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Penn Octane Corporation Announces Results for the Quarter Ended September 30, 2005; Company Reports Net Income of 1 Cent Per Share

Posted on: Monday, 21 November 2005, 21:00 CST

Penn Octane Corporation (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 September 30, 2005. The Company reported net income of $165,000 or $0.01 per share. During the quarter ended September 30, 2004, the Company reported a net loss of $439,000 or $0.03 per share. Net Income for the quarter ended September 30, 2005 excluding losses allocable to minority interest in loss of Rio Vista Energy Partners L.P. ("Rio Vista") resulted in a net loss of $888,000. During the quarter ended September 30, 2004, there was not any minority interest in Rio Vista.

The following table summarizes the gross profit before allocation of corporate overhead among the Company's LPG and Fuel Sales Business for the three months and nine months ended September 30, 2005. All amounts are in thousands. For the three months ended For the nine months ended September 30, 2005 September 30, 2005 -------------------------- --------------------------- LPG Fuel Total LPG Fuel Total Sales Sales -------- -------- -------- -------- -------- --------- Revenues $29,309 $37,389 $66,698 $85,517 $93,170 $178,687 Cost of goods sold 28,924 36,259 65,183 83,521 91,174 174,695 -------- -------- -------- -------- -------- --------- Gross profit $385 $1,130 $1,515 $1,996 $1,996 $3,992 ======== ======== ======== ======== ======== =========

Revenues for the three months ended September 30, 2005, were $66.7 million compared with $59.4 million for the three months ended September 30, 2004, an increase of $7.3 million or 12.4%. Of this increase, $19.6 million was attributable to increases in revenues generated from the Company's Fuel Sales Business during the three months ended September 30, 2005 compared to the three months ended September 30, 2004, primarily the result of increases in fuel sales prices and volumes (the Company commenced operations of the Fuel Sales Business in June 2004), $6.8 million was attributable to increases in average sales prices of LPG sold to P.M.I. Trading Limited ("PMI") during the three months ended September 30, 2005 and $846,067 was attributable to increased average sales prices of LPG sold to customers other than PMI during the three months ended September 30, 2005, partially offset by $16.7 million attributable to decreased volumes of LPG sold to PMI during the three months ended September 30, 2005 and $3.3 million was attributable to decreased volumes of LPG sold to customers other than PMI during the three months ended September 30, 2005.

During the nine months ended September 30, 2005, the Company recorded a net loss of $1.9 million or $0.12 per share. During the nine months ended September 30, 2004, the Company recorded net income of $1.0 million. Included in net loss for the nine months ended September 30, 2005 was $1.0 million of expense associated with the discount of a note receivable from a former officer. Revenues for the nine months ended September 30, 2005, were $178.7 million compared with $150.0 million for the nine months ended September 30, 2004, an increase of $28.7 million or 19.1%. Of this increase, $73.5 million was attributable to increases in revenues generated from the Company's Fuel Sales Business during the nine months ended September 30, 2005 compared to the nine months ended September 30, 2004, primarily the result of increases in fuel sales prices and volumes (the Company commenced operations of the Fuel Sales Business in June 2004), $20.2 million was attributable to increases in average sales prices of LPG sold to PMI during the nine months ended September 30, 2005 and $4.3 million was attributable to increased average sales prices of LPG sold to customers other than PMI during the nine months ended September 30, 2005, partially offset by $56.9 million attributable to decreased volumes of LPG sold to PMI during the nine months ended September 30, 2005 and $12.3 million was attributable to decreased volumes of LPG sold to customers other than PMI during the nine months ended September 30, 2005.

The following table shows the Company's LPG volumes sold and delivered in gallons and average sales price for the nine months ended September 30, 2005 and 2004 in connection with the Company's LPG business: 2005 2004 -------- -------- Volume Sold LPG (millions of gallons) - PMI 73.7 134.2 LPG (millions of gallons) - Other 19.9 35.0 -------- -------- 93.6 169.2 ======== ======== Average sales price LPG (per gallon) - PMI $0.94 $0.79 LPG (per gallon) - Other 0.81 0.69

The following table shows the Company's Fuel Product volumes sold and delivered in gallons and average sales price for the nine months ended September 30, 2005 and 2004 in connection with the Company's Fuel Sales Business: 2005 2004 ------ ------ Volume Sold Fuel Products (millions of gallons) 53.5 14.6 Average sales price Fuel Products (per gallon) $1.74 $1.35

About Penn Octane Corporation

Penn Octane historically has been a supplier of liquefied petroleum gas (LPG) to northeastern Mexico until the transfer of its physical assets to Rio Vista in September 2004. Unless the proposed sale of LPG assets to TransMontaigne is completed, Penn Octane intends to continue to lease the 132-mile, six-inch Seadrift pipeline which connects a gas plant in Kleberg County, Texas, to Rio Vista's terminal facility in Brownsville, Texas, and Penn Octane intends to 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 satisfaction of conditions to closing and the completion of the proposed sale of LPG assets to TransMontaigne and regarding 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 reseller 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 most recent reports on Form 8-K, Form 10-Q, Form 10-K and Form 10 filed with the Securities and Exchange Commission.

Source: Business Wire

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