Velocys
SpeedRead

October 2014
It has been an eventful and successful quarter for Velocys. Our significantly oversubscribed equity raise of £52 million was a very substantial vote of confidence from the market. Construction of our first commercial plant, to be located at Waste Management's East Oak landfill site in Oklahoma, USA has begun, and Red Rock Biofuels, a customer of Velocys, was awarded a $70 million grant to construct a biomass-to-liquids plant in Oregon, USA. Our patent position and competitiveness were further enhanced at this critical juncture of the market's growth, through a ruling in the UK High Court that upheld the Velocys patents in suit, found competitor CompactGTL to be infringing both patents, and imposed an injunction restricting their activities.

With markets experiencing volatility of late, it's worth remembering that there are many local opportunities for smaller scale GTL, even with reducing gas-oil differentials at the major hubs. With over $100 million of cash on the balance sheet, the unwavering support of major commercial partners and its first commercial plant under construction, Velocys is truly the company at the forefront of smaller scale gas-to-liquids, poised to emerge over the next couple of years even stronger than it is today.

Please get in touch if you would like more information on any of the items highlighted in this newsletter. Email…

Roy Lipski, CEO

What's new?

Fund raising
On 29 September, Velocys announced that it had raised £52 ($85) million (excluding expenses) through an oversubscribed equity placing, priced at a slight premium to the market price. The new funds will be used to build on the Company's recent successes and maintain strong commercial momentum. Read more…The placing was approved by shareholders on 17 October. Read more…

Announcement of the fund raising coincided with the announcement of the Company's 2014 interim results. Read more…

Velocys wins IP injunction against CompactGTL
On 22 September the UK High Court ruled in favour of Velocys in the patent infringement case it brought against CompactGTL. Read more… At a subsequent hearing, the Court ordered an immediate injunction restraining CompactGTL's infringing activities and payment of Velocys' legal costs. The case is continuing with assessment of damages. In addition to being used at its Wilton plant in the UK, CompactGTL confirmed to the Count that the same infringing technology was the subject of its demonstration at Petrobras. Read more…

Velocys customer selected for $70m construction grant
Also in September, Red Rock Biofuels was selected to receive a $70 million grant through the US Department of Defense to construct a biomass-to-liquids plant in Oregon, USA that will incorporate Fischer-Tropsch technology from Velocys. Red Rock Biofuels, a subsidiary of IR1 Group, is experienced in constructing and operating commercial scale biofuel facilities. Read more… The project took another step forward in the same week with Southwest Airlines announcing that it will purchase about 3 million gallons a year of jet fuel produced by the plant.

On the conference circuit

Roy Lipski, CEO, presented "Smaller scale GTL - the next big idea" at The Oil Council North America Assembly in Houston, USA.

Neville Hargreaves, Business Development Director, presented "Nothing wasted; smaller scale GTL as a better option for associated gas" at the GGFR Regional Conference in Ashgabat, Turkmenistan (view presentation in English or in Russian).

Soumitra Deshmukh, Development Engineer, presented "Commercializing an advanced FT synthesis technology" at the 248th ACS National Meeting in San Francisco, USA.

In what was a busy conference season, members of the Velocys team also presented at: the MSW to Biofuels and Bio-products Summit in Orlando, USA; the Energy Frontiers International Gas-to-Market & Energy Conversion Forum in Pittsburgh, USA; the Gasification Technologies Conference in Washington DC; the CIS Gaschem conference in Moscow; and The Stock Market Show and SMi's Gas-to-Liquids events in London. Copies of all presentations can be viewed here.

Coming soon:
Michael Williams, VP Strategy & Marketing will be presenting at the AFPM International Lubricants and Waxes Conference in Houston, USA, 13-14 November.

In the press

The July/August issue of Gas Processing included a high-profile Q&A with Roy Lipski (a photograph of the Velocys Pilot Plant in Ohio featured on the cover of the same issue). In September, The Energy Makers Show broadcast a video interview with Roy. Other interviews with Velocys' CEO appeared in Natural Gas Daily, SNL Financial and Shares Magazine entitled "US small-scale GTL may be the next 'revolution'", "'Whole new industry': Velocys' 1st small-scale gas-to-liquids plant under construction" and "Velocys is all fired up".

In October Petroleum Review pronounced "Small is beautiful", while the Oil Council ran an article by Jeff McDaniel, Velocys' Commercial Director, entitled "Smaller scale GTL - the new business opportunity" explaining how smaller scale GTL presents both asset owners and mid-stream operators with a significant financial opportunity.

The UK High Court ruling on the patent infringement case was covered by around 60 publications to date, including; The Telegraph and The Times, as well as Upstream, GasWorld, Bloomberg and Shares Magazine.

BRR Media interviewed Roy Lipski regarding the fund raise, which has so far been covered in around 40 publications, including; Investors Chronicle, Gas Processing and Biomass Magazine.

The Advanced Biofuels Association released a video coinciding with the awarding of the $70 million grant to Red Rock Biofuels that features an interview with Jeff McDaniel. The grant announcement was covered in over 40 publications, including Biofuels Journal, with GreenAir reporting "Southwest Airlines agrees to purchase three million gallons per year" on 30 September.

In the investment community a number of publications e.g., The Telegraph, covered reports of Neil Woodford's Equity Income Fund naming their full list of holdings, which includes shares in Velocys. Analyst Numis Securities reiterated a "buy" rating on Velocys shares with a 333p price target. Financial analyst Macquarie has initiated coverage of Velocys with a base case target of 376p

Company news

Amongst our new employees this quarter are Process Engineer Dale Sperlin, who is based in our Houston office, and Todd James, who is a Paralegal based in Plain City, Ohio. Our process engineering team is now 15 strong.

In the UK, London-based Camarco became our financial communications adviser. Camarco is strengthening our relationships with and communications to the investment community. Their advice and assistance was a significant asset to the Company through September's round of fund raising.

Think Smaller. Velocys is changing the way fuels are made.
Contact us for further information

General enquiries: info@velocys.com
Press enquiries: press@velocys.com
Careers: careers@velocys.com
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Velocys plc trades through its subsidiaries Velocys Technologies Ltd, 115e Olympic Avenue, Milton Park, Abingdon, OX14 4SA, UK (Registered in England No. 5258554) and Velocys, Inc., 7950 Corporate Blvd, Plain City, Ohio 43064, USA (Registered in the State of Delaware, USA). "Velocys", "Think Smaller" and the Velocys logo are trademarks of Velocys. © 2014 Velocys. All Rights Reserved.