Genoil Inc.
TSX VENTURE : GNO
OTC Bulletin Board : GNOLF

Genoil Inc.

April 06, 2011 06:01 ET

Genoil Announces Revised Cost Models, Increased IRRs and Closing of Private Placement

TORONTO, ONTARIO--(Marketwire - April 6, 2011) - Genoil Inc. (TSX VENTURE:GNO)(OTCBB:GNOLF) ("Genoil") has recently completed a profitability test for a Middle Eastern client, and is pleased to update its profitability model based on the significant expansion of profit spreads. The spreads between heavy oil and light oil have been steadily increasing, which has resulted in an increase in the profit margins for Genoil's upgrading business prospects. This will open up additional opportunities across the US and internationally as well. 

In June 2008, prior to the fall of Lehman Brothers and commodities crash, the spread between heavy oil and light oil was $30.91 per barrel. Further, the IRR was 44.6% after debt repayment and 55.3% before repayment.

In November 2010, the spread was $20.54 per barrel with an IRR after debt repayment of 25.9% and an IRR before debt repayment of 36.3%. This was considerably better than December of 2008 after the crash, but still significantly below June 2008's numbers.

Finally, in March 2011, the numbers are beginning to return to June 2008 levels. The spread is $27.39 per barrel, with an IRR after debt repayment of 39.4% and an IRR before debt repayment of 50.1%.

Genoil's recent client test results are based on feedstock of 100,000 barrels per day (BPD) Heavy Crude Oil (API 15.6), and GHU product of 91,600 BPD. Additionally, the results assume a bank loan of $700 million with five years repayment, no interest, income tax of 0% (assuming they won't charge taxes in the Middle East), operating cost of $3.23 a barrel based on the GHU zero waste formula, and a use of 20 years.

On this recent feedstock for a Middle Eastern client, Genoil IRR's have increased from 25.9% to 39.4% based on the widening spreads between heavy oil and light oil. 

The rates of returns under different scenarios are detailed in the table below:

 
     Genoil Model  
  Mar-11 Nov-10 Jun-08
Spread ($/bbl) 27.39 20.54 30.91
Fixed Cost (MM US$) 700 700 700
       
IRR – after debt repayment 39.40% 25.90% 44.60%
IRR – before debt repayment 50.10% 36.30% 55.30%

The demand for oil reached 88 million barrels a day in the fourth quarter based on dynamic Asian demand, the highest demand in history, and is growing greatly this year with the Japanese nuclear situation and the Libyan civil war. Irrespective of the latter two crises, the demand for oil this year should drive oil prices to new highs, and further widen spreads between light and heavy oil. 

Genoil is also pleased to announce that it has closed a non-brokered private placement, pursuant to which it has issued an aggregate of 1,575,000 units at a price of US$0.20 per unit to raise aggregate gross proceeds of US$315,000. Each unit is comprised of one common share in the capital of Genoil (a "Share"), and one Share purchase warrant (a "Warrant") exercisable for two years following the date of issue at an exercise price of US$0.20.

The common shares and warrants issued in connection with the private placement are subject to a statutory four month hold period.

The private placement has received the conditional approval of the TSX.V. The securities to be issued by the Corporation have not and will not be registered under the United States Securities Act of 1933, as amended (the "1933 Act"), or the securities laws of any state of the United States, and may not be offered or sold in the United States absent registration or an applicable exemption therefrom under the 1933 Act and the securities laws of all applicable states.

About Genoil Inc.:

Genoil is a publicly traded Canadian engineering technology development company headquartered in Edmonton Alberta, with offices in Calgary, Sherwood Park, New York City, Constanta Romania, and Dubai & Abu Dhabi. Genoil offers an array of clean tech petroleum technologies. Committed to sustainability, Genoil operates two major research facilities located Canada and Romania. It owns and operates a world class 10 bpd hydroconversion upgrader located on 147 acres, complete with independent water electrolysis unit for high purity hydrogen supply, hydrogen compressor, electrical substation, fired heater, low-pressure separator for vapor-liquid separation, and a PLC for automated operational control in Two Hills, Canada. Genoil's research and development (R&D) personnel develop cutting edge methods and new breakthrough patents to find solutions to the world's complex energy problems. Genoil also owns several patents related the GHU, its water purification, well testing, sand cleaning technologies, and environmental remediation, and centrifuge technologies. Genoil has been successful in patenting these new environmental technologies and with a most recent patent on its sand cleaning technology. Genoil's shares are listed on the TSX Venture Exchange under the symbol GNO, as well as on the OTC Bulletin Board under GNOLF.

For more information on Genoil Inc. visit www.Genoil.ca.

ADVISORY: Certain information regarding the company, including management's assessment of future plans, strategic partnerships, operations, financing outcomes and the ability to negotiate a definitive agreement on terms acceptable to both parties may constitute forward-looking statements under applicable securities law and necessarily involve risks associated with an oil and gas technology development corporation, including competition from other technologies and the ability to access sufficient capital from internal and external sources. As a consequence, actual results may differ materially from those anticipated. The Corporation assumes no obligation to update the forward-looking statements or to update the reasons why actual results could differ from those contemplated by the forward-looking statements. Additionally, statements included in this release may constitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Such statements involve a number of risks and uncertainties such as competitive factors, technological development, market demand, and the company's ability to obtain new contracts and accurately estimate net revenues due to variability in size, scope and duration of projects, and internal issues. Further information on potential risk factors that could affect the company's financial results can be found in the company's disclosure materials filed on SEDAR at www.sedar.com and with the Securities and Exchange Commission.

Neither TSX Venture Exchange nor its Regulation Services Provider (as that term is defined in the policies of the TSX Venture Exchange) accepts responsibility for the adequacy or accuracy of this release.

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