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Ludlow Energy Ventures Upgrades Research Opinion on Bluefire Ethanol Last Updated: June 27, 2008 - 1:27am EST (NEW YORK)-- New York based Ludlow Energy Ventures, Inc initiates research coverage on Bluefire Ethanol Fuel Inc., (OTC: BFRE), a producer of cellulose based ethanol in the United States, with a A equity rating.SUMMARY BlueFire Ethanol Fuels, Inc. today announced that the company was granted a conditional-use permit from the County of Los Angeles. The permit will allow BlueFire to move forward with the construction of the nation’s first commercial facility that will convert biowaste into ethanol. This facility, which will be located in Lancaster, will utilize the company's commercially tested and ready, patented Concentrated Acid Hydrolysis Technology process and is expected to yield ~3.2million gallons / year of ethanol. Bluefire Ethanol Fuels Inc. is a development stage cellulosic-based ethanol company with the capacity to produce fuel from a number of input’s including: municipal and forestry waste as well as agricultural products through the company's licensed Concentrated Acid Hydrolysis technology. Bluefire and their Japanese partner have demonstrated a small scale integrated process for years and are working on developing a pre-fabricated model of the commercial facility to be deployed in their first project located in Lancaster. Top management at Bluefire Ethanol provides a distinct competitive advantage to the Company due to the diverse nature of the executive team. Management is in a position, due to their vast experience and knowledge in the renewable energy sector, to enter into strategic partnerships that will ensure the success of the company, whether it be on the technology or the project financing side. The Company's CEO Arnold R. Klann has specific experiences with project financing and was instrumental in the acquisition or development of over 600MW's of natural gas-fired co-generation facilities. Other executive include: John Cuzens (Chief Technology Officer / Senior VP) a veteran engineer in the ethanol industry as well as Christopher D. Scott (Chief Financial Officer) an experienced member with over 10 year of financial and operational experience. RECENT NEWS / QUARTERLY REVIEW Earlier this week the company received the initial installment of DOE funding (totaling $40 million) to develop its ethanol production on facility in Southern California, which is expected to have a output capacity of ~17millions gallons of ethanol / year. In addition to this the company was granted a conditional-use permit from the County of Los Angeles, Department of Regional Planning, to start construction of the facility, which is expected to be complete in July 2009. The facility is of significance importance to the United States as it is the first commercial cellulosic-based ethanol production plant. Lancaster Project Highlights: - Projected 3.1MM Gallon/ year ethanol capacity (~$8.5 million/year in revenue based upon a $2.75/gallon target) - Are in the final phases of receiving the permit to develop the project - Construction is planned to be finished for June 2009 - Issued Initial Resolution by the California Pollution Control Financing Authority for tax-exempt bond financing - Initiated a partnership with Roeslein Association to begin prefabricating the Lancaster project modules to ensure that construction for the facility stays on track.Southern California Project Highlights: - Projected 19.4MM Gallon/ year ethanol capacity (~$53.3 million/year in revenue based upon a $2.75/gallon target) - The project is currently in the design phase and expected to start construction in 2010 - $40 million awarded to Bluefire Ethanol from the US Department of Energy to develop project - A purchase and sales agreement with Petro-Diamond is in negotiations for the purchase of the facility's ethanol output. RESEARCH OPINIONMark Blackwell, Research Analyst with Ludlow Energy Ventures commented," the new ‘Farm Bill’ that was passed by Congress in April and the $40 million DOE award, for their Southern California Project, puts Bluefire is in a great position to ensure that development of their two corner stone projects move forward. The company is also exploring partnerships to ensure that feedstock for both of the projects is met which will ensure that output at each of the facilities is being met. When comparing relative performance to another DOE ethanol-based award winner (Alico Inc.), Bluefire Ethanol ,on a percentage basis, outperformed the stock. 
In addition to this, BlueFire's strategy to develop
facilities located on the coastal regions in the United States will
give them a competitive advantage over traditional biofuel companies
because it will reduce shipping costs, as a majority of consumptions
come from these densely populated areas.
Lastly,
with a combination of the much needed per gallon tax credit ($1.01),
passed in the Farm Bill, and their combined projected 19 million
gallon / year production the company is a strong position to become
a leading ethanol player, therefore Ludlow Energy Ventures has commenced research coverage on BFRE, with a 'optimistic'
A rating with a short-term price target of $4.50.
Report Updates: To receive updates on this
research report, or
wish to request an investor packet on BFRE
 ETHANOL INDUSTRY OVERVIEW Ludlow Energy Ventures has a vested interest in identifying companies within the ethanol industry whom are on the cutting edge of technology and are able to withstand the small profit margins and fluctuating commodity prices taking place. One of the key elements contributing to the growth of the ethanol industry in the United States is the economies of scale in production and the growing concern about the environment. Boosts in production will consequently yield increased capital in the industry and will produce improvements in technologies and therefore decreases production costs. However, although increased production has taken place; fluctuating commodity prices are having a gradually larger effect on growth. This a major issue, in that a majority of ethanol production is made from corn, which accounts for more than half the input cost associated with production. Having corn as one of the major inputs in making ethanol has simulated major debate on whether or not there is enough excess corn to meet growing demand for ethanol fuel. According to the American Coalition for Ethanol, approx. 1.6 billion bushels or corn went to production in 2005 – about 12% of the nation’s total corn crops. In 2006, however, the amount of U.S corn processed into ethanol was projected to hit 2.5 billion bushels, a 36% jump. With these growth patterns in mind, the United States will likely start reaching limitations on growth within the next 7-10 years. Due to the unpredictability of commodity prices, there is extensive research being done to move beyond feedstock’s such as corn to inputs such as forestry waste and wood residues to produce cellulose based ethanol. This shift from food crops to waste residue offers unique opportunities for a range of stakeholder groups including: farmers, biotech firm’s investors and food producers. In addition to this, current feedstock’s being used in mainstream ethanol production is putting a strain on the global food market – as they are now being converted into fuel. With development of technology and increased investment, cellulose based ethanol should hit as much as 150 billion gallons of ethanol by 2050, according to a report by the National Resources Defense Council (NRDC), which equates to more than 2/3 of the current gasoline consumption in the entire United States. Furthermore, ethanol (mainstream or cellulous based) is beneficial in helping to reduce GHG emissions in the United States and beyond. According to a research study conducted by the Argonne National Laboratory, it was found that a 10% ethanol blend into conventional gasoline could reduce global GHG emissions, by ~12% to 19%. In addition to these reductions, the Renewable Fuels Association has stated that ethanol could reduce tailpipe carbon monoxide (CO) emissions by as much as 20% and tailpipe particulate matter (PM) emissions by 50%. . ABOUT LUDLOW ENERGY VENTURES, INC. Based in New York City, Ludlow Energy Ventures is a venture capital and research advisory firm with a specific focus on the renewable and alternative energy markets. The goal of the firm is to promote investments into alternative and renewable energy projects and ventures worldwide. Ludlow Energy Ventures owns and operates the Ludlow Energy Indices, which tracks a wide basket of US traded large and small cap alternative energy stocks. www.ludlowenergy.com -------- Contact: Ludlow Energy Ventures, Inc. Sarah Kapchinske Managing Director (212)-233-2864 sarah@ludlowenergy.com Disclosure: This is NOT a solicitation to Buy or Sell any security, but rather is for research purposes only. Content contained herein includes facts, views, opinions and recommendations of individuals and organizations deemed of interest. Ludlow Energy ventures does not guarantee the accuracy, completeness or timeliness of, or otherwise endorse these views, opinions or recommendations, or give investment advice. Ludlow Energy Ventures, its affiliates, or directors, may or may not hold a position in the above security from time to time, and investors are encourage to consider this as a possible conflict of interest when reviewing this information. In Compliance with SEC Rule 17B Ludlow Energy was NOT compensated for the distribution of this research material, but may hold a position in the above securities in the Ludlow Energy fund, and should thus be considered a possible conflict of interest when reviewing this report and information. |
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