GeoBio Energy, Inc. Signs Letter of Intent to Acquire Pipeline Construction Company

/ Source: GlobeNewswire

SEATTLE, Sept. 30, 2010 (GLOBE NEWSWIRE) -- GeoBio Energy, Inc. (Pink Sheets:GBOE) ("GeoBio"), pursuing its plan to become a dominant player in the oil and natural gas services industry, today announced the signing of a Letter of Intent to acquire all of the ownership interests of a Grand Junction, Colorado based pipeline construction company (the "Pipeline Construction Company"). GeoBio expects that the combination of the Pipeline Construction Company with the previously announced, anticipated acquisition of a Colorado based, civil construction company will provide a solid base for growing the GeoBio construction business. 

The Pipeline Construction Company is a contractor servicing the oil and natural gas drilling, production and transmission industry that operates in the Piceance Creek Basin in Colorado, Wyoming, North Dakota, Utah and New Mexico. It has grown rapidly and profitably, generating over 50% compound annual growth rate and an average 40% EBITDA over the last three years. The Pipeline Construction Company, coupled with the anticipated closing of Magna Energy Services ("Magna"), a chemical treatment company operating in the San Juan Basin shale play area of New Mexico, provides a solid platform for substantial growth.

GeoBio and the Pipeline Construction Company are currently finalizing the definitive acquisition agreement, under which GeoBio proposes to acquire the Pipeline Construction Company for a combination of cash, debt and equity in GeoBio, with an anticipated closing within 120-days of the Letter of Intent.

As of 2008, Colorado was the 8th leading state for total number of producing natural gas wells, at 25,716. The year also saw natural gas consumption reach near-record levels of 23.2 trillion cubic feet, of which Colorado was an important supplier. With the recent completion of the Rockies Express West interstate pipeline, and anticipated drilling increases in 2010 - 2011 by the operators in Piceance, the Pipeline Construction Company is in a strong position to become one of the leading pipeline contractors in the region.

Further, given that the Piceance Creek Basin is developing at a rapid pace, GeoBio intends to rapidly establish chemical blending and service operations in the Piceance Basin utilizing the relationships of the Pipeline 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 customer bases of Magna and the Pipeline Construction Company. 

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.

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. We anticipate that the Pipeline Construction Company, along with Magna, provides a solid platform for potential, long term growth, expansion and profitability, while creating immediate opportunities for revenue and profits. With a proactive strategic sales and marketing plan, taking advantage of the synergies between the two companies, cross selling and expanding capabilities and geographic operations, we believe this will create significant value for our shareholders."

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About GeoBio Energy:

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.

Safe Harbor Statement

This Press Release contains forward-looking statements generally identified as such because the statements 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 the Pipeline Construction Company, Magna and the Colorado civil construction company 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.

CONTACT: GeoBio Energy Corporation Investor Relations Joseph J. Malone 786-375-0556