TARRYTOWN, N.Y., May 12 /PRNewswire-FirstCall/ -- Environmental
Power Corporation (Nasdaq: EPG or the "Company") today announced
results for the first quarter ended March 31, 2008. Business
Commentary We are pleased to report that while it has only been
eight weeks since our last update, market conditions for our
business model have become increasingly favorable and there has
been significant progress related to our projects in Texas,
California and Nebraska. Recent developments include a new
renewable natural gas (RNG(R)) sales agreement for output from
three projects in Texas; sale of greenhouse gas offset credits
related to our Wisconsin facilities; granting of the water and
conditional use permits for the Bar 20 project in California;
applications filed for tax exempt bond allocation in California;
and state approval of tax exempt bond allocation which we intend to
pursue to help finance our JBS Swift project in Nebraska; all of
which represent significant progress along our milestone schedule
as we roll out our pipeline of renewable energy projects. Market
Conditions Renewable Energy Demand is Increasing - We continue to
experience increased demand for our RNG(R) - our trademarked brand
for our pipeline grade methane - due to not only utilities' needs
to meet their Renewable Portfolio Standards (RPS) but also the
demand by energy users for a green energy product. As a result of
the expectations for increased gas pricing, we have focused on
shorter term gas purchase agreements, which still reflect the
premium value of our product and provide certainty over the short
term with fixed pricing, but which also allow us to take advantage
of expected increases in natural gas prices over the longer term.
We have recently executed such an agreement related to our Texas
projects as described below. Increased Demand for Greenhouse Gas
Offset Credits - The increased desire to improve environmental
stewardship by industry has also increased the demand and,
therefore, the potential value of the greenhouse gas offset credits
we produce. Therefore, as with gas pricing, we believe that
continued demand in the voluntary market and the expectation of an
eventual compliance/mandatory market will have a positive influence
on future pricing. Public Policy - The debate over food versus fuel
has come into focus, leading to a new evaluation of some of our
alternative energy choices. We of course rely on waste products,
not ingredients for food, a point that is resonating with policy
makers searching for answers to increased demand for renewable
energy solutions that do not result in higher consumer prices for
basic necessities. As the debate continues, more policy makers
understand that anaerobic digestion of wastes is an important
near-term solution to produce more renewable energy without other
unintended economic consequences. We believe that all these factors
bode well as we seek to maintain our first mover status in the
biogas market, continue to execute on our identified projects
totaling 4.9 million MMBtu per year of energy production and
finalize the development of the 6.8 million MMBtu of projects
currently in various stages of development. Overall, we believe
that our company is well positioned for growth, and we will
continue to focus on both the construction of our announced
projects and identifying additional project opportunities
throughout North America. Financial Results The Company reported
net income applicable to common shareholders of $2,840,477, or
basic income per share of $0.18, for the three months ended March
31, 2008, as compared to a net loss applicable to common
shareholders of $1,682,056, or basic loss per share of $0.17, for
the three months ended March 31, 2007. The increase in net income
for the three months ended March 31, 2008 as compared to the three
months ended March 31, 2007 is entirely attributable to the results
of discontinued operations. For the quarter ended March 31, 2008
the Company had net income from discontinued operations of
$6,989,324. The net income was composed of a one-time gain on
disposal of $7,999,858, partially offset by a loss from operations
of $1,010,534. The Company had previously announced its intention
to dispose of its discontinued operations and completed this
disposition on February 29, 2008 by entering into an agreement
terminating the leasehold interest of its subsidiary, Buzzard Power
Corporation, in a waste-coal fired generating facility in
Pennsylvania known as the Scrubgrass facility. The net gain of
$7,999,858 was a one-time, non- cash gain, except for a cash
payment received of $375,000, and was partially offset by a loss
from operations of $1,010,534. The Company has ended its
involvement with these discontinued operations, and future results
will not include any amounts from discontinued operations. The
Company's results from continuing operations declined from a net
loss of $1,680,737 for the three months ended March 31, 2007 to a
net loss of $3,811,347 for the three months ended March 31, 2008.
Although revenues increased, as discussed below, a number of
factors accounted for the decline in results for the three months
ended March 31, 2008: -- Revenues for the Company increased from
$215,273 for the three months ended March 31, 2007 to $970,542 for
the first three month of 2008. The primary reason for the increase
in revenues was the fact that Huckabay Ridge began commercial
operations in February 2008 resulting in increased revenues of
$578,634. In addition, during the first quarter of 2008, the
Company sold greenhouse gas offset credits for vintage years 2005
and 2006 from its Wisconsin facilities and recorded 50% of the
proceeds or $171,000 as revenue. The Company did not sell any
greenhouse gas offset credits in the first quarter of 2007. --
Operations and maintenance expenses increased by $1,099,323 for the
first quarter of 2008. The primary reason for the increase was the
commencement of commercial operations at Huckabay Ridge which
resulted in operations and maintenance expenses of $1,070,233 for
the first quarter of 2008. -- Depreciation and amortization
expenses increased to $260,774 for the first quarter of 2008, up
from $70,862 during the first quarter of 2007, due principally to
the expensing of two months' depreciation at Huckabay Ridge. --
Interest income improved during the first quarter of 2008 to
$246,907 from $158,537 during the first quarter of 2007 principally
because the Company had higher invested cash balances as a result
of the Company's public offering in October 2007, which resulted in
proceeds of approximately $26,199,000. -- Interest expense
increased to $176,755 for the three months ended March 31, 2008
from $3,919 for the three months ended March 31, 2007. Prior to the
commencement of commercial operations at the Huckabay Ridge
facility in late January, 2008, the Company was capitalizing
interest associated with the financing of the project. Following
achievement of commercial operations, the Company began expensing
the interest associated with this project. -- The decline in other
income of $583,116 in the first quarter of 2007 to expense of
$13,477 in the first quarter of 2008 was due principally to the
fact that in the first quarter of 2007 the Company experienced a
one-time gain of $583,116 related to the expiration of the statute
of limitations on certain contingent obligations on the 2001 sale
of a project. A complete presentation of the Company's financial
results for the first quarter of 2008, and management's discussion
and analysis thereof, is included in the Company's Quarterly Report
on Form 10-Q for the quarter ended March 31, 2008, which is being
filed today with the Securities and Exchange Commission and will be
available on the Company's website. Business Update Huckabay Ridge
Commercial Operations On January 22, 2008, the Company announced
that the Huckabay Ridge facility had achieved full-capacity
production levels of pipeline-quality renewable natural gas
(RNG(R)) and had moved into full-scale commercial operation. For
accounting purposes, the results for the first quarter of 2008
include two full months, February and March, of commercial
operations of the Huckabay Ridge facility. "The digesters at the
Huckabay Ridge facility are operating as anticipated and we are
undertaking the necessary initiatives to improve the reliability
and performance efficiency of the gas conditioning system which
should allow us to achieve our budget in the near term," said
Richard Kessel, President and CEO of Environmental Power. New
RNG(R) Offtake Arrangement to Support Texas Projects/ Projects
Update The Company has secured a new, medium-term gas purchase
agreement for up to 6,000 MMBtu/day of RNG(R) to be produced by
projects physically located in Texas. Terms of the agreement,
including the identity of the buyer, are confidential. In addition,
the Company is poised to commence site work at the Rio Leche and
Cnossen projects in accordance with its previously announced
schedule. California Projects Update The Company has been granted
all the required permits associated with its California projects,
except for the air permit on the Bar 20 project, which it expects
to have in hand shortly. The Company has begun discussions with
engineering and construction contractors related to the build out
of these projects. As previously announced, the Company submitted
an application for an allocation of tax-exempt bond financing in
California to support the construction of the Riverdale Cluster and
Hanford Cluster projects in March, and expects to file a similar
application for an allocation for the Bar 20 project by the end of
May. JBS Swift Grand Island Project Site activities are expected to
begin shortly at the JBS Swift Grand Island facility in Nebraska in
accordance with our previously announced schedule. The Nebraska
Investment Finance Authority (NIFA) approved a volume cap
allocation of $7 million in tax exempt bond financing at the end of
March, 2008. The Company is seeking to obtain this financing in
support of the Swift project Sale of Wisconsin Greenhouse Gas
Offset Credits The Company sold greenhouse gas offset credits from
the Wisconsin facilities for vintage years 2005 and 2006 since our
last update. Total proceeds of $342,000 from these sales include
$171,000 of income for management of the credits. The balance of
the proceeds was credited against the outstanding notes on the
Wisconsin facilities in accordance with the Company's contracts
with the owners of the facilities. Annual Meeting Environmental
Power has scheduled its 2008 Annual Meeting of Stockholders for
Wednesday June 11, 2008, in Dallas, Texas at 10:00am CDT. The
meeting will be held at the Dallas Marriott Solana near DFW Airport
in Westlake, Texas. Further information regarding the Annual
Meeting is included in proxy materials filed with the Securities
and Exchange Commission. The Company's Board of Directors has set a
record date of April 25 for the Annual Meeting. Following the
Annual Meeting the Company will sponsor a tour of the Company's
projects southwest of Dallas. All stockholders are invited but are
asked to register in advance. Transportation between Dallas and the
projects will be provided by the Company. Management Conference
Call Mr. Richard Kessel, President and CEO, and Mr. Michael Thomas,
Senior Vice President and CFO, will comment on these and related
items and will also answer questions from interested investors in
the Conference Call scheduled for Monday, May 12, 2008, at 10 a.m.
EDT. Conference Call details: Dial-in: U.S. Toll Free: 800-355-2355
International/Canadian Toll: 402-220-2946 Verbal Passcode VK73574
Replay Access #: 800-355-2355 Code 73574# The call will be
available for 3 days by accessing the number above after which it
will be available on our website http://www.environmentalpower.com/
"We are very pleased by the continued progress made over the past
eight weeks especially related to our ability to receive
environmental permits for our projects," said Rich Kessel. "We
believe that improvements in the outlook in price and demand for
natural gas, along with increased interest in RNG(R) for its
renewable characteristics, give us more options than we have had in
the past. We continue to see increased demand for greenhouse gas
offset credits, with recent prices on the Chicago Climate Exchange
exceeding $6/ton and even higher prices for recent bi-lateral
transactions for methane offsets. We continue to focus on bringing
our announced portfolio of projects on line during the first and
second quarters of 2009 and achievement of our targeted $40 million
of annualized revenue run rate by the third quarter of 2009." ABOUT
ENVIRONMENTAL POWER CORPORATION Environmental Power Corporation is
a developer, owner and operator of renewable energy production
facilities. Its principal operating subsidiary, Microgy, Inc.,
holds an exclusive license in North America for the development and
deployment of a proprietary anaerobic digestion technology for the
extraction of methane gas from livestock wastes and other organic
waste for its use to generate energy. For more information visit
the Company's web site at http://www.environmentalpower.com/.
CAUTIONARY STATEMENT The Private Securities Litigation Reform Act
of 1995, referred to as the PSLRA, provides a "safe harbor" for
forward-looking statements. Certain statements contained in this
press release, such as statements concerning planned
manure-to-energy systems, our sales pipeline, our backlog, our
projected sales and financial performance, statements containing
the words "may," "assumes," "forecasts," "positions," "predicts,"
"strategy," "will," "expects," "estimates," "anticipates,"
"believes," "projects," "intends," "plans," "budgets," "potential,"
"continue," "targets" "proposed," and variations thereof, and other
statements contained in this press release regarding matters that
are not historical facts are forward-looking statements as such
term is defined in the PSLRA. Because such statements involve risks
and uncertainties, actual results may differ materially from those
expressed or implied by such forward-looking statements. Factors
that could cause actual results to differ materially include, but
are not limited to: uncertainties involving development-stage
companies; uncertainties regarding project financing, the lack of
binding commitments and/or the need to negotiate and execute
definitive agreements for the construction and financing of
projects, the sale of project output, the supply of substrate and
other requirements and for other matters; financing and cash flow
requirements and uncertainties; inexperience with the development
of multi-digester projects; risks relating to fluctuations in the
price of commodity fuels like natural gas, and our inexperience
with managing such risks; difficulties involved in developing and
executing a business plan; difficulties and uncertainties regarding
acquisitions; technological uncertainties; including those relating
to competing products and technologies; risks relating to managing
and integrating acquired businesses; unpredictable developments;
including plant outages and repair requirements; the difficulty of
estimating construction, development, repair and maintenance costs
and timeframes; the uncertainties involved in estimating insurance
and implied warranty recoveries, if any; the inability to predict
the course or outcome of any negotiations with parties involved
with our projects; uncertainties relating to general economic and
industry conditions, and the amount and rate of growth in expenses;
uncertainties relating to government and regulatory policies and
the legal environment; uncertainties relating to the availability
of tax credits, deductions, rebates and similar incentives;
intellectual property issues; the competitive environment in which
Environmental Power Corporation and its subsidiaries operate and
other factors, including those described in our most recent Annual
Report on Form 10-K or Quarterly Report on Form 10-Q, well as in
other filings we make with the Securities and Exchange Commission.
Readers are cautioned not to place undue reliance on these
forward-looking statements, which speak only as of the date that
they are made. We undertake no obligation to publicly update or
revise any forward-looking statements, whether as a result of new
information, future events or otherwise. CONTACT: Company Contact
Mark Hall, Senior Vice President Environmental Power Corporation
630) 573-2926 DATASOURCE: Environmental Power Corporation CONTACT:
Mark Hall, Senior Vice President, Environmental Power Corporation,
+1-630-573-2926, Web site: http://www.environmentalpower.com/
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