SOURCE: PetroSun, Inc.

October 09, 2007 07:30 ET

PetroSun Issues Shareholder Update

PHOENIX, AZ--(Marketwire - October 9, 2007) - PetroSun, Incorporated (PINKSHEETS: PSUD) issued the following responses to shareholder questions regarding corporate activities.

Alternative Energy Division

PetroSun has recently formed a number of wholly owned subsidiaries. Is PetroSun licensing its algae-to-biofuels technology to itself or are other parties involved?

PetroSun has formed PetroSun BioFuels Mexico, PetroSun BioFuels Brazil, PetroSun BioFuels Australasia and PetroSun BioFuels China. The Company did indeed license the algae-to-biofuels technology to each of the respective wholly owned subsidiaries, but their purpose is to enter into joint ventures within each respective geographical region with PetroSun BioFuels retaining full ownership of the technology. The joint venture partners will earn their participation by providing the capital required to construct the algae farms and algal oil extraction plants.

The Company has announced our initial partner in PetroSun BioFuels Mexico as being Grupo Santa Maria and Icon Energy in PetroSun BioFuels Pty, Ltd (Australia). The identification of our partners in Brazil and China will be announced in the near future upon the completion of the final documents.

PetroSun announced an algae-to-biofuels demonstration program to be conducted at their pilot plant in Opelika, Alabama. Did this occur and what were the results?

PetroSun BioFuels and AL-G-BAMA did have demonstration sessions at its pilot plant and will conduct other sessions in the future. The demonstrations were positive and the Company expects to enter into algal oil feedstock supply agreements with several of the attendees in the near future.

The Company received a gas chromatograph analysis from Midwest Research Institute that indicated the vast majority of the raw algal oil sample supplied by PetroSun BioFuels is comprised of C18 fatty acids with no appreciable levels of linolenic acid. PetroSun BioFuels views these results as being favorable for biodiesel production.

When, where and in what volumes does PetroSun anticipate the commencement of its commercial algae-to-biofuels operations?

The Company will locate its initial domestic operations during 2008 in Alabama, Louisiana and Arizona. The algae farms and extraction plants are designed to produce a minimum of 60 million gallons of algal oil annually per facility. PetroSun is currently seeking to secure the capital required to construct these facilities in the form of debt and/or equity.

The Company announced that it will index its algal oil product to the market price of crude oil. As an example, based upon a crude oil price of $75 per barrel, the algal oil product will approximate $1.79 per gallon or twenty-four cents per pound. This scenario would generate gross annual revenues per facility of $107,400,000 for the algal oil production. Additional revenues would be generated from the conversion of the algae biomass to ethanol or as livestock feed.

The Company announced the formation of PetroSunBioFuels Refining. Does PetroSun intend to engage on a large scale basis the refining of its algal oil feedstock?

The Company does intend to participate in a refinery to be located in Arizona. However, our business model is to provide algal oil feedstock to biodiesel refiners in the United States and select foreign markets.

Oil and Gas Division

What is the status of the Arizona oil, gas and helium exploration program?

PetroSun has contracted for the acquisition of two drilling rigs to be utilized for exploration and development of company owned leases in Arizona and New Mexico. The Company anticipates the completion of the equipment financing and rig mobilization during the fourth quarter of 2007. The primary oil and gas prospects are located in the Holbrook Basin of Apache County, Arizona and the San Juan Basin of New Mexico. PetroSun controls approximately one million acres of oil and gas rights within these regions with a net revenue interest of 81.25%.

The Company has entered into an agreement with a Colorado-based exploration company to drill a test well on company owned leases in Mohave County, Arizona. A future press release will detail this transaction.

What is the status of the Australian oil and gas exploration program?

The window of opportunity to drill prior to the wet season in the Canning Basin of Western Australia was fast becoming an obstacle and the decision was reached to postpone the commencement of the exploration program until the spring of 2008. At that time the drilling rig and associated equipment and services will be readied for immediate deployment. The Company considers this project a priority due to the enormity of the potential of the seismic generated prospects located within Exploration Permits 417 and 442, but the potential hazards and additional expenses related to drilling during the wet season prevented the drilling of the Lanagan A as scheduled.

Additional information on the Arizona and Australian oil and gas exploration programs can be found on our company website at www.petrosuninc.com under Prospects and Projects.

Final Question

Does PetroSun intend to become a fully reporting company?

Yes. The 2007 2Q financial statements will be filed by the end of October and will be posted on Pink Sheets and the corporate website. The Company has been engaged in discussions with legal counsel and other parties regarding the upgrading of our public company market status.

About PetroSun

PetroSun's operations include oil and gas exploration, development and production, algae-to-algal oil alternative fuels production and oilfield services. The oil and gas division is focused on the exploration of the Canning Basin of Western Australia and the Holbrook Basin of Arizona. The Company will continue the development of oil and gas reserves in Louisiana. The alternative fuels division is in the pre-commercial stage of the algae-to-biofuels production technology. The Company plans to establish algae farms and algal oil extraction plants in Alabama, Arizona, Louisiana, Mexico, Brazil and Australia during 2007/2008. The algal oil product will be marketed as feedstock to existing biodiesel refiners. The oilfield services division is in the process of upgrading our capabilities to support the exploration, development and production operations. PetroSun is headquartered in Scottsdale, Arizona with field offices in Shreveport, Louisiana and Opelika, Alabama. For more information about PetroSun visit the company's website at http://www.petrosuninc.com.

Except historical matter contained herein, matters discussed in this news release are forward-looking statements and are made pursuant to the safe harbor provision of the Private Securities Litigation Reform Act of 1995. These forward-looking statements reflect assumptions and involve risks and uncertainties, which may affect the Company's business and prospects and cause actual results to differ materially from these forward-looking statements.

Contact Information

  • Contact:
    PetroSun, Inc.
    Investor Relations
    Email Contact
    (480)-425-4290