, access Genoil's website at http://www.genoil.net/investor_relat... and follow the instructions at the web cast link. The archived web cast will be available shortly after the call on the Company's website. ABOUT GENOIL Genoil is an international engineering technology development company based in Alberta, Canada that develops innovative hydrocarbon, oil and water separation, and marine technologies. |
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