Synthesis Energy Systems, Inc. Reports Fiscal 2014 Second Quarter Financial Results and Provides Business Update

Synthesis Energy Systems, Inc. Reports Fiscal 2014 Second Quarter Financial
Results and Provides Business Update

Company Reports $5.9 Million Revenue for the Quarter Versus $13,000 for the
Prior Year Same Quarter

HOUSTON, Jan. 29, 2014 (GLOBE NEWSWIRE) -- Synthesis Energy Systems, Inc.
(SES) (Nasdaq:SYMX) today reported financial and operating results for its
fiscal 2014 second quarter, ended December 31, 2013.

"During the fiscal second quarter and into the new calendar year, we have
advanced towards our stated key objectives of achieving meaningful revenues
for the company. Revenues from our Zao Zhuang joint venture's methanol
operation (ZZ JV), after we took operational control on October 31, 2013, were
approximately $4.4 million. This quarterly revenue was based on operating for
the months of November and December, and producing methanol from coke oven gas
(COG). In December we also operated for two weeks using syngas plus COG
feedstock. We demonstrated our ability to meet and slightly exceed the
facility's approximate 300 tonnes per day expected methanol production
capacity, achieving a maximum daily methanol output of 320 tonnes. We are very
pleased with this progress at our ZZ JV facility," said Robert Rigdon, SES
President and CEO.

"We have also entered the next stage of commercialization of our power
business vertical for the first distributed power plant based on our
gasification technology and GE's aero-derivative gas turbine power generation
system. Together with our partners, we have entered into an exclusive Letter
of Intent (LOI) with the Karachi Electric Supply Company, a large electric
utility in Pakistan, which spells out and initiates commercial and technical
development steps required for the parties to enter into negotiations for a
definitive power plant purchase contract," said Rigdon. "We believe this is
the first of several potential small- to medium-scale power projects that we
can secure together with GE, ISTROENERGO GROUP and TUTEN.

"Also on the near-term horizon, we continue to make progress on our
anticipated China partnership to advance our Chinese business platform across
multiple industrial sectors in the chemicals, fertilizers, power, natural gas,
fuels and DRI steel markets," continued Rigdon. "We have made significant
headway during the past three months towards securing a Chinese partner that
meets our key objectives.

"With concrete progress at our ZZ methanol operations, the advancement on the
distributed power business, and our China partnering initiative, we believe
that we are rapidly moving forward with our strategy of most effectively
deploying our proprietary advanced syngas technology, which enables the
economical production of cleaner, high-value energy from abundant low-grade,
low-cost natural resources worldwide. Through our partners, we are, in effect,
bolting our technology and engineering expertise onto leading large,
capitalized companies in different business verticals, such as power and
industrial equipment, and adding value into such initiatives," added Rigdon.

Recent Corporate Highlights

  *Zao Zhuang Joint Venture Methanol Plant – The handover of the Xuecheng
    Energy (XE) Methanol Plant to the ZZ JV was completed on October 31, 2013,
    giving the ZZ JV control of XE's adjacent methanol production plant and
    methanol product sales. The ZZ JV's methanol operation produced refined
    methanol at an average rate of approximately 185 tonnes per day utilizing
    primarily COG. Completed sales for the limited-run quarter were 10,127
    tonnes of methanol. In December, SES initiated test production of
    additional syngas feedstock produced by the SES gasification system at the
    ZZ plant, and expects annual methanol production rates to ramp up to
    90,000 tonnes per year when operating at full rates using syngas-COG
    feedstock input.
    
  *Yima Joint Venture Methanol Plant – The Yima JV completed commissioning of
    the refined methanol section of the facility. The JV operated at average
    80% capacity for the fiscal second quarter. SES owns 25% of the Yima JV
    and will not report income from the Yima JVs until dividends are paid.
    
  *Distributed Power Business - SES, along with co-marketing partner, GE
    Packaged Power, and regional collaborators, ISTROENERGO GROUP and TUTEN,
    signed its first Letter of Intent (LOI) with Karachi Electric. Karachi
    Electric is a large electric utility company in Karachi, Pakistan, with
    over 2.3 GW of installed electric generating capacity. The exclusive LOI
    calls for the engineering and financial feasibility evaluation of a coal
    gasification power generation plant with a gross capacity between 90 and
    200 MW to be constructed near Karachi.
    
  *Hongye Glycol Plant Project - SES entered into a Memorandum of
    Understanding (MOU) with Hongye International Investment Group Co., Ltd.
    for the supply of SES gasification technology, equipment and services to
    Hongye's 600,000 tonnes-per-year glycol plant to be built in the Inner
    Mongolia Autonomous Region of China, through subsidiary company, SES New
    Energy Technologies (Shanghai) Co., Ltd.
    
  *Hulunbeier Tianfu Energy City Gas Project - SES signed an MOU for an
    exclusive agreement with Hulunbeier Tianfu Energy to supply SES
    gasification technology, equipment and services to its 1 billion
    normal-cubic-meters per-year city gas project to be built in Hulunbeier,
    Inner Mongolia, China. Tianfu has completed the required Feasibility Study
    Report and Environmental Impact Assessment for the SES technology
    conversion of Inner Mongolian lignite resources to syngas.

Second Quarter Fiscal 2014 Financial Results (Unaudited)

The Company reported $5.9 million of revenue for the three months ended
December 31, 2013, versus $13,000 for the three months ended December 31,
2012. The Company's ZZ JV operated in November and December generating $4.4
million from sales of 10,127 tonnes of methanol produced using XE's coke oven
gas supply as a result of assuming operational control of XE's methanol plant
assets on October 31, 2013. In addition, approximately $1.5 million of
advances paid to ZZ from XE and its affiliate were recognized as revenue
during the quarter due to settling amounts due to ZZ under the prior syngas
purchase and sale agreement. 

The Company's operating loss for the second quarter of fiscal 2014 was reduced
by two-thirds to $1.3 million versus an operating loss of $3.9 million for the
second quarter of fiscal 2013. The decrease in operating loss was primarily
due to the margin on ZZ's revenues including the $1.5 million of prior
advances recognized during the quarter, and a $1.0 million, or 30% reduction
in overall general and administrative expenses, offset, in part, by an
increase in non-cash stock-based compensation expenses.

The net loss attributable to stockholders for the second quarter of fiscal
2014 was $1.4 million, or $0.02 per share, versus a loss of $4.4 million, or
$0.07 per share, for the prior year's second quarter.

As of December 31, 2013, the Company had cash and cash equivalents of $12.4
million, including $2.6 million held by the ZZ JV.

Conference Call Information

SES's President and CEO, Robert W. Rigdon, and CFO, Charles Costenbader, will
hold a conference call to review the Company's financial results for this
period and provide an update on corporate developments beginning at 4:15 p.m.
EST on January 29.

To access the live webcast, please log on to www.synthesisenergy.com.
Alternatively, interested parties may participate in the SES telephone
conference call by phoning (866) 250-8117 (U.S) or (412) 317-6011 (Int'l).
Callers should request the "Synthesis Energy Systems, Inc. call." Interested
parties can pre-register for the call at: http://dpregister.com/10040205.

An archived version of the SES conference call webcast will be available on
thecompany's website through March 2, 2014. A telephone replay of the call
will be available beginning approximately one hour after its completion and
will be available through March 2, 2014. Interested parties can access the
telephonic replay by phoning (877) 344-7529 (U.S.) or (412) 317-0088 (Int'l).
The PIN access code for both the live call and replay is: 10040205.

About Synthesis Energy Systems, Inc.

Synthesis Energy Systems is a Houston-based technology company focused on
bringing cleaner high-value energy to developing countries from low-grade coal
and biomass natural resources through its proprietary fluidized bed
gasification technology. The technology, which is licensed from the Gas
Technology Institute, enables greater fuel flexibility and efficient
smaller-scale operations close to fuel sources. Fuel sources include low-rank,
low-cost high ash, high moisture coals, which are significantly cheaper than
higher grade coals, many coal waste products, and biomass feed stocks. For
more information, please visit synthesisenergy.com.

Forward-Looking Statements

This press release includes "forward-looking statements" within the meaning of
Section 27A of the Securities Act of 1933, as amended, and Section 21E of the
Securities Exchange Act of 1934, as amended. All statements other than
statements of historical fact are forward-looking statements. Forward-looking
statements are subject to certain risks, trends and uncertainties that could
cause actual results to differ materially from those projected. Among those
risks, trends and uncertainties are: the development stage of the operations
of Synthesis Energy Systems; the ability of the ZZ joint venture to
effectively operate XE's methanol plant and produce methanol; the ability of
the Yima project to produce earnings and pay dividends; the ability of SES to
secure a partner for its China business initiative; the ability of SES to
develop its power business unit and marketing arrangement with GE and its
other business verticals, steel and renewables; the ability of SES to
successfully develop its licensing business; its ability to reduce operating
costs; the limited history and viability of its technology; commodity prices
and the availability and terms of financing opportunities;its ability to
obtain the necessary approvals and permits for future projects; its ability to
raise additional capitaland its estimate of the sufficiency of existing
capital sources; the sufficiency of internal controls and procedures; and its
results of operations in foreign countries where it is developing projects,
such as India. Although Synthesis Energy Systems believes that in making such
forward-looking statements its expectations are based upon reasonable
assumptions, such statements may be influenced by factors that could cause
actual outcomes and results to be materially different from those projected.
Synthesis Energy Systems cannot assure you that the assumptions upon which
these statements are based will prove to have been correct.

                                TABLES FOLLOW

SYNTHESIS ENERGY SYSTEMS, INC.
(A Development Stage Enterprise)

Consolidated Statements of Operations
(In thousands, except per share amounts)
(Unaudited)

                                      Three Months Ended  Six Months Ended
                                      December 31,        December 31,
                                      2013      2012      2013      2012
Revenue:                                                          
Product sales                          $ 5,914   $ —       $ 5,914   $ —
Technology licensing and related       —         13        —         84
services
Total revenue                          5,914     13        5,914     84
                                                                 
Costs and Expenses:                                               
Costs of sales and plant operating     4,030     133       4,127     264
expenses
General and administrative expenses    2,183     3,141     4,605     6,223
Stock-based compensation expense       472       109       1,518     272
Depreciation and amortization          565       570       1,130     1,146
                                                                 
Total costs and expenses               7,250     3,953     11,380    7,905
                                                                 
Operating loss                         (1,336)   (3,940)   (5,466)   (7,821)
                                                                 
Non-operating (income) expense:                                   
Equity in losses of joint ventures     —         400       1         917
Foreign currency gains                 (31)      (85)      (43)      (48)
Interest income                        (11)      (15)      (16)      (28)
Interest expense                       122       78        192       174
                                                                 
Net loss                               (1,416)   (4,318)   (5,600)   (8,836)
Less: net (earnings) loss attributable (19)      (85)      3         (52)
to noncontrolling interests
Net loss attributable to stockholders  $ (1,435) $ (4,403) $ (5,597) $ (8,888)
                                                                 
Net loss per share:                                               
Basic and diluted                      $ (0.02)  $ (0.07)  $ (0.09)  $ (0.16)
                                                                 
Weighted average common shares                                    
outstanding:
Basic and diluted                      63,720    61,899    63,695    57,116



SYNTHESIS ENERGY SYSTEMS, INC.
(A Development Stage Enterprise)

Consolidated Balance Sheets
(In thousands)
(Unaudited)

                                                       December 31, June 30,
                                                       2013         2013
ASSETS                                                              
                                                                   
Current assets:                                                     
Cash and cash equivalents                               $ 12,428     $ 15,870
Accounts receivable, net                                93           2
Prepaid expenses and other currents assets              4,645        2,636
Inventory                                               542          —
Total current assets                                    17,708       18,508
Property, plant and equipment, net                      32,795       32,641
Intangible assets, net                                  1,020        1,060
Investment in joint ventures                            34,856       33,311
Other long-term assets                                  2,458        2,844
Total assets                                            $ 88,837     $ 88,364
                                                                   
LIABILITIES AND EQUITY                                              
                                                                   
Current liabilities:                                                
Accrued expenses and accounts payable                   $ 9,709      $ 7,632
Short-term loan                                         3,280        —
Current portion of long-term bank loan                  1,197        2,428
Total current liabilities                               14,186       10,060
Total liabilities                                       14,186       10,060
                                                                   
Equity:                                                             
Common stock, $0.01 par value: 200,000 shares
authorized: 63,720 and 63,583 shares issued and         637          636
outstanding, respectively
Additional paid-in capital                              225,954      224,337
Deficit accumulated during development stage            (157,338)    (151,741)
Accumulated other comprehensive income                  6,287        5,958
Total stockholders' equity                              75,540       79,190
Noncontrolling interests in subsidiaries                (889)        (886)
Total equity                                            74,651       78,304
Total liabilities and equity                            $ 88,837     $ 88,364


Contact:

MDC Group

Investor Relations:
David Castaneda
Arsen Mugurdumov
414.351.9758
IR@synthesisenergy.com

Media Relations:
Susan Roush
747.222.7012
PR@synthesisenergy.com

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