XL TechGroup creates its fourth company, PetroAlgae

28 September 2006

XL TechGroup, Inc. (AIM: XLT), the systematic architect and builder of an ongoing stream of high value new companies, is pleased to announce the creation of PetroAlgae LLC, the fourth company to reach the development stage of XL TechGroup's proven methodology for value creation. PetroAlgae follows AgCert International plc, which was created by XL TechGroup in May 2002 and listed on the London Stock Exchange in June 2005, TyraTech LLC which was created in July 2004 and has already started earning its first revenues, and DxTech LLC, which was created in July 2005

PetroAlgae is commercializing a proprietary, environmentally-friendly algae that generates over two hundred times more energy per acre than traditional biofuel crops like soybeans. Using a cost-effective, modular cultivation process that can be massively scaled, PetroAlgae will produce renewable feed stock oils for use in applications such as transportation fuels (e.g. biodiesel), heating oil, and plastics. This development places PetroAlgae in a leading position to address an ever-increasing multi-hundred billion dollar global market need for sustainable, affordable sources of petroleum derived products.

The algae can be grown in many areas, including those regarded as wasteland. The algae mature within 24 hours, permitting daily harvesting, and 50% of its weight is usable oil. To harvest, the oil is simply pressed from the algae. The energy density of the algae is such that, if just 2% of the cultivated land in the US was used to grow this alga, it would produce 60 billion gallons of oil - enough for the entire annual US demand for diesel fuel.

Other benefits provided by the algae system include carbon dioxide and sulphur dioxide emission reductions, and water remediation. Greenhouse gases are absorbed by the algae during photosynthesis, offsetting emissions caused by the burning of the derived oil. The algae also act as a filter in natural water systems, helping to prevent accumulation of heavy metals or other harmful substances in water supplies.

PetroAlgae's business development plan addresses multiple markets, with the initial thrust aimed at global commodity markets such as biodiesel, large-scale fatty acids and bioplastics. Target market sizes are significant with, for example, US$150 billion spent annually in the US on transportation diesel and home heating fuel. Petroleum used in the manufacture of plastics in the US amounts to an additional market of US$15 billion per year. A second, more disruptive part of the business development plan is aimed at smaller, but still significant and potentially higher margin areas where there is strong demand for more specialised, high performance oils in applications such as medicines, cosmetics and food products. XL TechGroup is already in discussions with a number of global multinational strategic partners and potential end users.

John Scott, Chief Executive Officer of XL TechGroup, said: "We are extremely excited about the potential of PetroAlgae to transform the gigantic global markets which currently rely on petroleum based feedstock. The modular production process also lends itself to the rapid scaling of this technology in order to satisfy the significant market demand. The formation of XL TechGroup's fourth company further demonstrates the success of our systematic approach to creating truly disruptive technologies."

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