SOURCE: O2Diesel Corporation
January 11, 2008 09:04 ET
O2Diesel Provides Year End Update and Future Outlook
NEWARK, DE--(Marketwire - January 11, 2008) - O2Diesel Corporation (AMEX: OTD) today provided
a year end update on key milestones achieved during 2007 coupled with an
outlook of future developments in 2008.
"In many ways 2007 was a pivotal year in the company's commercial
progress," said Alan Rae, O2Diesel's President and CEO. "In Asia, our
partnership with Energenics was strengthened as they have committed to
becoming our third largest shareholder behind Abengoa and UBS London with a
commitment to expand the market as rapidly as possible. In Europe,
through our partnership with Abengoa, we commenced a trio of demonstrations
that we believe will lead to the development of potentially large
commercial markets in several key EU countries. Our partnership with Fair
Energy for certain South American markets saw the commencement of two
programs that are expected to deliver not only substantial commercial
opportunity but also substantial air quality and economic benefits in
several rapidly emerging economies."
Rae continued, "In the US, we focused on highly successful commercial
applications in the Port of Long Beach, doubling the use of O2Diesel™
and the successful culmination of our Department of Defense (DoD) testing
program which will allow us to move towards commercial adoption by the Air
Force of O28, the 28% renewable fuel we have developed specifically for the
DoD. To this end, a statement from the Air Force team undertaking the
technical evaluation of O28 made it clear that commercial adoption would
start in the third quarter of 2008. The scale of this adoption will depend
on the final extreme cold weather and humidity testing to be completed in
July. I can report that the cold weather testing at the Minot Air Force
base in North Dakota is progressing well."
"We are also continuing to pursue our strategy towards vertical integration
for the US market by working towards our objective to develop our own
ethanol supply. To this end, we are currently investigating several options
that will make the best long-term sense for the company and its
shareholders. The increased support for ethanol in the recent Energy bill
and, in particular, the expectation of a five fold increase in its use, we
believe further enhances the opportunity for O2Diesel in a market which, in
our opinion, will see a substantial increase in diesel fuel use as fuel
economy becomes an increasingly important political and economic issue."
Key milestones achieved by O2Diesel during 2007 included the following:
Strengthened Strategic Partnerships
-- In January, our Asian Distributor, Energenics, secured an agreement
to transition the entire fleet of 17,000 buses in the state of
Kanataka (India), using O2Diesel's Clean Fuel Technology.
-- In October, Energenics increased their investment in O2Diesel
through a new Joint Venture that secured their access to O2Diesel's
technology for multiple Asian Markets. This provided the comfort
they needed to invest millions of dollars in delivery
infrastructure in India and other markets. As part of this
transaction, Energenics placed an order for $2.2 million of O2DO5,
the company's proprietary fuel technology.
-- Commenced three demonstrations (two in Spain and one in France)
in municipal and commercial fleets. Additional demonstrations
are being negotiated in other EU market countries.
-- In March, we announced a strategic partnership and distribution
agreement with Fair Energy to jointly develop selected markets in
South America. This has led to several potential opportunities in
this market, the first two of which are at the demonstration
stage in Columbia and Paraguay.
-- The company has worked closely for the past year with ProEco
Energy to develop and build an ethanol facility in Belle Fourche,
South Dakota. The start-up of the project has been deferred due
to the currently unfavorable debt and equity markets for starch
based ethanol projects. Alternative options to developing this
site are being evaluated by the parties which may involve
additional strategic partners, selling the project or continuing
to construct the site according to the original plan. ProEco and
O2Diesel remain committed to working together on this project as
market conditions improve in the ethanol industry.
-- The company remains committed to its medium term objective to have
access to favorable ethanol pricing and supply for the US Market and
is currently evaluating several projects that would meet this
US Commercial Expansion:
-- Port of Long Beach expansion announced in October resulted in the
third large tenant to transition its fleet of heavy equipment to O2Diesel's
fuel technology. The operator converted over 120 pieces of diesel powered
heavy equipment to O2Diesel™ in order to meet CARB requirements to
reduce emissions at the Port. This expansion resulted in a doubling of the
company's sales at the Port.
-- U.S. Department of Defense extended and expanded its field testing of
O2Diesel's fuel technology to include a new fuel compound consisting of 28%
renewable sources by combining ethanol, biodiesel, the company's
proprietary additive and diesel fuel.
-- Testing for this new fuel blend, called O28, was expanded to two
additional Air Force bases in North Dakota and Arkansas to provide the
final testing for cold and humid weather climates.
-- The testing for O28 entered the final stages in December 2007 and is
expected to conclude in the summer of 2008 at which time the DoD will make
a definitive decision to place into full service the use of O2Diesel's fuel
technology on a fleet wide basis.
-- The company is expecting favorable results from the final DoD testing
phase and hopes to serve a key role in assisting the military to meet
Presidential Order 13423, which requires all agency fleets of more than 20
vehicles to reduce the fleet's total consumption of petroleum products by 2
percent annually through the end of fiscal year 2015, and increases the
total fuel consumption that is non-petroleum-based by 10 percent annually.
The DoD is the single largest user of distillate fuels in the continental
U.S. with purchases in FY06 exceeding $5.5 billion.
-- The company entered into a demonstration at Ben Franklin Transit to
demonstrate the benefits of O28 fuel in a municipal transit system. It is
expected that this demonstration will show increased engine durability and
reduced maintenance costs, along with significant emission reduction
-- The company expanded its Midwestern school bus demonstration project
under the CityHome™ program to include two small fleets in South Dakota
and two in Chicago.
-- Four new countries (France, Spain Columbia and Paraguay) added
O2Diesel™ to the available solutions for clean burning alternatives to
-- France - a demonstration with Veolia Transport (ex Connex) began in
September 2007, and is expected to be completed by July 2008 and has the
full support of the French governmental agencies DBIRE and DIREM.
-- India - Over 3,000 buses in the state of Karnataka in India are
already using O2Diesel fuel technology. Full expansion to 17,000 buses is
expected by the second quarter of 2008, with additional Indian states to
-- Spain - Long-term validation program in conjunction with TUSSAM
(Transportes Urbanos de Sevilla Sociedad Anonima Municipal) which operates
the collective urban transport system in Seville, Spain.
-- Columbia - following initial tests a large scale demonstration
preceding commercial adoption is expected to begin in the first quarter
of 2008 using the fuel blending pumps developed by Energenics for the
Secured Additional Funding and Financing:
-- Entered a common stock purchase agreement with Fusion Capital Fund II,
LLC to sell up to $10 million in common stock.
-- Closed $2.52 million in funding from a private placement with European
investors in July and August, 2007.
-- Senate Committee approved $1.6M in continued funding for the O2Deisel
fuel development and demonstration program in conjunction with the Air
Force. As discussed above, when finalized, O2Diesel fuels will help DoD
facilities meet Presidential Order 13423 and local air quality compliance
requirements while strengthening its commitment to reducing the USA's
dependency on foreign oil imports.
-- Strategic partner Energenics agreed to invest an additional $2 million
into O2Diesel to form a joint venture between both companies and to secure
the rights for distribution of O2Diesel's fuel technology for its expanding
markets in India and Asia.
Outlook for 2008
-- Department of Defense testing to conclude in the summer of 2008, with
a definitive decision to implement some level of use thereafter, provided
the conclusive results of testing continue to be positive.
-- Expansion of additional European territories with testing and
-- Veolia test pilot in France estimated to conclude in June 2008, with a
company-wide deployment decision thereafter.
-- U.S. ASTM certification anticipated by the end of 2008, which will
allow nationwide deployment of O2Diesel™ in fleet operated vehicles.
-- Continued investigation of bio-fuel manufacturing opportunities with
the aim of vertically integrating and controlling the costs of our major
-- Resolution of O2Diesel™ fuel registration with the EPA by the end
Alan Rae, President and CEO of O2Diesel Corporation further stated, "We are
pleased with our progress as a company over the past year. Although the
ethanol market weathered difficult times and survived, we remain steadfast
in our objective to develop our clean fuel technology as a viable
alternative fuel technology for improving the environment, while lessening
our dependence on fossil based fuels. Our objective for 2008 is
simple. Move the company toward achieving a positive cash flow financial
position by expanding our market presence both domestically and worldwide.
Focus on deploying our technology with key partners to shoulder the costs
while sharing the economic benefits. We expect that 2008 will be the
turning point for the company," continued Mr. Rae. "We will continue to
achieve major landmarks as a company and strengthen our key partnerships
with groups such as Energenics, Abengoa and Fair Energy. We expect that
the great efforts by these companies in partnership with O2Diesel will
allow us to succeed even further in the coming year."
More about O2Diesel: The Company and Its Fuel Technology
O2Diesel Corporation (AMEX: OTD) and its U.S. subsidiary O2Diesel, Inc., is
a pioneer in the commercial development of a cleaner-burning diesel fuel
alternative that provides exceptional performance and environmental
qualities for centrally fueled fleets and off-road equipment of all kinds.
Engineered and designed for universal application, O2Diesel™ is an
ethanol-diesel blend that substantially reduces harmful emissions without
sacrificing power and performance. Extensive independent and
government-recognized laboratory and in-use field tests have demonstrated
the effectiveness of O2Diesel™ -- the introduction of this
cost-effective, cleaner-burning diesel fuel is now underway in the United
States and other global markets. For more information please refer to
"Safe Harbor" Statement under the Private Securities Litigation Reform Act
of 1995: Statements in this press release regarding O2Diesel Corporation's
business which are not historical facts are 'forward-looking statements'
that involve risks and uncertainties. Forward-looking statements are
subject to a variety of risks and uncertainties which could cause actual
events or results to differ from those reflected in the forward-looking
statements, including, without limitation, the failure to obtain adequate
financing on a timely basis and other risks and uncertainties. Actual
results could differ materially from those projected in the forward-looking
statements, as a result of either the matters set forth or incorporated in
this report generally or certain economic and business factors, some of
which may be beyond the control of O2Diesel. These factors include adverse
economic conditions, entry of new and stronger competitors, inadequate
capital, unexpected costs, failure to gain product approval in the United
States or foreign countries for the commercialization and distribution of
our products, failure to capitalize upon access to new markets and failure
in obtaining the quality and quantity of ethanol necessary to produce our
product at competitive prices. O2Diesel disclaims any obligation
subsequently to revise any forward-looking statements to reflect events or
circumstances after the date of such statements or to reflect the
occurrence of anticipated or unanticipated events. "O2Diesel" and
"CityHome" are trademarks of O2Diesel Corporation.