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Penn Octane Corp. Announces Results for the Quarter Ended June 30, 2005

Posted on: Friday, 19 August 2005, 21:00 CDT

Penn Octane Corp. (NASDAQ:POCC), a provider of LPG for distribution to Northeast Mexico and a reseller of gasoline and diesel fuel ("Fuel Sales"), announced today its financial results for the quarter ended June 30, 2005. The company reported a net loss of $2.2 million or $0.14 per share. During the quarter ended June 30, 2004, the company reported a net loss of $69,117 or $0.00 per share. Net loss for the quarter ended June 30, 2005, excluding losses allocable to minority interest in earnings of Rio Vista Energy Partners L.P. ("Rio Vista") was $2.9 million. During the quarter ended June 30, 2004, there was not any minority interest in Rio Vista. Included in net loss for the quarter ended June 30, 2005, was $1.0 million of expense associated with the discount of a note receivable from a former officer.

Revenue for the quarter ended June 30, 2005, was $52.2 million compared with $39.9 million for the quarter ended June 30, 2004. The increase in revenue during the quarter ended June 30, 2005, was primarily due to revenue of approximately $27.0 million from the company's fuel sales business that commenced operations in June 2004, offset by reduced volumes of LPG sold to P.M.I. Trading Limited ("PMI") and to customers other than PMI in connection with the reduction of inventories.

During the six months ended June 30, 2005, the company recorded a net loss of $2.0 million or $0.13 per share on revenue of $112.0 million. During the six months ended June 30, 2004, the company recorded net income of $1.5 million or $0.09 per share on revenue of $90.7 million. The increase in revenue during the six months ended June 30, 2005, was primarily due to revenue of approximately $53.8 million from the company's fuel sales business that commenced operations in June 2004, offset by reduced volumes of LPG sold to PMI and to customers other than PMI in connection with the reduction of inventories. Included in net loss for the six months ended June 30, 2005, was $1.0 million of expense associated with the discount of a note receivable from a former officer.

The company sold and delivered approximately 20.4 million gallons and 52.7 million gallons of LPG to PMI for the three and six months ended June 30, 2005, respectively, versus 40.3 million gallons and 97.7 million gallons for the same periods one year earlier. The company also sold and delivered approximately 8.4 million gallons and 12.0 million gallons during the three and six months ended June 30, 2005, respectively, to customers other than PMI in connection with the reduction of inventory balances, compared with 12.1 million gallons and 23.2 million gallons during the three and six months ended June 30, 2004.

As previously announced, Penn Octane reported that on Aug. 15, 2005, it had entered into a purchase and sale agreement (PSA) with TransMontaigne Product Services Inc. (TransMontaigne), a wholly owned subsidiary of TransMontaigne Inc. (NYSE:TMG), which provides for the sale and assignment to TransMontaigne of all of Penn Octane's LPG assets including its midline pump station and LPG inventory associated with the Seadrift pipeline and the assignment of its Seadrift pipeline lease and its ExxonMobil LPG supply contract (LPG Asset Sale).

About Penn Octane Corp.

Penn Octane historically has been a supplier of Liquefied Petroleum Gas (LPG) to Northeastern Mexico until the recent transfer of its physical assets to Rio Vista Energy Partners L.P. (Rio Vista). Unless the LPG Asset Sale is completed, Penn Octane will continue to lease a 132-mile, six-inch pipeline (the Seadrift pipeline) which connects from a gas plant in Kleberg County, Texas, to Rio Vista's terminal facility in Brownsville, Texas and Penn Octane will supply Rio Vista with all of the LPG which Rio Vista supplies to Northeastern Mexico. Penn Octane began operations of its gasoline and diesel fuel reseller business in June 2004. By allocating portions of certain pipeline and terminal space located in California, Arizona, Nevada and Texas to Penn Octane, Penn Octane is able to sell gasoline and diesel fuel at rack loading terminals and through bulk and transactional exchanges.

Forward-Looking Statements

Certain of the statements in this news release are forward-looking statements, including statements regarding the completion of the proposed LPG Asset Sale, and prospects for the LPG business and gasoline and diesel fuel reseller business. Although these statements reflect Penn Octane's beliefs, they are subject to uncertainties and risks that could cause actual results to differ materially from expectations. The proposed LPG Asset Sale may not be completed if any of the conditions to closing, including satisfactory completion of TransMontaigne's due diligence review, are not satisfied or if various governmental and third party approvals are not obtained. If Penn Octane is not able to obtain adequate financing or to continue to generate sales of its products at profitable levels, Penn Octane would suffer material adverse consequences to its LPG and/or Fuel Sales business. Additional information regarding risks affecting Penn Octane's business may be found in Penn Octane's most recent reports on Form 8-K, Form 10-Q and Form 10-K and Rio Vista's Form 10-Q, Form 10-K and Form 10 filed with the Securities and Exchange Commission.

Source: Business Wire

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