- UK-Based Natural Gas Business: Proved Reserves, Exploration Upside and Current Cash Flow -
NEW YORK, Feb. 14 /PRNewswire-FirstCall/ -- At the 18th annual Wall Street Analyst Forum today, U.S. Energy Systems, Inc. (NASDAQ:USEY) Senior Vice President Adam D. Greene will present the Company's strategy for, and progress in, unlocking growth in the "clean and green" energy markets. "We are very excited about the potential of our assets, and we have plans for substantial growth over the next two to three years," according to Mr. Greene.
Mr. Greene will present today at 9:50 AM ET, at The Princeton Club, on 43rd Street between 5th and 6th Avenues (4th Floor), in New York City. To access a live webcast of the event, including supplemental materials, visit: http://www.wsw.com/webcast/wsaf/usey/. The webcast will be archived at the same website for 90 days. The supplemental materials used today also may be accessed at http://www.useyinc.com/forinvestors_invpres.html.
In his presentation, Mr. Greene will discuss the Company's UK natural gas exploration and production business and its U.S. landfill gas business. In particular, Mr. Greene will provide a significant upward revision to the UK business's target gas production goals, and corresponding upward revisions to the revenue and cash flow it expects the UK business to produce. Mr. Greene also will highlight the growth potential and new growth catalyst in its U.S. landfill gas business.
USEY Corporate Strategy USEY's strategy is to grow shareholder value by acquiring and enhancing undervalued high potential "clean and green" energy assets. "We believe that the renewable energy, clean energy and power generation sectors are very attractive markets. We seek to leverage our combination of management expertise in operations, finance, acquisitions and turnarounds to pursue and execute against opportunities that can generate exciting returns for shareholders," according to Mr. Greene.
"Our two operating businesses offer excellent examples of our 'unlocking growth' strategy at work. Each business has a clear growth strategy and experienced management teams to execute them, and at the corporate level we are focused on supporting our operating business's efforts and seeking new undervalued opportunities," according to Mr. Greene's remarks for the conference.
UK Energy Systems Ltd. (UKES) "We expect our UK natural gas business, UKES, to be the primary growth driver of our Company over the next several years. It is an exciting business because it features proved gas reserves that analysis indicates has further upside, along with significant further exploration potential. Moreover, as the development work is taking place, the business already is generating current cash flow - and we expect that cash flow to increase significantly in about three years," according to Mr. Greene.
"We believe UKES's properties offer offshore-sized potential with an onshore operating cost structure," according to Mr. Greene. Located in the lightly explored Cleveland Basin, the 100,000 acres of gas properties - located in 6 fields (4 producing, 2 to be developed) - are an onshore extension of the Southern North Sea Gas Basin with geology similar to less accessible offshore fields. USEY recently announced that it expects reserve calculations for UKES's gas licenses will be upwardly revised from an estimated 46 Bcf of proved reserves and 16.4 Bcf of probable reserves (cumulative 62.4 Bcf) to reflect increased estimates.
During his discussion, Mr. Greene will announce that USEY has upwardly revised UKES's previously announced production target levels from 20 mmcfd to between 50 and 150 mmcfd, a level that USEY expects UKES to achieve by mid- 2009. UKES's current production is approximately 9 mmcfd; prior to USEY's acquisition of UKES in August 2006, gas production was approximately 2 mmcfd.
Having completed Phase One of its two-phase development strategy approximately three months ahead of schedule, UKES commenced Phase Two in January. Phase One focused on bringing the Company's 42MW gas-fired power plant to its full 9 mmcfd capacity. Phase Two of the project, scheduled to be completed in mid-2009, is focused on fully developing UKES's gas fields to increase gas production to between 50 and 150 mmcfd, and constructing a pipeline connecting the project with the UK's nearby wholesale and retail gas distribution systems to facilitate significantly higher capacity commercialization of gas from its fields. As part of Phase Two, the Company also will conduct 3D seismic mapping of its gas properties.
According to Mr. Greene, the Company has additional upside from existing fields. In addition, USEY believes that its Newton Prospect, an unexplored UK gas prospect, has the potential to contain between 350 Bcf and 1 Tcf of gas, with production potential of 100 mmcfd or more. The Newton Prospect's proved and probable reserves have not yet been defined.
Addressing UKES's current cash flow performance, which is based upon gas- fired power generation and sales to ScottishPower, Mr. Greene will confirm USEY's previous statements that it currently expects UKES to generate annual revenue of between approximately $16 million and $31 million from December 2006 through August 2009, and annual cash flows of between approximately $14 million and $29 million USEY during the same period.
Reflecting UKES's newly revised gas production targets, USEY expects that during the three years after August 2009, UKES's annual revenues will grow to between approximately $155 million and $212 million, and cash flow will be approximately $97 million annually. Previously, USEY projected average annual revenues for the same period of between approximately $59.2 million and $75.6 million, and average annual cash flow generation of at least $37 million.
U.S. Energy Biogas Corp. (USEB) The Company's U.S. renewable energy business, U.S. Energy Biogas Corp. (USEB), provides USEY with proven, long-term assets, gross margins in excess of 50%, and $10 million to $12 million of dependable free cash flow. Moreover, given attractive growth opportunities in the green energy sector and recent developments at USEB, USEY believes there is the opportunity to double USEB's cash flow in about three years, according to Mr. Greene.
"USEB is a proven, profitable business in an attractive market, and now it has a catalyst for growth," according to Mr. Greene's remarks. USEB recently won court approval of a settlement agreement with its secured lender that will enable USEY to unlock the equity value of USEB's business. As a result of the settlement, USEB has repaid $3 million in debt, plans to pay an additional $30 million later this week, and has begun the process of refinancing the $66 million in debt that will remain so that it can grow.
According to Mr. Greene's remarks, USEB is expecting an expedited exit from Chapter 11 in the first half of 2007; USEB pursued a Chapter 11 filing in late November 2006 in order to achieve the outcome of its recent settlement with its secured lender.
"We are very pleased that, for the first time in several years, USEY shareholders are positioned to benefit from USEB's value and growth potential," according to Mr. Greene.
About U.S. Energy Systems, Inc.
U.S. Energy Systems, Inc. is an owner of green power and clean energy and resources. USEY owns and operates energy projects in the United States and United Kingdom that generate electricity, thermal energy and gas production.
Certain matters discussed in this press release are forward-looking statements, and certain important factors may affect the Company's actual results and could cause actual results to differ materially from any forward- looking statements made in this release, or which are otherwise made by or on behalf of the Company. Such factors include, but are not limited to, the effect of the USEB's Chapter 11 filing, access to needed financing or refinancing on acceptable terms, our ability to continue as a going concern, revisions in the initial estimates in the fair market value of the acquired assets, failure to realize the estimated savings or operating results of the acquisition, and other risks associated with acquisitions generally, including risks relating to managing and integrating acquired businesses, changes in market conditions, the impact of competition, changes in local or regional economic conditions, and the amount and rate of growth in expenses, dependence on management and key personnel, changes in federal or state laws and their interpretation with respect to regulation, energy policy and other business issues, the inability to commence planned projects in a timely manner, our ability to continue our growth strategy, and the ability to complete acquisitions, as well as other risks detailed from time to time in U.S. Energy's Securities and Exchange Commission filings, including its Annual Report on Form 10-K for the year ended December 31, 2005 as well as the 10-Q for the period ended September 30, 2006. We do not undertake to update any of the information set forth in this press release. http://www.useyinc.com/news_2006_08_10.html Contact: Investors Media
U.S. Energy Systems, Inc. Kekst and Company
Adam D. Greene, 212-588-8901 Adam Weiner / Joel Steinhaus
212-521-4800
DATASOURCE: U.S. Energy Systems, Inc.
CONTACT: Investors, Adam D. Greene of U.S. Energy Systems, Inc., +1-212-588-8901, ; Media, Adam Weiner and Joel Steinhaus of Kekst and Company, +1-212-521-4800 Web site: http://www.wsw.com/webcast/wsaf/usey http://www.useyinc.com/forinvestors_invpres.html
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