The project will have access to abundant low-cost natural gas from the Marcellus shale region, as well as benefitting from substantial existing infrastructure. Initial engineering for the facility is complete and the air permit has been issued. Final investment decision is expected within six to nine months. Future expansions could see installed capacity of 10,000 bpd or more at the site.

In addition to Ashtabula, Pinto Energy has a pipeline of smaller scale GTL projects it is seeking to develop throughout North America.

The acquisition of Pinto Energy will allow Velocys further to stimulate early market adoption of its technology in North America by accelerating the development of “shovel ready” GTL projects. It also provides complementary skills and business synergies.

Velocys technology remains fully available for license to new customers. Furthermore, Velocys is also open to partner with project developers to bring promising smaller scale GTL opportunities to market.

The acquisition of Pinto Energy, one of North America’s leading smaller scale GTL project developers, provides Velocys a key stepping stone for commercial growth. It will strengthen our route to market, accelerate early adoption, and deepen our ties with suppliers, partners, investors and customers across the entire GTL value chain. Our primary mandate remains technology leadership in smaller scale GTL; Velocys continues to work with and welcome customers seeking to take advantage of the historic opportunity presented by smaller scale GTL.

—Roy Lipski, CEO of Velocys

Velocys has acquired 100% of Pinto Energy and its wholly owned subsidiaries, including Ashtabula Energy LLC, for an initial consideration of 955,977 ordinary shares in Velocys plc (201,089 of which shall be held in escrow pending claims by Velocys under the sale and purchase documentation), and a further sum of 1,072,476 shares at successful financial close of the Ashtabula GTL project (subject to certain conditions), as well as five year warrants over up to $750,000 worth of Shares that will be granted for each additional project in the Pinto Energy pipeline (up to a maximum of two projects) that achieves financial close by the end of 2015, struck at a price equivalent to the greater of £2.192 (US$3.72) per share and 200% of the share price at financial close of the project in question.

The consideration shares will rank pari-passu with all existing ordinary shares of Velocys plc. Application has been made for a portion of the initial consideration shares (being 754,887 Shares) to be admitted to trading on AIM; it is expected that such admission will be effective as at 8 am on 1 July 2014.