September 29, 2008
GreenHunter Energy Provides Update on Recovery Efforts at Biodiesel Refinery
GREENHUNTER ENERGY, INC. (AMEX: GRH), previously announced on September 15, 2008, the preliminary estimates of damage caused by Hurricane Ike that struck the Company's biodiesel refinery located in Houston, Texas on September 12-13, 2008, after less than sixty days of initiating operations.
The water surge created by Hurricane Ike reached levels exceeding twelve feet within the refinery complex. GreenHunter's biodiesel refinery took almost a direct hit from the eye of the hurricane. The storm surge that flooded the refinery was exacerbated due to the timing of the hurricane strike, which happened at high tide. This created a number of problems which included the floatation of certain storage tanks, the puncture of certain tanks and subsequent disposal of feedstock and chemicals, the complete destruction of all office buildings, both permanent and temporary, the destruction of many electrical panels that were not located above the water line, and the destruction of many pumps and motors due to water damage.In an effort to give all of our shareholders an opportunity to view both pictures and video of the magnitude of damage caused by Hurricane Ike during and after landfall at the Company's biodiesel refinery please go to http://greenhunterenergy.com/HurricanIkeDamage.html.
Fortunately, the Company anticipates that most of the damage sustained by its wholly-owned subsidiary, GreenHunter BioFuels, Inc., will be covered by existing property and casualty insurance along with business interruption insurance. Insurance adjusters for the Company and underwriters have been at the refinery and are daily assisting management in preparing our claims. While our personnel continue to find damage caused by the storm, it is currently estimated that total damages are approximately $22.4 million.
Through the immediate and tireless efforts of our staff and management team, the refinery has been substantially cleaned of layers of mud, spilled materials, and debris from the flood. Repairs were commenced within one week of Hurricane Ike's landfall strike. Major mechanical and operational components of the refinery remain intact. The receipt and installation of necessary electrical components from third parties is the primary reason for delay in restarting operations. It is anticipated that the U.S. Coast Guard will approve our barge docking facilities for resumption of operations, enabling the Company to begin moving products and feedstock early this week. The Company continues on target to meet the estimate of resumption of operations on or before October 31, 2008.
The existing inventory lost due to Hurricane Ike included canola oil, methanol, and sodium methylate, all of which are covered under existing cargo insurance with a minimum deductible. The Company had a substantial amount of finished product inventory in bulk storage facilities that appears predominantly free from contamination due to the storm. A significant portion of this in-spec biodiesel has recently been contracted for sale to a third party. Deliveries will begin on or about October 10, 2008 and should be completed prior to October 31, 2008.
GreenHunter BioFuels had previously contracted with a foreign entity to purchase feedstock supply and sell finished product of biodiesel. This entity was notified immediately after the hurricane of a force majeure, as called for under the contract. GreenHunter management believes that this entity has subsequently breached the terms and conditions of this contract. Additionally, this entity has recently issued a press release with certain allegations that the Company vehemently denies. In particular, the Company denies making any statement intended to mislead the public and will pursue any and all legal remedies against parties issuing such statements intended to harm our reputation for whatever reason.
Any statements in this press release about future expectations and prospects for GreenHunter Energy and its business and other statements containing the words "believes,""anticipates,""plans,""expects,""will" and similar expressions constitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Actual results may differ materially from those indicated by such forward-looking statements as a result of various important factors, including the substantial capital expenditures required to fund its operations, the ability of the Company to implement its business plan, government regulation and competition. GreenHunter Energy undertakes no obligation to update these forward-looking statements in the future.
GreenHunter Energy is focused on the renewable energy sectors of wind, hydro, geothermal, solar, biofuels, and biomass power plants. Our assets consist of leases of real property for future development of wind energy projects located in Montana, New Mexico, California, Texas, wind development projects in Wyoming and China that we believe will be acquired in the future, the nation's largest biodiesel refinery located in Houston, Texas, and a biomass-fired power plants located in Brawley, California and Telogia, Florida. Headquartered in Grapevine, Texas, GreenHunter Energy was formed to be the first publicly traded renewable energy company based in the U.S. that provides to investors a portfolio of diversified assets in the alternative energy sector. Additional information about GreenHunter Energy may be found at www.greenhunterenergy.com.