News
Aug 12, 2010Ram Power Press Release August 12, 2010
RENO, NEVADA- (August 12, 2010)– Ram Power, Corp. (TSX: RPG) ("Ram Power" or the “Company”), today reported its financial and operating results for the second quarter ended June 30, 2010. This earnings release should be read in conjunction with Ram Power’s MD&A and financial statements, which are available on the Company’s website at www.ram-power.comand have been posted on SEDAR at www.sedar.com.
Concurrent with today's release, Hezy Ram, CEO of Ram Power, said, “Ram Power continued in the second quarter of 2010 to execute its plan to be one of the world’s preeminent geothermal power companies. Construction of Phase I and II expansions at our San Jacinto-Tizate project proceeds according to the schedule and budget. We are in the final stages of the negotiation process for the Phase II expansion’s financing, which is expected to close in the third quarter. Drilling activity commenced at the Orita project in parallel to negotiations with EPC contractors. We recently purchased the land rights associated with our Geysers project in Northern California which will allow forflexibility and autonomy in the development of this project, which is a continuation of our commitment to developing our pipeline of projects to their full potential. As well, the Company announced the pending acquisition of Sierra Geothermal Power Corp.”
OVERVIEW
The financial results of Ram Power for the three and six months ended June 30, 2010 and 2009 are summarized below:
For the purpose of this summary, the results of Polaris Geothermal Inc. for the three and six months ended June 30, 2009 are used as comparatives because, for accounting purposes, the financial statements of the Company are deemed to be a continuation of the financial statements of Polaris Geothermal Inc.
For the second quarter ended June 30, 2010, the Company reported a net loss of approximately $6.5 million ($0.04 per share). On a cash basis, for the same period, the Company had a negative cash flow of about $5.7 million from operating activities and spent approximately $51.6 million on additions to geothermal properties and capital assets, including approximately $23 million on the Phase I and II San Jacinto expansions, $20 million to acquire the land rights associated with the Geysers project, and approximately $6.5 million on the Orita Project. At June 30, 2010, the Company had cash and short term investments of approximately $91.5 million, and long-term debt, net of debt discount, of approximately $45.6 million.
San Jacinto Operations
The San Jacinto operating plant produced as expected during the quarter with short interruption to correct the decline performance of an injection well. In early 2010, the power plant was not producing to its full capacity due to insufficient injection at the SJ-1 well. During the second quarter ending June 30, 2010, the Company completed a mechanical cleaning of that well which resulted in full recovery of the injection capacity of this well. The clean out operation restored the net MW production of the power plant to its optimal 9.6 MW.
Construction continued during the second quarter on the Phase I 36 MW expansion of the current operating facility to increase the production capacity to 46 MW. The Company expects a commercial operation date in the second quarter 2011. The current active production and injection wells have sufficient capacity to support the planned production increase. The total cost of the Phase I expansion is estimated to be $156 million. The Company is using a combination of cash on hand and a $77 million credit facility to fund the cost of the expansion. In the six months ended June 30, 2010, the Company satisfied the equity investment requirement for the credit facility and drew $47 million of the $77 million available under the facility. As of June 30, 2010 the Company had approximately $90.7 million in accumulated costs related to the Phase I expansion.
The Company commenced its drilling/exploration program for Phase II of the San Jacinto Project in April 2010 with two rigs. The first exploration/production well (SJ 12-1) was completed in July 2010 and encountered fault-controlled permeability at several shallower zones. A maximum temperature of over 500 degrees Fahrenheit was measured in the well. The well is being allowed to heat prior to temperature surveys and flow testing which will be conducted in August 2010. A second production well (SJ 9-3) commenced drilling by a smaller rig in June 2010 and was cased at 2,550 feet. Drilling on SJ 9-3 has resumed recently by a bigger rig and is currently being targeted to a depth of approximately 6,000 feet which is expected to be completed by the end of August 2010. The Company anticipates completing its Phase II drilling program by March 2011.
The Company is in negotiations with a group of development banks led by International Finance Corporation (“IFC”) and Inter-American Development Bank (“IDB”) to provide the debt financing for the Phase II expansion, which will add 36 MW for a total capacity of 72 MW, after which the 10 MW facility will be decommissioned. Approvals were obtained for over $200 million senior debt financing which exceeds the expected financing need of $140 million. The approvals are subject to execution of a definitive agreement among the parties. Phase II is being constructed in parallel to Phase I and is being financed with cash on hand until the Phase II debt financing closes, which is expected to occur in the third quarter of 2010. As of June 30, 2010 the Company had approximately $27.1 million in accumulated costs related to the Phase II expansion.
Exploration Activities
In April 2010, the Company commenced its Orita drilling/exploration program starting with Orita Well #2 which was drilled as a direct offset to production encountered in the successful Emanuelli #1 well drilled in 1982. The Emanuelli #1 well produced about 500,000 pounds per hour which indicated commercial viability. Orita Well #2 was intended to test potential production zones down to 10,400 feet. Drilling was suspended at a depth of 9,267 feet due to mechanical problems and the well was lined with perforated casing, cleaned and tested. A maximum temperature of 457 degrees Fahrenheit was measured in the well still cooled by drilling mud. A flow test produced fluids that confirmed the desired low-salinity benign chemistry but only marginal permeability at this depth. In September 2010, the Company expects to resume drilling to the intended 10,400 foot production zone to enhance the fluid mass flow rate.
In July 2010 drilling commenced on Orita Well #3 is which is being drilled to the targeted depth of about 9,000-10,000 feet. As of August 2010, the well shows significant hydrothermal alterations and is being drilled to intercept a major fault controlled low-resistivity zone. The drilling of Orita Well #3 is expected to be completed in August 2010. The well was successfully cased at 6,700 feet and is currently at about 9,000 feet. Flow testing will be conducted in the later part of August 2010.
Mr. Ram concluded, “Ram Power remains committed to the execution of our business plan which maximizes shareholder value through the development of clean, reliable geothermal projects.”
About Ram Power, Corp.
Ram Power is a renewable energy company based in Reno, Nevada, engaged in the business of acquiring, exploring, developing, and operating geothermal properties and has interests in geothermal projects in the United States, Canada, and Latin America.
Steven Scott, Director of Investor Relations
Ram Power, Corp.
Phone: 775-398-3711
Email: .(JavaScript must be enabled to view this email address)
www.ram-power.com
Cautionary Statements
This news release contains certain “forward-looking information” which may include, but is not limited to, statements with respect to future events or future performance, management’s expectations regarding the Company’s growth, results of operations, estimated future revenues, requirements for additional capital, production costs and revenue, future demand for and prices of electricity, business prospects and opportunities. In addition, statements relating to estimates of recoverable geothermal energy “reserves” or “resources” or energy generation are forward-looking information, as they involve implied assessment, based on certain estimates and assumptions, that the geothermal resources and reserves described can be profitably produced in the future. Such forward-looking information reflects management’s current beliefs and is based on information currently available to management. Often, but not always, forward-looking statements can be identified by the use of words such as “plans”, “expects”, “is expected”, “budget”, “scheduled”, “estimates”, “forecasts”, “predicts”, “intends”, “targets”, “aims”, “anticipates” or “believes” or variations (including negative variations) of such words and phrases or may be identified by statements to the effect that certain actions “may”, “could”, “should”, “would”, “might” or “will” be taken, occur or be achieved. A number of known and unknown risks, uncertainties and other factors may cause the actual results or performance to materially differ from any future results or performance expressed or implied by the forward-looking information. Such factors include, among others, general business, economic, competitive, political and social uncertainties; the actual results of current geothermal energy production, development and/or exploration activities and the accuracy of probability simulations prepared to predict prospective geothermal resources; changes in project parameters as plans continue to be refined; possible variations of production rates; failure of plant, equipment or processes to operate as anticipated; accidents, labor disputes and other risks of the geothermal industry; political instability or insurrection or war; labor force availability and turnover; delays in obtaining governmental approvals or in the completion of development or construction activities or in the commencement of operations; as well as those factors discussed in the section entitled “Risk Factors” in this news release. These factors should be considered carefully and readers of this news release should not place undue reliance on forward-looking information.
Although the forward-looking information contained in this news release is based upon what management believes to be reasonable assumptions, there can be no assurance that such forward-looking information will prove to be accurate, as actual results and future events could differ materially from those anticipated in such information. Accordingly, readers should not place undue reliance on forward-looking information. Such forward-looking information is made as of the date of this news release and, other than as required by applicable securities laws, Ram Power, Corp. assumes no obligation to update or revise such forward-looking information to reflect new events or circumstances.
