Investors push SulphCo's new management for answers

Barely more than a year ago, the publicly traded stock of Sparks-based SulphCo Inc. briefly flirted with a price of $20 a share, and the stock market valued the company at about $1 billion.

Last week, the stock traded below $3.50 on the American Stock Exchange, its market capitalization stood at $240 million, and investors had plenty of pointed questions for SulphCo's new chairman and new chief executive officer.

Other than promising that they'll keep shareholders better informed, new Chairman Robert H. C. van Maasdijk and new CEO Larry Ryan provided few of the specifics that investors sought.

SulphCo is developing a technology that uses ultrasound to remove sulfur from crude oil. If the process works commercially, refiners might be able to get more usable fuel out of a barrel of crude, particularly in parts of the Middle East.

But the company has been working to develop a commercial version of the technology since 1999, losing $65.2 million in the process. More than half that loss $33.5 million was rung up in the first nine months of last year.

The board booted founder Rudolf W. Gunnerman from his posts as chairman and CEO in mid-January, and Gunnerman and the board have taken their battle to court. A month earlier, Gunnerman's son, Peter, had stepped down as president of SulphCo.

Van Maasdijk and Ryan a former General Electric executive barely had time to settle into their new offices when they scurried off to the United Arab Emirates to check on a joint venture that SulphCo is developing with the government of Fujairah.

In December, the company's previous management had said the facility was almost ready for commission. Last week, Ryan and Van Maasdijk backed down a long way from those statements.

The key question, Ryan said, is the lifespan of the SulphCo probes that would be inserted into crude oil, creating the ultrasound waves that are the heart of its technology.

The company hopes to develop probes that will require replacement every six months or so. Some of the current probes last only a few hours, and most no more than a couple of days, before they fall apart.

Ryan said the company previously insisted on developing the probes with its own staff. The new management, however, has enlisted outside suppliers to get their ideas to move the product development more quickly.

With any luck, he said SulphCo will be testing the technology at Fujairah and at a refinery in Austria by early spring.

The results of large-scale testing can't be overestimated, Ryan said. Unless those tests are successful, other potential deals SulphCo has in the hopper are likely to stall.

Van Maasdijk noted, too, the company will need to come up with more money to fund commercial development if the technology can be shown to work. He said the board is highly reluctant to sell more stock to raise capital because that would dilute the value of the holdings of existing shareholders.