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SulphCo, Inc. (NYSEMKT:SUF)

F1Q09 Earnings Call

December 16, 2008 4:30 pm ET

Executives

Stanley W. Farmer – Chief Financial Officer & Vice President

Larry Ryan, Ph.D. – Chief Executive Officer & Director

Analysts

[Alfred Blakey – Gun Allen]

[David Munson] – Private Investor

David Firshein – Cascade Capital Corporation

[Bill Holstein – B&H Group]

James Van Allen – Philadelphia Investors

[Thomas McParkson – Private Investor]

Operator

Welcome to the SulphCo quarterly investor call. At this time all participants are in a listen only mode. A brief question and answer session will follow the formal presentation. (Operator Instructions) As a reminder, this conference is being recorded. It is now my pleasure to introduce your host Mr. Stan Farmer, CFO for SulphCo.

Stanley W. Farmer

Thanks to everyone for joining us on this shareholder call today. With me on the call today is Dr. Larry Ryan, SulphCo’s Chief Executive Officer. Before we get in to the body of today’s call which is to review our progress thus far, I’d like to offer the following disclaimer. Please note that some of the information you will hear today may consist of forward-looking statements regarding revenue, memoranda of understanding, test results, margins, operating expenses and future goals.

Actual results or trends could differ materially from our forecast. For more information please refer to the risk factors discussed in our Forms 10K and 10Q on file with the SEC. SulphCo assumes no obligation to update any forward-looking statements or information as of their respective dates. Today’s call is being recorded and an audio replay will be available on SulphCo’s website.

Now, turning to our current business, I would first like to reiterate our strong financial position. In June of this year we raised approximately $25 million of capital to fund our transition from a research to a commercial enterprise. Given the current difficult credit and financial markets we are fortunate to be in such a position. For the 11 month period ended November 30, 2008 we had an average monthly cash burn rate of approximately $1.25 million per month.

As of November 30, 2008 we had approximately $19.2 million of cash on hand that based on current assumptions we anticipate will take us through the latter part of 2009. Having this cash on hand will allow us to hire important personnel as well as fund scale up and commercial activities. We have continued to add technical personnel to our Houston laboratory over the past several months and will continue to do so in the upcoming months.

Before I turn the call over to Dr. Ryan, I would like to make clear SulphCo’s continued commitment to delivering shareholder value and to being as transparent as possible with respect to our ongoing scientific developments and commercial discussions. During the past few months and in to the New Year we have been and will continue working diligently to deliver information consistently to our current and potential investors.

We expect that the increased visibility of our ongoing activities will be beneficial in helping our stakeholders understand the true potential value of our business. To that end, we have developed an expanded shareholder outreach program that will allow us to enhance the transparency of our communications with current and future investors. We have met with a number of potential investors over the past several weeks and are meeting with several more while we are here in New York this week.

As a management team, we have also increased our outreach in to several media outlets including interviews with newspapers, trade magazines and other forms of media in order to tell the SulphCo story not only to the investor community but also to our industry and target customers. Both Dr. Ryan and our Chief Technology Officer Dr. Florian Schattenmann have been participating in these interviews over the past several weeks and we expect some of these meetings will result in expanded media coverage in the coming weeks.

We are also in the process of increasing our investor and public relations channels and expect to hire a leadership team member in that area in the near future. I am highly confident that as a result of our increased presence in the media and development of our shareholder outreach program and our continued commitment to transparency investors will be able to share in our management team’s excitement about what the future holds for SulphCo.

In short, we have a great story and opportunity with our technology at SulphCo and we want to make sure that the story is heard by as wide an audience as possible. With that, I would like to turn the call over to our CEO, Dr. Larry Ryan.

Larry Ryan, Ph.D.

First, I’d like to thank everyone who has taken the time to join this call this afternoon. I’d like to take this opportunity to discuss the progress the company has made during the past few months regarding our technology development and commercial operations. I will first discuss the positive developments from our laboratory in Houston and explain how this relates to our ongoing and future projects.

Then, I will provide an update for our current activities in North America, Europe, the Middle East and Southeast Asia. For the technology development, as we discussed in the last conference call in October and as all of you are well aware, there are two critical elements to the SulphCo technology: one, the mechanical aspects, the ultrasound technology, probes, generators, drivers, etc.; and two, the chemical aspects, the catalyst, additives, etc.

During my first 15 to 18 months at SulphCo starting in January 2007 we necessarily focused on improving our ultrasound probe technology. Our research has shown time and time again that a best in class ultrasound probe is indispensable to the effective operation of our sulfur removal process.

I feel that with the technology license from Industrial Sonomechanics, ISM and the manufacturing and development capability of Markische Werke, NWH we have been able to achieve remarkable results. Our probes today both in the laboratory and commercial scale are reliable, robust, economical and state of the art truly a testament to the combined hard work of SulphCo personnel and our development partners.

We are already confident our current probe technology is commercially viable from both a cost and operational standpoint. With the mechanical part of our process well in hand, over the past eight months we have turned to optimizing the chemical platform for our technology. We have made tremendous strides in this area and I am pleased to report that we have been able to produce consistent, reliable and reproducible sulfur reduction results in our Houston laboratory over the past few months on over 85% of the crude oils and fuels we have tested.

I will go in to further detail in a moment but suffice to say that our technology has never been in better shape. We have spent the past months developing data packages for current and perspective customers making sure that the results are consistent, reproducible and meet their requirements. The increased data and information has been well received by potential customers and we are working with them as fast as possible to identify the best applications and move towards implementation of the technology on a commercial scale.

Perhaps the most important development for us at SulphCo occurred in October where we were able to demonstrate the our technology at a customer’s site and reproduce reliably and consistently the same sulfur reductions that were observed in the laboratory. We have observed immediate sulfur reduction of over 20% and we were also able to reduce the sulfur by more than 50% with some additional processing.

These results were confirmed by an outside laboratory. We were also able to show that we converted more than 80% of the sulfur compounds in the oil to new molecular structures. This is a significant milestone. First, because we were able to produce great results on a customers’ specific crude at their own facility and consistent with their target requirements and secondly because that data generated has been very useful for continuing development in our lab as well as for presenting to other potential customers.

We have been and will continue using this data as a showcase for our technology. The level of detail we are able to discuss goes far beyond what we’ve been able to use in the past. One of the key improvements for our laboratory over the past few months has been the addition of a piece of sophisticated analytical equipment that allows us to analyze the sulfur content of a crude oil in terms of the molecular structure.

Normal crude oil in fuel fractions contain a mixture of sulfur molecules of many types distributed throughout the various boiling point ranges in the oil. For example, the diesel fuel fraction typical contains a large amount of what’s called benzothiophenic sulfur which is very difficult to remove through a conventional hydrotreating system. Our process converts these sulfur compounds to an oxidated form that is sulfoxide and [sulphones].

This is significant because in addition to reducing the absolute sulfur content by weight, by transforming the sulfur that remains in to these different species, we move it to higher boiling points within the crude oil. This is crucial to the refining customer because the sulfur content is reduced by 65% or more in the important middle distillery range where gasoline, jet fuel and diesel fuel reside.

I know there have been questions regarding the cost of our process and I want to address them today. First, the cost of our process will vary by application and the desired results and, as you would expect the cost of chemical additives is directly correlated to the amount of sulfur to be removed. For sour crude applications, the cost benefit relationship is highly customer dependent largely influenced by the price of crude oil and environmental considerations.

Suffice to say, even at our current state of technology development in today’s crude oil pricing, we feel confident that we can successfully treat diesel fuel and other middle distillate fuels and a number of crudes and achieve profit margins within the parameters laid out in our business model. We believe that this segment of the market alone numbers in the millions of barrels per day.

I will now provide a summary of the developments in the Houston Laboratory over the past few months including specific data results we have been able to communicate to our potential customers. Our combined mechanical and chemical approach allows us to produce consistent, reliable and most importantly commercially relevant results for potential customers in the laboratory.

In October, as mentioned above, we put our system to the test at a potential customer site utilizing our newest 5,000 barrel per day mobile skid at a potential customer site in the southeastern part of the USA with significant success. In those field trials we were able to duplicate our laboratory results and full scale operation reducing the sulfur content immediately by more than 20% and more than 50% with additional processing.

Perhaps more importantly the results of these trials, especially those obtained with the new analytical equipment provides us with a set of detailed data that we can leverage with all potential customers. Of course, it also reconfirms the value of the systematic approach we are taking in our laboratory. Over the past few months we have been able to build upon our laboratory success and develop detailed technical data for a number of crude oils and fuels.

We have tested several different crude oil samples typically producing 20% to 30% immediate sulfur reduction and typically more than 50% reduction with additional processing. With our new sulfur analyzing equipment described earlier, we are able to track the changes to the molecular structure of the sulfur compounds in the crude oil and observed that in many cases the sulfur compounds present in the lower boiling crude oil fractions are almost completely converted to the oxidized species.

In one particular case study we were able to show that more than 65% of the sulfur compounds are removed from the middle distillate fuels. With further processing we were able to reduce about 90% of the sulfur compounds originally present in the diesel fuel fraction. In addition to crude oils we have also had many potential customers supply diesel fuel samples for sulfur reduction opportunities.

From an economic standpoint, diesel fuel is a very attractive opportunity for us due to the lower starting sulfur levels. Our work in the lab to date shows that we can remove more than 70% of the sulfur compounds from the diesel fractions we have tested. We are continuing to work with the diesel fuel supply through our laboratory and expect to spend significant time optimizing our process for those applications.

We have as well observed API shifts of up to five points in certain crude oils tested in our laboratory. The observed API changes tend to be larger for lower API crude oils, that’s both five points for the starting API somewhere in the twenties and about a one point change for crude oil with a starting API of about 40. Although not the primary focus of our current efforts, these API shifts represent an incremental economic benefit to the overall process and are very important for heavy oil applications.

Now, I’d like to move over to provide you an update on some of our commercial activities. SulphCo is transitioning from a development stage company to a commercial and operational company. I personally have never felt better about the technology, the company and the direction in which we are headed. In the past few months we have been able to produce exciting results both in the laboratory as well as in the field and that is aiding our commercial efforts immensely.

Given the fluctuations in crude oil pricing over the past year or two, we have focused our efforts on potential customers who will derive material value from our process regardless of whether crude is $50 a barrel or $150 a barrel. One segment of the market that continues to be a fruitful one for SulphCo is in the crude oil products such as diesel fuel. For these fuels government regulations on sulfur content are driving market pricing differentials and increasing processing cost.

For example, current regulations require less than 15 parts per million sulfur in ultra low sulfur diesel fuel in the USA with the limit actually less than 10 PPM in Europe. Typical crude oils have much higher levels of sulfur present in the diesel fuel fractions so refineries either have to sell dirty diesel at a discount to the market or further process the diesel fuel product to meet the requirement.

The traditional process for removing sulfur compounds is hydrotreating, a high temperature, high pressure expensive catalyst based process which also consumes hydrogen in the process of removing the unwanted sulfur. It is estimated that 90% of hydrotreating capacity is utilized to remove about 20% of the sulfur compounds that are difficult to treat. A large percentage of those difficult to treat sulfur compounds are the ones that our process affects.

Also, up to 10% of a refineries carbon dioxide emissions result from the production of hydrogen necessary to treat sulfur compounds in the fuels and residual oil. By lowering hydrogen costs the bottlenecking existing hydrotreating processes avoiding investment for new hydrotreating capacity and lowering hydrogen usage which in turn reduces the carbon footprint. The SulphCo process can drive significant incremental value for a refining customer.

Now, to give you some specifics on ongoing programs. In the southeastern USA, again in October we conducted another series of trials at a potential customer site. During these trials we were able to reproduce consistently and reliably sulfur reductions commensurate with our laboratory work. The data from the trial was independently verified by an outside laboratory located in New Orleans.

The immediate sulfur reductions obtained from the process met the customer’s expectations. There are a few processing and cost issues that remain to be resolved. We are working in the laboratory and have enlisted an outside engineering firm to aid in the development and implementation of the simplest and most economical solution for all parties involved.

Now, to provide an update on our program with our European partner; our CTO and I met with our European testing partner in November and presented a detailed picture of our Sonocracking technology to the technical team. As you know, we have conducted several trials with this partner over the course of the past 18 months but from the results of those trials we were not able to provide them with a clear and detailed demonstration of our technology.

This time however, it was quite different. By using most of the sulfur speciation data generated from our laboratory and field trials in the southeastern USA as described in the technology section earlier, we were able to clearly show the effect of our process on the properties of the sulfur compounds in a crude oil. From our testing partner’s perspective there is now not a doubt or question about whether the technology works.

The questions now center around the effect of the changes on the downstream processing in their refineries. There are clear benefits in terms of one, immediate sulfur reduction in the crude oil; two, reducing the sulfur content of the lower boiling and higher value fractions of the crude oil, that’s [inaudible], kerosene and diesel; three, reducing the severity of the hydrotreating process; and four, the potential of reducing the carbon footprint of the downstream process.

At this technical meeting we immediately agreed to work on parallel paths in the laboratory and back in the field at the testing partner’s site. As you know, one of our 15,000 barrel per day processing units is still located at our testing partner’s site in Europe so we can conduct a series of trails in a timely manner. In January, we will be conducting laboratory work in conjunction with our European testing partner and we are scheduled to conduct another series of trials in the field.

Naturally, we are very excited about these developments and are committing resources to the program to ensure our best chance for success. We will keep you updated on this program as significant milestones occur. Just a brief update for the Middle East, we are continuing to work with our distributor, the Amerigroup and they’re developing several opportunities in the Middle East region.

We are in detailed discussions with several potential customers and will provide updates on these programs as they progress. To update you in Southeast Asia, as you are well aware, we have been working with a potential customer in Southeast Asia for some time now. I’m happy to say that based on our recent laboratory results that the potential customer has agreed to expedite delivery of crude oil samples to our Houston facility where they will witness testing.

We are in the process of scheduling that visit through our distributor Isis Megah and expect the testing to occur in the coming weeks. In addition to these specific opportunities, we have begun evaluating crude oil and petroleum product samples from South America that have been provided by our regional distributor [JW Technolgia y Servicios Petroleos].

In summary, although a lot of the programs take longer than everyone anticipates, it is part of the normal technology implementation cycle. We are in the best shape that SulphCo has ever been in, in terms of our ability to clearly articulate our technology and benefits to potential customers. A big piece of what was missing in the past is now in place. We are capable in our laboratory of providing detailed data to our potential customers on their crude or fuels.

This detailed data has already proven critical to advancing programs beyond the early stages. We are confident that we will continue to move forward with several projects and be able to meet the cost and benefits desired from all parties involved. One thing to keep in mind is that our potential customer list keeps growing and the applications expanding.

In summary, as a management team we’ve never felt more confident about the technology and the prospects for SulphCo. We remain well funded with over $19 million in cash on hand which is fortunate given these tough economic times. We have made tremendous strides in our Houston laboratory and are able to produce consistent, reliable and commercially relevant results on a number of crude oils and fuels.

We have demonstrated our technology on a full scale basis at a potential customer site and have reproduced the same results observed in our laboratory. We are taking a systematic approach to our technology and commercial applications by focusing on a few applications for execution. Although there is still more work to do in terms of secondary operations than the overall process, we are confident that we will be able to overcome these issues and generate a commercial product.

We understand the cost benefit relationship for our process and the context of the broad petroleum market applications and are focused on those applications that will drive the most value for SulphCo. Overall, we remain focused on the most important thing, executing the best opportunities as quickly as possible so we maximize our shareholders value.

I’d just like to take the opportunity to reiterate our communication plan. We’re going to continue to hold quarterly conference calls to keep the investment community updated on the recent activities of the company and to answer investor questions. We will also of course, continue to issue 8Ks and press releases as material events warrant. As a leadership team we want our investors to be as informed as possible on the relevant current events of the company.

Thanks for your attention. Now I’d like to open up the line for any questions.

Question-and-Answer Session

Operator

(Operator Instructions) Our first question comes from [Alfred Blakey – Gun Allen].

[Alfred Blakey – Gun Allen]

It looks like you’re really going forward with the process and everything and hopefully we’re in the last phases. It always seems like something jumps up where there is one more thing before a contract needs to happen or perfecting the machines, getting costs down on the machines but I think you guys will get there. I just have something, it’s a little bit irrelevant but it has to do with the company itself, that lawsuit that you guys were in it recently just went on.

I know you just won it at the state level but was there a federal lawsuit going on or the company Clean Fuels tried to – how did that wrap up? Is there any news on that?

Stanley W. Farmer

Let me respond to that, that trial started on December the 1st and it ran for 10 days. It recessed last Friday without the judge rendering a ruling. For those that don’t know, it was a bench trial and not a jury trial so the evidence from both sides has been presented to the judge, the judge recessed the trial without reaching a verdict and we are now in the process of preparing post trial briefs that will be provided back to the judge in mid January that will then enable him to render his final conclusion probably late January, early February. That’s really all we can say about it at this point.

Operator

Our next question is from [David Munson] – Private Investor.

[David Munson] – Private Investor

In regard to your European partner and the ongoing testing there, if that proves to be successful is the 15,000 barrel a day unit that you have there sufficient to move in to some sort of quasi commercial operation?

Larry Ryan, Ph.D.

I think the short answer to your question is that where the unit is, it’s sufficient for the quantity of oil that goes through that site. But, clearly we’re obviously looking at the relationship with the European partner as one that’s going to be a lot bigger and broader than that. We anticipate a number of steps in that process. I think we’ve made a tremendous amount of progress with them in the past couple of months and we want to move as quickly as possible.

That unit that we have in the field is going to prove to be very important for us because it’s already there and we can start it up very quickly and really get going with them as soon as possible.

[David Munson] – Private Investor

Is there any indication of the timing on moving forward with that?

Larry Ryan, Ph.D.

Well, we’ve already scheduled to be in the field I think it’s the last week in January, whatever that Monday is, we’re actually going to be out in the field doing the next round of trials with them and in conjunction with that, Dr. Schattenmann will be over in their R&D facilities working with them in the laboratory on several items as well in the early part of January. So, we’re really putting a lot of energy on this one.

Operator

Our next question is from David Firshein – Cascade Capital Corporation.

David Firshein – Cascade Capital Corporation

My question goes to the situation in the southeast, I was not clear from your comments, is there a revised sense of timing on that? Is there anything you can say on that? I apologize it was just not clear to me when I was listening.

Larry Ryan, Ph.D.

We’ve done a few trials with these guys so far and we’ve made a tremendous amount of progress. We’ve been able to demonstrate the technology on scale in their field applications so all that is great. There are a few things that from – the best way to say it is that the site that we’re at is not very sophisticated in terms of infrastructure and so there are a few things from a processing standpoint that we need to work out with that potential customer and that’s what we’re doing.

We’re working on that in the lab and we’ve also enlisted some outside engineering help to help with some solutions there.

David Firshein – Cascade Capital Corporation

Is there anything left over from the previous press release about that basically saying that there were certain I would call it fine tuning that was still talked about in that press release? I take it that’s different than what you’re talking about here? Are those two things different?

Larry Ryan, Ph.D.

They’re basically the same.

David Firshein – Cascade Capital Corporation

Is there any concern that you’ll be able to do that any time soon or are you just saying that you can get there?

Larry Ryan, Ph.D.

We know what we need to do and the items that we have to accomplish don’t require new inventions to do them, it just is going to take some time to get it done to the satisfaction of the customer as well.

Operator

Our next question is from [Bill Holstein – B&H Group].

[Bill Holstein – B&H Group]

I hate to say it but this conference call is identical to the one we had three months ago, identical to the one we heard six months ago. The testing is going great, you’re as optimistic as you’ve ever been, you’re moving forward, you’re working on these issues but in plain, simple English the secondary issues you said, and just a moment ago with David Firshein you said, “We know what we have to do and it’s a matter of doing that to the satisfaction of the customer.”

How long is this going to take to get done? I mean, we are we going to have the same phone call three months from now and six months from now? Or, is this something that you feel that is imminent? A year ago the exact verbiage you used is, “We’re moving out of the testing phase in to the commercialization.” And, that was exactly a year ago so give us a real honest opinion without putting a timeline that’s going to get you in trouble with a future looking statement.

Give us an honest of opinion of where this technology is, when we’re going to be able to commercialize it, when we can expect a revenue generating contract? If there are issues that aren’t going to be very hard to overcome, let us know but, be honest with us.

Larry Ryan, Ph.D.

Well first I would say obviously we always give you the information that we have at the time and we’re always honest with the information we give out. I think when you’re developing a technology and as projects develop you often time hit curves in the road and there are some assumptions made at certain points that get changed over time as you learn more about the technology.

So, I think what I can tell you now is that truly from a technology standpoint it is very clear, it’s very easy to articulate, we’ve made a lot of systematic progress and now we actually are in to where a lot of technology projects spend a little bit of time which is we’ve been out in the field, we’ve been able to demonstrate the technology and you learn some things when you do that about additional items that you need to address.

Now, the timing on addressing those, I can’t give you a firm timeline on when they’ll be addressed what I can tell you is that the majority of the items that we need to address are available type of solutions they’re not something that we need to invent but, they do require some time to implement. Again, I don’t know how to give you a hard timeline on that but it’s part of the overall process as we go forward.

[Bill Holstein – B&H Group]

I mean Larry you have a definition in your head of what some time means, okay. Don’t give me a hard timeline but give me an idea of what your definition of some time is. Is that something that you think in days and weeks can be tackled, or is it going to be months, or is it going to be years? What is your definition of the term some time?

Larry Ryan, Ph.D.

I don’t think it’s going to be years first of all. It’s going to be something that is more in the weeks and months timeframe. I would not say it’s in the days timeframe.

[Bill Holstein – B&H Group]

And when you say that these are issues that have common applications out there that can be addressed does that mean you’re going to bring in outside people in to address this or are you going to address them in house? What is your battle plan to address these customer issues?

Larry Ryan, Ph.D.

Most of it we’re going to try to outsource as much as we can because we’re not experts in some of the areas. Some of these things are simple things like water separation issues so these aren’t inherently very complicated items to address. We’ve already brought people in from the outside and addressed some of those problems. Those are the types of things that we need to bring in but they again, when we have to bring in some of these secondary items it’s not that they’re necessarily complicated it’s just something that doesn’t happen in a day or two.

You have to have a real plan and a real project plan with the customer and we’re going after it as hard as we can and as fast as we can.

Operator

Our next question is from James Van Allen – Philadelphia Investors.

James Van Allen – Philadelphia Investors

It sounds like you’re moving ahead and that’s certainly appreciated. On the 18th of June in your presentation for the annual meeting you said your goal was to process 10% of the 50 million barrels of heavy sour oil. Is that still your goal and is that still realistic?

Larry Ryan, Ph.D.

I think what’s realistic is that the markets that we feel very capable of addressing still number in that same range. The certain types and applications have shifted a little bit Jim but not to the detriment of the overall market opportunity and/or the economics.

James Van Allen – Philadelphia Investors

Now, is that the total market as you see it now for your process or is it bigger and you hope to achieve – because I don’t think you’re going to get 100% of whatever the market is?

Larry Ryan, Ph.D.

Well, I guess we see our market as any crude oil or petroleum product stream that has a problem with sulfur compounds. In that sense there’s a 16 million barrel a day diesel market out there, there’s I don’t know how many millions of gasoline, there’s 84 million barrels of crude oil so in the mix there are a lot of opportunities and applications that we feel like we can address and I don’t feel like at all that our opportunity in the marketplace has gotten any smaller.

James Van Allen – Philadelphia Investors

You also indicated that the cost for this process was $0.50 per barrel, is that the same cost now?

Larry Ryan, Ph.D.

I think the cost there that was used was in illustration that we used for the process and in certain applications that will still hold true, in others it won’t. So as I said before, Jim what we’re really focused on is making sure that we retain our margin requirement for SulphCo because in some sense, I’m going to use a wild example, but if it took several dollars of cost to do something but you generated $10 worth of costs, as long as we can get $1 out of the situation, that’s still not a bad deal.

James Van Allen – Philadelphia Investors

So your cost vary by as much as $1, $2?

Larry Ryan, Ph.D.

They vary depending on the application and the oil stream to be tested?

James Van Allen – Philadelphia Investors

By how much approximately?

Larry Ryan, Ph.D.

It can range anywhere from in the 10s of cents to dollars depending on the application.

James Van Allen – Philadelphia Investors

Then the dollar, you can improve it to a degree? Even at this prices for crude, you can improve it so that you get your dollar out of it?

Larry Ryan, Ph.D.

I want to make sure I’m clear, we can do that for a number of fuels and crude oils, not for all of them. I think of course, as market prices changes, that would change as well. But, Jim again, what I would tell you is we have a lot of opportunity and if we can meet all the opportunity that we have everyone is going to be very happy.

James Van Allen – Philadelphia Investors

So you’re indication that 30,000 barrels a day could bring in $10 million a year is still valid on a general basis or an average basis?

Larry Ryan, Ph.D.

Yes, again our target is really on the net to SulphCo so yes.

Operator

Our next question is from [Thomas McParkson – Private Investor].

[Thomas McParkson – Private Investor]

It sounds like you worked past most of the technology issues. I was involved early in SulphCo and early in Fujairah and I was just wondering is that now an abandoned site?

Larry Ryan, Ph.D.

No, no, our equipment is still there of course, 90,00 barrels of our equipment is still there, it’s also manned on a daily basis and it’s also a facility that we have available to be used for testing purposes in the short term and it may develop in to something commercial in the longer term as the pipeline from Abu Dhabi goes through the port and they increase their fuel supply.

[Thomas McParkson – Private Investor]

What’s the timing on that now?

Larry Ryan, Ph.D.

The pipeline I think is 2010, in that range but I forget Tom, I have to look again.

[Thomas McParkson – Private Investor]

I mean you’ve got 90,000 barrels of production capability there and it sounds like you may have better opportunities in the southeastern US.

Larry Ryan, Ph.D.

Well, I didn’t say I wasn’t going to move it if I had to with the anticipation of other opportunities.

[Thomas McParkson – Private Investor]

The other question I have is I hear you going back and forth on distillate, on diesel, what are we selling? What’s the product now? Is it to get in on the front end of the heavy sours and transform those or is the whole game wide open now to improve any sulfur fuel?

Larry Ryan, Ph.D.

It’s the latter. I mean our technology is really geared around the modification of sulfur compounds in petroleum products whether that be a crude oil, whether it be heavy crude, sour crude, sweet crude, diesel, anything you can imagine so I consider that to be - our technical excellence is in the use of ultrasound to give us a highly efficient process to modify sulfur compounds in petroleum streams.

[Thomas McParkson – Private Investor]

In saying that I wonder why wouldn’t we try to partner with an engineering firm, a process firm who knows those refineries and can quickly, easily identify for the client the true benefit of our process.

Larry Ryan, Ph.D.

Tom, to be honest we’re doing some of that but I’d be more than happy offline to talk to you about any specific ideas that you might have. We’re talking to a lot of folks that have a lot of information in those areas.

[Thomas McParkson – Private Investor]

A final question I’ve got is we wrestled for a long time about the waste stream here and if you’re removing 20% initial removal, 50% in a secondary or additional processing and have the ability to reduce 80%, either you’ve created some incredible sulfuric gas or an incredibly large pile of sulfur. Is there a mass balance that’s been done now on the process that’s sound and firm and is stamped by a registered engineer?

Larry Ryan, Ph.D.

I don’t know that it is stamped by a registered engineer but we certainly have a much better and more detailed grasp of the mass balance and I think you’re comments would be correct but I would caution that they matter a lot in terms of how much sulfur is actually in the stream that you’re trying to treat to start with. If you start with something that has a 1,000 parts per million that problem is not as big as if you start with something that has 6% sulfur in it.

Operator

There are no further questions at this time. I would like to turn the floor back over to management for closing comments.

Larry Ryan, Ph.D.

I’d like to thank everyone again for attending the call tonight. We’d like to have the opportunity to keep you updated on the company’s activities and we’ll be talking to you again next quarter.

Operator

This concludes today’s teleconference. You may disconnect your lines at this time. Thank you for your participation.

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Source: SulphCo, Inc. F1Q09 (Quarter End 11/30/08) Earnings Call Transcript

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