SEATTLE, July 14, 2010 (GLOBE NEWSWIRE) -- GeoBio Energy, Inc. (Pink Sheets:GBOE) ("GeoBio"), aggressively moving forward with its plan to become a dominant player in the oil and natural gas services field, today announced the signing of a Letter of Intent to acquire all of the ownership interests of Magna Energy Services, LLC (Magna), located in Aztec, New Mexico. Magna, in combination with GeoBio's previously announced acquisition of H&M Precision Products (H&M), provides a solid base of growth for the GeoBio chemical business.
Magna and H&M are chemical treatment and service companies focused on oil and natural gas production improvement in the San Juan Basin shale play area of New Mexico. The chemical business, when coupled with the proposed acquisition of a civil construction company operating in the Piceance Creek Basin shale play area of Colorado, provide a solid platform for substantial growth.
The GeoBio Chemical Division will be created by the acquisition of Magna and H&M. The unique capabilities of the two companies are complementary and synergistic. The operations of Magna and H&M are physically located within 20 miles of each other and will be integrated during the first six months following acquisition of these two companies.
Magna Energy Services adds the following value to GeoBio's strategic plan:
- Strong management team that can manage and expand both Magna and the H&M businesses;
- Strong Business Development and Marketing team that can market H&M's proprietary chemical blending process;
- GeoBio can quickly consolidate and scale H&M and the Civil Construction business with Magna management on site;
- GeoBio can quickly start to address new business opportunities and services which exist in each of the other businesses; and
- GeoBio can quickly address infrastructures and expand market share (for example, H&M only servicing approximately 1000 of 30,000 wells in the area).
H&M Precision Products, Inc. compliments the Magna business operations as follows:
- High capacity delivery system utilizing specially designed trucks for rugged, mountainous deliveries;
- Dedicated in-house blending operation for specialty chemical formulations offering high capacity to service the entire Chemical Division;
- Low production costs based on a high volume of specialty chemical purchases coupled with an efficient and scalable infrastructure; and
- Unique and individually created formulations that are proprietary property of the company and are specifically designed to address the production issues at well sites in a specific geographic region.
H&M, Magna and the Civil Construction business will benefit from the vision and experience of a strong management team and a proactive strategic sales and marketing plan. This combination is expected to unlock additional value through growth and expansion in existing and new geographic markets. Through its proactive sales and marketing effort, GeoBio expects to expand the customer base of H&M and Magna throughout the San Juan Basin.
Further, given that the Piceance Creek Basin is developing at a rapid pace, GeoBio intends to immediately establish chemical blending and service operations in the Piceance Basin utilizing the relationships of the Civil Construction company. GeoBio expects to grow organically by expanding geographically through the existing relationships of its pending business acquisitions and taking advantage of synergies between the three companies' customer bases.
The demand for oil and natural gas continues to increase in North America and around the world. New exploration and production is expanding at a rapid pace, especially in the shale areas of the U.S. The newly developing Marcellus shale play in Pennsylvania, along with Texas and Louisiana shale plays, are all planned expansion areas for GeoBio. In addition, after the completion of these acquisitions, GeoBio intends to expand internationally with the first targeted area being the active oil sands area of Alberta, Canada.
John L Sams, incoming CEO of GeoBio, commented, "We are excited about the opportunities in the oil and natural gas service markets of North America and internationally with our three pending acquisitions. These three companies provide a solid platform for long term growth, expansion and profitability with immediate opportunities for revenue and profits. With a proactive strategic sales and marketing plan, taking advantage of the synergies between the three companies, cross selling and expanding capabilities and geographic operations, we believe this will create significant value for our shareholders."
GeoBio and its investment bankers are currently working to secure financing to complete the acquisitions of the H&M, Magna and the Civil Construction business.
About GeoBio Energy: http://www.geobioenergyinc.com/
GeoBio Energy's business model emphasizes the acquisition and operation of existing companies in the oil and gas services and energy industry. As oil well and gas exploration continue in the face of ever rising demand, preparing and monitoring drilling sites and obtaining peak efficiency and production from existing, aging wells becomes increasingly important. GeoBio believes this to be a significant growth opportunity in its strategy to combine and consolidate companies in the oil and natural gas services sector.
Media Services by: ValueCorp Communications & www.Smallcap1.com
Safe Harbor Statement
This Press Release may contain forward-looking statements which can be generally identified as such because the context of the statement will include the words such as GBOE "expects," "should," "believes," "intends," "anticipates" or words of similar import. Such forward-looking statements are subject to certain risks and uncertainties including the financial performance of GBOE, which could cause actual results, performance or achievements of GBOE to differ materially from any future results, performance or achievements expressed or implied by such forward-looking statements. Readers are cautioned not to place undue reliance on these forward-looking statements.
This Press Release does not constitute or form any part of any offer or invitation to sell or issue or any solicitation of any offer to purchase or subscribe for any securities in any jurisdiction, nor shall it (or any part of it) or the fact of its distribution form the basis of, or be relied upon in connection with, or act as any inducement to enter into, any contract or commitment therefore.
"Forward-looking statements," as defined in the Private Securities Litigation Reform Act of 1995, may be included in this press release. These statements relate to future events and/or our future financial performance. These statements are only predictions and may differ materially from actual future events or results. GBOE disclaims any intention or obligation to revise any forward-looking statements whether as a result of new information, future developments or otherwise. Risks particularly associated with our current business include, but are not limited to the risks associated with our ability to (i) obtain the necessary financing to complete our prospective acquisitions of H&M and the Colorado Acquisition and to finance our current operations, (ii) generate sufficient revenue and obtain profitability, (iii) obtain additional financing as needed, (iv) manage changes in general economic and business conditions (both generally and in the natural gas and oil services and the energy industry), (v) react to actions of our competitors, (vi) develop new services and markets for our services, (vii) identify and manage risks in connection with acquisitions (viii) evaluate the level of demand and market acceptance of our services and (ix) make necessary changes to our business strategies.