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Stock Alert for SulphCo Inc. (AMEX: SUF)

SulphCo Inc. (SUF), an energy technology company, engages in the development and commercialization of an oxidative desulfurization process for crude oil products, crude oils and condensate streams. The Company’soxidative desulfurization process consists of, the ultrasound assisted conversion of the sulfur compounds to their oxidized analogs employing its patented Sonocracking technology and the subsequent removal of these oxidized compounds by a separation technique, such as adsorption (the SulphCo Process).  SUF’s Sonocracking technology is based upon the use of high power ultrasonics, the application of high energy, high frequency sound waves in conjunction with catalyst and oxidant regimes to alter the molecular structure of crude oil fractions (i.e., petroleum products), crude and natural gas condensates, and crude oil. Additionally, in refining applications where the Sonocracking process is used in conjunction with a traditional hydrotreater, the SulphCo technology allows for carbon dioxide emission reductions because less hydrogen is required to meet ultra low sulfur diesel sulfur specifications. The Company primarily intends to serve refining, transportation, and blending markets.

SUF was founded in 1999 and is headquartered in Houston, Texas.

Share Statistics (23-June-10) FY

2008

FY

2009

%

Chg

Q1 2009 Q1

2010

%

Chg

Symbol SUF Revenue, $Mn 0.00 0.00 0.0% 0.00 0.00 0.0%
Current price $0.35 Gross marg. n/a n/a n/a n/a n/a n/a
52wk Range: 0.25-2.18 Oper. margin n/a n/a n/a n/a n/a n/a
Avg Vol (3m): 671,932 Net margin n/a n/a n/a n/a n/a n/a
Market Cap. 35.55M
Shares Outstanding 101.71M EPS, $ -0.29 -0.13 -55.2% -0.05 -0.02 -60.0%

Source: Reuters.com, SEC Filings.

Financial Summary

As a development stage company, SUF has not generated any material revenues since it commenced its current line of business in 1999.

For the three-month period ended March 31, 2010, the Company incurred expenses of approximately $1.6 million in selling, general and administrative expenses. This compares to expenses of approximately $3.5 million for the comparable period in 2009.

As of March 31, 2010, SUF had approximately $5.4 million in available cash reserves. Based on the cash reserves at March 31, 2010, and the forecasted monthly cash burn rate, the Company anticipates that its cash reserves will be sufficient to fund its cash requirements into the first quarter of 2011.  Historically, the Company has been able to raise capital to continue with its research and development and it is likely that it will need to raise additional funds before it can generate enough revenue to become profitable.

The Company is evaluating various equity financing alternatives that may include, among other things, additional equity issuances, the proceeds of which would be used to fund future research and development activity.  There can be no assurance that the Company will be successful in raising such financing, if it decides to pursue such an alternative.

Source: Form 10-Q for the quarter ended March 31, 2010

Financial Strength (23-June-2010) Company Industry Sector S&P 500
Quick Ratio (MRQ) 3.42 1.17 0.71 0.81
Current Ratio (MRQ) 3.42 1.35 0.95 0.97
LT Debt to Equity (MRQ) 0.00 49.28 37.12 133.54
Total Debt to Equity (MRQ) 0.00 61.62 47.47 199.10
Interest Coverage (TTM) -16.75 7.60 13.11 41.59

Source: Reuters.com, SEC Filings.

Analyst Consensus

No analyst rate shares of SUF at this time.

Consensus Estimates Analysis

No consensus analysis data available.

Source: http://www.reuters.com/finance/stocks/analyst?symbol=SUF


Investment Highlights

SUF has developed a patented safe and economic process employing ultrasound technology to alter the molecular structure of crude oil products and crude oil. Its technology is designed to improve the quality of crude oil fractions, crude and natural gas condensates, and crude oil by modifying and allowing for removal of sulfur compounds in a cost effective manner, among other operational benefits.  Additionally, in refining applications where the Sonocracking™ process is used in conjunction with a traditional hydrotreater, SUF’s technology allows for significant carbon dioxide emission reductions because less hydrogen is required to meet ultra low sulfur diesel sulfur specifications.  Since its inception, the Company has continuously improved its Sonocracking™ technology by redesigning the ultrasound probe, systematically documenting the chemical reactions that occur during the Sonocracking™ process, and identifying efficient and cost effective catalyst and oxidant systems.

Amid the ever increasing environmental regulations mandating the reduction of sulfur content in many fuels, SUF is offering an attractive alternative to hydrodesulfurization (HDS), the currently practiced method of desulfurization. HDS requires a large capital investment and suffers from high hydrogen and energy consumption as severe operating conditions have to be employed to treat the most refractory sulfur compounds.

In contrast, the SUF’s SulphCo Process allows for comparably mild reaction conditions such as ambient temperatures and mild pressures, resulting in a potentially more cost effective and energy efficient alternative to HDS for certain applications within the refining, transportation and blending market segments.

The Company expects that the commercialization of its Sonocracking™ technology should provide a lower capital and operating cost option for the treatment of complex sulfur compounds and reduction of carbon dioxide emissions.

Latest Developments

SUF shares were boosted yesterday after the Company announced that it has executed a validation agreement with Enterprise Products Operating LLC, a wholly owned subsidiary of Enterprise Products Partners L.P.  As per the agreement, SUF will install a mobile Sonocracking™ unit at Enterprise’s natural gas liquids fractionation facility located in Mont Belvieu, Texas, for the purpose of evaluating the commercial scale performance of SUF’s Sonocracking™ technology on certain Enterprise natural gasoline streams produced at the facility.

According to SUF CEO Dr. Larry D. Ryan, both companies have been working on the application of SUF’s technology to reduce sulfur levels in natural gasoline for several months. It is expected that the commercial scale evaluation will confirm the laboratory findings that SUF’s technology is the solution to Enterprise’s objective of efficiently and economically reducing sulfur levels in its natural gasoline streams.

Source: http://www.sulphco.com/index.php

Technical Analysis

Source: http://stockcharts.com

Tuesday, SUF closed above its 13 day moving average. This is generally considered to be an indication of a bullish trend.

SUF is trading above its upper Bollinger Band. Relative to recent price action, the stock is currently overextended and due for either a pause or retracement.

SUF’s MACD is currently indicating a weak bullish signal. Although the MACD is trending above the signal line, the indicator is still below 0, which suggests that the underlying moving averages are bearish.

Comparative Analysis

Company Name Ticker Price per Mrkt. Cap. P/E P/S
June23-2010 symbol Share, $ $ Mn 2010 2011 2010 2011
Baker Hughes Inc. BHI 42.52 18,240 20.95 13.50 1.32 1.10
Exterran Holdings Inc. EXH 26.73 1,690 334.13 29.7 0.67 0.61
Basic Energy Services Inc. BAS 8.56 353.31 0.56 0.48
Complete Production Services Inc. CPX 13.78 1,070 91.87 20.26 0.80 0.69
Oil & Gas Equipment & Services Median 23.58 n/a 1.28 n/a
SulphCo Inc. SUF 0.35 35.55 n/a n/a n/a n/a

Source: Thomson Financial

Insider Trading Activity

NET SHARES PURCHSE ACTIVITY

Inside Purchases – Last 6 Months

Shares Transaction
Purchases n/a n/a
Sales 5,072,110 10
Net Shares Purchased (Sold) (5,072,110) 10
Total Insider Shares Held 15.63M n/a
% Net Shares Purchased (Sold) (24.5%) n/a
Net Institutional Purchases — Prior Qtr to Latest Qtr
Shares
Net Shares Purchased (Sold) 1,545,270
% Change in Institutional Shares Held 9.3%

Source: Yahoo Finance

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One Response

  1. Stay infmoriatve, San Diego, yeah boy!

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