Gas to Liquid
Commencement of Operations Started 28/12/2006
The strategy of GTL Resources plc is to produce liquids such as methanol and ethanol from stranded gas, corn and other feedstocks with quality counterparties. GTL manages all aspects of a project: finance, feedstock supply, production and marketing.

In line with its strategy of seeking to develop and exploit markets for alternative fuels, GTL has, since the beginning of 2001, concentrated primarily upon developing methanol projects, principally in Australia, and, more recently, ethanol project work. The Board has recognised the strategic benefits of acquiring a cash generative asset on a shorter time scale than the typical methanol construction time of three years. In furtherance of this strategy, on 6 September 2005 GTL Resources acquired a controlling interest in Illinois River Energy (IRE) to build an ethanol plant at Rochelle, Illinois, through its wholly owned subsidiary, GTL USA, which has been established for the purpose of investing in ethanol projects in the USA. GTL USA has invested in IRE by way of a subscription for units of IRE pursuant to the Unit Purchase Agreement.

This project has the advantage that the Plant is expected to produce revenues on a shorter time scale and at a significantly lower capital cost than the methanol plant in Australia.

The Company intends to further expand within the ethanol industry in the United States or other suitable markets by selective acquisition of low cost production facilities. The Company sees itself as a potential consolidator of ethanol plants in a particularly fragmented market.

FT Tip
GTL Resources, an Aim-listed company. It raised money to build an ethanol plant in the US. Raw materials costs have risen but the price of ethanol has gone through the roof. The earnings potential should be spectacular.

New Plant

Construction started at Rochelle, Illinois site in September and production from the 50 million gallon per annum ethanol plant is expected to commence in the fourth quarter of 2006. Following unusually mild weather in Illinois the project has progressed well and is on schedule and on budget. Whilst the Companys main efforts centre on the successful delivery of the US ethanol project at Rochelle, the potential expansion of that site to 100 million gallons is being investigated. In addition and consistent
with GTLs stated strategy for the expansion of its interests in the ethanol industry, other ethanol opportunities have also been identified and will be analysed. Pictures Of The Site Under Construction March 27, 2006 http://www.illinoisriverenergy.com/html/construction.html


Arden
http://gtlresources.com/documents/ArdenAnalystResearchNote.pdf
http://www.gtlresources.com/documents/ArdenAnalystResearchNote.pdf
BBC News Item On Ethanol
http://news.bbc.co.uk/nolavconsole/ukfs_news/hi/newsid_4940000/newsid_4948400/bb_wm_4948456.stm

Ethanol Priceshttp://ethanolmarket.aghost.net/
Ethanol as a Transportation Fuel
http://energy.ca.gov/afvs/vehicle_fact_sheets/ethanol.html

Annual report for 2006
http://www.gtlresources.com/documents/GTLAnnualReport2006_001.pdf
Pics from Ethanol Producer Magazine of GTL's plant.
http://ethanolproducer.com/plant-images.jsp?plant_id=302&image_id=59
Commencement of Operations Started 28/12/2006
http://www.gtlresources.com/
Economics of Ethanol
http://www.ces.purdue.edu/extmedia/ID/ID-339.pdf
2 July 2007 GTL Resources FY pretax loss narrows, plans 13 mln stg placing to fund expansion
http://moneyam.uk-wire.com/cgi-bin/articles/200707020705014067Z.html
GTL Web Site
http://www.gtlresources.com/

The net assets consist mainly of plant, which has a dubious value unless the business makes sufficient profit. Apart from that it has considerable debt.

At present I see no value greater than 50p.

Can anyone here confirm how much one unit of product costs to manufacture, and what they sell same for?

I have asked this question before, but never received any figures in reply, so I find it hard to understand how people can conclude this is a good or bad investment.

TIA.

driver .... assuredly will not be topping up ..... in this sector, i have stakes in DOO and GTL and BFC (short!!) and TAN, which thank goodness is performing exceptionally and in which i have invested most heavily .... would be more inclined to top up performers than falling knives

This is an interesting comment from a few minutes ago on the iii BB.


"The FT reports today that Exxon has cancelled its GTL project in Qatar and is investing instead, together with QGPC (or whatever they call it nowadays), in a domestic piped gas supply project. The reason was the GTL project's failure to meet Exxon's financial criteria."

I have been told Haystack (Gas To Liquid GTL) Nout to do with Ethanol

Andy
When we get the figures we will probably be able to break it down to units as you ask but not until then. What we can say is that RVA has a M/Cap of 55m producing a few million gallons, this from their last quarterly update

Renova Energy plc Quarterly operating update
Renova Energy plc (AIM:RVA), the integrated ethanol production, distribution and
marketing company, today provides its operating update for the 9 months ended 31
December 2006: 62% increase in sales volumes to 7.0 MMgal (2005 - 4.3 MMgal);

Comparing the two companies M/Caps makes GTL greatly under valued considering the 50m increasing to 100m gallons of ethanol they are going to produce.

Hi! GTellers, After looking thro many threads I have to say adverse but constructive criticsm is acceptable . What I find unacceptable is bleating, whinging and whining. It is not only unhelpful but is surely contrary to the purpose of this blog,which is in my mind to share information, to enable us shareholders to make informed choices and make money! GTL have set up on schedule, got their certification and are producing on schedule and secured their raw material at what we believe are good prices and we are told making money! IMO we should all get behind this and more important if any one of you has an inside ear in GTL tell their PR department to get off their butts. I could be pi.... on ethanol, but I have had my say.

There are differences between RVA and GTL.

RVA has a turnover of more than $12m and makes $1.1m before tax and pays a dividend.
GTL has no turnover and no profit

RVA has $19m in cash
GTL has $8.6, but much more then that in debt.

Haystack
That's the point GTL will have a turnover of $??????????? And will make a profit of $?????????? When they produce 100m gallons of ethanol they are not going to drink it all, I think they might be selling a few gallons.

GTL have a lot of debt to pay back. They aren't going to be profitable for quite a time.

Haystack , you are not suggesting we all switch to RVA are you? perhaps you may like to look at the FUNDAMENTALS AND FORECASTS . GTL FORECAST 2007=9M PRETAX=(1m ) 2008=60m pretax=5m. if its true then GTL shoots RVA in the foot .RVA 2007 =13.72m=pretax1.72m 2008=27.85m pretax=2.21m. Who knows but not all bad for GTL. Unless its the ethanol iam still drinking.

Down 5p on less than 2,000 shares this is mm's being stupid.
It was down 2.5p on 320 sales.
Morgan Stanley meeting with Paul Middleton today so lets hope for some positive PR as chesneywilliam suggested.
I have suggested a few points including actual corn prices paid for announcement.

Andy, to answer your question re the numbers, here's a rehash of something that Starfrog and I discussed back on post 932:

Soul - Liked your calculation (Post 921), but just had a quick tinker with the figures myself.

Assume average price of corn is 3.55 per bushel

.....................

So if the IRE plant gets 2.8 gallons ethanol per bushel of corn:

Assume ethanol price $2.10 per gallon: 2.10 x 2.8 = 5.88.

Sutract cost of corn $3.55 per bushel = $2.33 gross profit per bushel.

Work that back to profits per gallon of ethanol, i.e. divide by 2.8 and you get: 83 cents per gallon of ethanol.

0.83 x 50 million = $41.5 million gross profit (on turnover of $105 million).

I'd hate to hazard a guess at the running and admin costs; smaller company RVA seems to cost about $3.6 mil a year. Call it $6.5 for IRE?

Leaves $35 mil pre-tax. That's 17.5 mil, and about 12.7 mil after tax. Of which GTL owns an 85% share, which is 10.8 mil

..........................

For 22.7 million shares in issue and current SP at 170p (at time of posting) gives a market cap of 40 mil, leading to a PE of 3.7!!.


Hope this helps. have had to do it in a bit of a hurry and have been further hampered by the fact that my decent calculator is in a box somewhere and I was reduced to doing the sums on my mobile phone!

Put it another way: the price of ethanol has gone up 25 cents per gallon in the last month. That makes a difference of $12.5 million to IRE's top line and quite a lot to the bottom line, given that 95% of the corn intake is hedged.

If that translated to a bottom line difference of 4 million for GTL, at PE 10 you've covered GTL's current market cap right there.

Still, please DYOR, etc.

Anyone know how you can take out a futures contract on eth?? :o)

ST let's hope Morgan Stanley read your posts.! If the numbers are roughly right, GTL needs to shout about it, probably being cautious though during first months production after testing.

By the way safe journey when you make it & hope a warm welcome awaits you back in Blighty!

Morgan Stanley presumably won't publish they're results immediately - anyone know the standard time lag between such events (E.g.Meeting and then notifying the market).

Silvermede, if Morgan Stanley like my stuff they are welcome to offer me a job :o)
I agree your analysis. GTL is doing the right thing by allowing the analysts to take care of producing the estimates.

Thanks for your good wishes - am sure all will work out when I return to the UK. Thanks for your mail, too. Not sure if I agree with Monisha, but will keep my eyes peeled and maybe do a little more digging to see if she has a point.

Crikey, but the price of corn is powering away at the moment. Still, with GTL/IRE having already hedged 95% of their requirements for the forthcoming year's production, it's not so serious, and one has to hope that by the 2008 season, the farmers will be planting more corn to cover increased demand.

Although maybe GTL/IRE could make more money by simply selling their hedged corn without bothering with the tiresome process of turning it into ethanol ;o)


GDP, I suspect that the answer to your question is a piece of string, as none of us outsiders know what was discussed between MS and PM, or how far MS has got with producing its research note.

If they get stuck, they can borrow my figures :o)

soul* ... the prob with ethanol from corn is that the company is always hostage to food stock futures ... unlike jatophra hich isn't

Has something happened to the corn and ethanol graphs at the top of each page, i get the error "Incorrect Contract Name, user_is_not_authorised"

Anyone else have the same problem?