TWST: May we begin with a brief historical sketch of the company and then a profile of Syntroleum as it is now?

Mr. Agee: My brother Kenneth formed Syntroleum in 1984. We spent about 10 years in research and development before we made any attempts to offer this technology commercially. We started that in 1994 and signed our first license agreement in 1996 with Texaco. We currently have license agreements with Texaco, ARCO (that now owned by BP), Enron, Ivanhoe Energy, Kerr-McGee, Marathon, Repsol-YPF and the Commonwealth of Australia. Syntroleum is an energy technology company providing gas-to- liquids (or GTL) technology to those in the energy industry that have the gas resources and/or the wherewithal to build synthetic fuels plants.

TWST: Can you give us a layman's description of your technology very briefly?

Mr. Agee: The simplest description is that our process tears natural gas molecules apart and reassembles them into longer chain molecules, such as those that comprise crude oil. However, you end up with a synthetic crude oil that is extremely pure, since it contains no contaminants. It's virtually free of sulfur, aromatics and metals, and can be refined into virtually anything that can be made from conventional crude oil.

TWST: Is your company the only one doing this?

Mr. Agee: No, there are at least three other credible processes in the world ' Sasol's, Exxon's and Shell's. Shell has been very active in the last seven months. I believe that they now have a total of six proposals around the world for 75,000 barrel-a-day sized GTL plants. We think that's significant. We're not aware of them having any proposals out for conventional refineries, yet they have seven proposals out for 'natural gas refineries,' and their most recent statement is that they intend to build at least four such plants in the next decade. That's a pretty significant statement for this industry!

TWST: What is your response to all this? What is your scenario for the next two or three years?

Mr. Agee: We are certainly pleased to see Shell so strongly advocating development of GTL projects. These proposals, coupled with several others, inclusive of our own Sweetwater project, continue to lend credibility to the emerging synthetic fuels industry. Part of what's driving this is tied to the recent regulations requiring cleaner fuels. As you probably know, our own EPA just passed regulations that mandate sulfur content of diesel fuel be dropped from 350 parts per million to 15 parts per million by 2006. So much of the GTL activity that you're going to see in coming years is going to be spurred by clean fuel requirements, with companies using GTL as a tool to help them comply with regulations. I think also that GTL will be part of a response to some of the recent concerns about possible future shortages of crude oil supply, and the fact that the world has an abundance of untapped natural gas. By most estimates there's enough stranded natural gas ' gas that has already been discovered but is too remote to be economically transported to market in its gaseous state ' that, if converted to liquids and made marketable, it would equate to about 250 billion barrels-of-oil equivalent. That's like finding another Saudi Arabia. So I think in the coming decade you're going to see GTL fill multiple roles. The cleanliness role is one; the monetization and use of stranded supplies is another; and making up for potential shortages in crude oil supplies may be still another.

TWST: Where will you be going with all of this? Can you give us a growth scenario?

Mr. Agee: We've seen projections for GTL as high as 3 million barrels per day of capacity by 2010, and we certainly expect that our licensees could have a significant share of that. We currently have projects in various stages of development with our licensees and potential licensees that total more than a million barrels per day of capacity. Admittedly, not all of it will actually go to construction. But then you have to add what others are planning. Shell's announced proposals total more than 450,000 barrels of capacity, and Chevron/Sasol are talking about two plants of around 30,000 barrels per day each. So it's not inconceivable that there could be several hundred thousand barrels of plant capacity under construction within the next few years.

TWST: So where would you see yourself, say, in the year 2004? Where would you hope to be then?

Mr. Agee: In 2004, we should have our first project, the Sweetwater Project in Australia, up and running. That's the one on which we're the closest to having financial close and start of construction. We find it very interesting, by the way, that in the last 30 days Sasol, Chevron and Shell have all made announcements about potential GTL plants in Australia. We think there's going to be a lot more of that because Australia is an ideal location for this technology. It's a good country with a stable environment; it has a good work force; it is well located with respect to markets that would use GTL products; and most of Australia's substantial gas resources are offshore, so plants would be located with ready access to water for shipment for products. We think that Australia is going to be a major center for GTL.

TWST: Will acquisitions play a part in what you're going to be doing? Do you see Syntroleum as a potential target?

Mr. Agee: As far as our acquiring things, we have always looked at fledgling technologies where we think there may be opportunity to complement our own technology. We've also looked at some stranded-asset possibilities, such as methanol plants that might be economically converted into GTL plants. While we've looked at several of these, most of them have been on high-priced gas, such as in the US, and the economics have not proven out. There are some other opportunities, however, that may someday have potential. Because our process is unique from the others, we can more easily wrap around a turbine-based power plant, and we've looked at a couple of opportunities in this area. This could involve us acquiring the power plant asset, but it's more likely that we'd partner with others. But our primary focus is always to keep moving the technology forward and keep lowering the cost, licensing it for fuels and initiating specialty projects in partnership with some of our licensees, such as our Sweetwater Project. As to being acquired ' well, I guess no one's immune from that, nowadays. I can't predict that one, although it's always a possibility.

TWST: Do you have the people in place in the company now to accomplish what you want?

Mr. Agee: We've made huge strides in the last year in that regard. We're up to 130 people right now, and we expect to add several more this year. Part of the answer depends upon how fast our licensing activity takes off. We may have to double that number in the next two or three years if things were to really get going.

TWST: Do you think it will be easy enough for you to find qualified people? What do you do to get to the best people and keep them?

Mr. Agee: We've been very fortunate in that regard. We're located in Tulsa, where many people in the oil business have lived at least once in their careers, and it's not usually viewed as a negative. It's also not that far from Houston and we've been able to attract a lot of talent. Another factor has been the consolidation that's been going on within the oil industry. This has put some good people on the street, which has certainly made our recruiting efforts a little easier. When we do recruit, one of the key things we look for in people is an entrepreneurial spirit. Entrepreneurial types are naturally attracted to the opportunities we have to offer. Also, it's our corporate policy that everyone in the company has stock options. So if we're going to be really successful, everyone is going to share in it and that type of compensation package tends to attract the kind of people we want.

TWST: Could you comment on the expertise of your top management team, including yourself?

Mr. Agee: I'm a degreed Chemical Engineer but I've spent about 25 years starting and growing companies, having started several and taken one public. When I came into Syntroleum in 1994 it was to help my brother to work through figuring out how to turn an R&D company into a business, raise the necessary capital to do it and put the right management in place. We have an extraordinary management team, in my opinion. Our Vice President of Engineering, Chuck Bayens, holds a PhD from Johns Hopkins and was formerly head of Shell's synthetic fuels division.

Dr. Paul Schubert, our Vice President of R&D, has a similar background. He came from Phillips Petroleum's research group and, earlier, from Englehard Catalyst. Because of his experience in taking catalyst systems from the lab all the way to full commercial scale, he has been invaluable in helping us to develop our proprietary catalysts. Randy Thompson, our Chief Financial Officer is a Wharton grad, a former executive at Tenneco with an unbelievable energy level. He's been the key driver on developing our Sweetwater project. Larry Weick, our Vice President of Business Development and Licensing, is a Stanford grad with 20 years in the oil business, much of it with ARCO; he also worked in the power business. He has tremendous grasp of business and how all the pieces work together ' the economic and corporate drivers that cause decisions to be made. We now have a staff of 13 just on business development, several of which are multilingual. We have one office in London, we're about to open another one in Australia and we are probably going to be opening one in South America within the next 18 months. I certainly don't want to leave out my brother Kenneth, who has about 100 patents to his name. Kenneth is Chairman and CEO of the company and still plays a big role in our R&D activities. Our R&D staff is now approaching 50 people with 14 holding one or more advanced degrees. We have a high percentage of degreed people, as it's our philosophy to always try to hire the best available. While this requires premium compensation, it is our view that such practice is actually the cheapest and best thing we can do to achieve high performance and productivity.

TWST: In the midst of everything, what problems could arise?

Mr. Agee: The price of oil could go back to $10! But no one seems to be expecting that, and I think that it's a fairly low-probability. One concern, of course, is the speed at which GTL development is going to evolve. We've put a lot of effort into cultivating customers. And for the early adopters of this technology to really get the big benefit, they need to be first to market. If, for some reason, we are unable to deliver the technology in a timely manner, we hurt them and we hurt ourselves. By technology I really mean the process design packages, detailed engineering and design that is required for each specific project. If we had to deliver five or six licenses this year, we could probably do it; but if we had to deliver 15 or 20 in a year, we would be hard pressed to keep such a schedule. That would be a good dilemma to have, but still a dilemma. One of the ways that we hope to avoid such a situation is by continuing to develop relationships with engineering companies. We already have contractual relationships with Bateman in the US, AMEC in the UK and TESSAG in Germany, the latter of which is doing the engineering for our Sweetwater project. We're trying to expand these kinds of relationships with other engineering firms so that we will have greater flexibility and project capacity when the need arises, as we expect that it will.

TWST: What areas of the company do you have to strengthen?

Mr. Agee: If the aforementioned scenario turns out to be the case, and we have to deliver lots of licenses and project support, our engineering department ' which is currently about 20 people ' would have to grow substantially. Syntroleum's engineering department sits between the R&D people, who keep coming up with new stuff, and the customer, who wants to turn it all into a plant that runs. Also in this mix is the engineering constructor who will not only build the plant but also guarantee that it runs. As the 'keeper' of the technology that's ready for commercialization, Syntroleum's engineering department has to be able to produce and deliver the process design packages for the projects and work closely with the engineering constructors so that they can build the plant and also be comfortable in guaranteeing its performance. And that takes quite a few skilled engineers for each project.

TWST: What should long-term investors focus on when reading your annual report?

Mr. Agee: Since we became public in 1998, we've been very much an event- driven company. Until we cross over that line of becoming cash-flow positive, milestones and events will continue to be key in measuring the company. I think the things to watch are: growth in licensees; progress on and completion of the Sweetwater project; project announcements and site licenses by our licensees; and new technology developments that would continue to improve GTL economics. As site licenses are delivered, Syntroleum begins receiving and recognizing licensing revenues thus there is a possibility that we could become cash positive before we get the Sweetwater project up and running, if enough licensees proceed with projects. The Sweetwater project, of course, is proceeding ahead. This project carries economics that are very robust and, as a majority owner, Syntroleum should be in sound financial shape when this plant comes fully on stream. You may have seen where we announced completion of the agreement with Clough-PGS for the operating and maintenance of Sweetwater. The EPC contract with TESSAG is very close to being finalized. Merrill Lynch is signed up as our financial adviser for the debt, with the debt memorandum simply waiting for the final EPC fixed- price contract to be executed. Then we'll be out marketing the debt so that we can get the project fully financed and into the construction phase.

TWST: Could you now comment on your recent financial history and maybe on your current stock valuation?

Mr. Agee: We did a secondary public offering with Merrill Lynch as the lead about a year ago, which raised about $95 million. Goldman Sachs, Salomon Smith Barney, JP Morgan and Petrie Parkman were all in the syndicate as co-managers. The offering was very well received and I think that our underwriters did a good job of setting the stage for us in the investment community.

TWST: What do you think of your market valuation?

Mr. Agee: As a friend of mine said recently, 'We're the giant amongst the midgets here lately.' Compared to how much the market has been decimated, particularly NASDAQ-listed stocks, we've done pretty well. We closed our secondary offering at $17.50, and we're sitting at about $14.50 today. We would certainly like it to be better, but we're also pleased that we've held up as well as we have against such adverse conditions. But I think there may be a little silver lining in this dark cloud. I'm optimistic that this market may start to level out soon, and there's some indication that it already may be starting to do so. There is substantial money that's been parked on the sidelines ' I read somewhere that it's something like $3 trillion ' and once that money starts looking for new opportunities, I think energy-related companies are going at the top of many investor's lists. It has become obvious since the California energy crisis in recent months that our new economy cannot work without old economy fundamentals like energy. I think many are going to take a new, hard look at that, and energy stocks are going to be pretty robust for the next several years.

TWST: Going on from there, would you give us the three or four best reasons why long-term investors should consider Syntroleum?

Mr. Agee: The over-arching consideration is the shift that is going on. The world is beginning a gradual transition from an oil-based economy to a natural-gas-based economy. That is largely because there's an abundance of gas in the world, enough to more than equal the world's oil reserves if it was converted to liquid, and because it is cleaner. Gas will certainly continue to find lots of market opportunities as gas. Over the next decade or so, however, application of GTL technology will allow gas to flow into the oil markets in the form of larger and larger supplies of synthetic oil and ultra-clean synthetic fuels that the world increasingly wants. Twenty years from now GTL conversion will be viewed as a revolutionary, watershed event, although in reality it will have actually been more evolutionary than revolutionary. Enabling gas to flow into oil markets will help to solve a large part of the world's environmental issues, and it will also help solve the energy supply issue vis--vis steadily increasing demand. GTL will also help mitigate long-term energy costs because it will increasingly add new supply. Companies that are in the midst of the GTL evolution are well positioned for the growth to come. While there are four companies in the world today that have GTL technologies that work and are apparently economic, Syntroleum is the only pure play and, I think, the only company that licenses its technology to all who need it.

TWST: Is there anything you've left out that you would like to bring in, or anything that you would like to say by way of summary?

Mr. Agee: I did miss one thing. The other interesting benefit of this ultra-clean fuel is its benefit in the fuel cell arena, which is developing rapidly. One of the things that Syntroleum has done in our different relationships with companies and laboratories is testing of our fuels in different kinds of power trains to demonstrate that this fuel can work not only in conventional internal combustion engines, but also in fuel cells. We are currently working with the military to demonstrate the viability of using a single battlefield fuel ' a common fuel that works in jet engines, internal combustion and fuel cell systems that the military is looking to deploy as power sources in the future. We have successfully demonstrated synthetic fuels made with the Syntroleum process that meet these requirements. So when you think out to the longer term and ask what is the safest thing to bet on, and what's going to be affected the least by all the changes that may occur, GTL technology appears to be at the top of the list. As someone said the other day, Syntroleum is a high-technology company in an old-economy business, and I think that's going to play very well for our shareholders and us. I would emphasize that it's easy for someone to discount what I say because I'm the President of a small start-up company. But when the President of Shell makes statements, as he did recently, that we are transitioning to a gas economy and that GTL plants can be economical even with $15 oil ' and then back it up by making seven proposals around the world, stating that they intend to build at least four of these plants, to the tune of $6 billion ' something's going on. It's one thing to listen to me and decide if I'm right about this market trend. But when Shell is doing it, and Chevron/Sasol is doing it, and I suspect that pretty soon you'll be seeing Exxon doing the same thing ' it's going to be pretty hard to ignore. There is a shift happening as we speak.

TWST: Thank you. (MC)

MARK A. AGEE President & COO Syntroleum Corp. 1350 South Boulder Avenue Suite 1100 Tulsa, OK 74119 (918) 592-7900 (918) 592-7979 - FAX e-mail:

Each Executive who is the subject of a TWST Interview is offered the opportunity to include an Investors Brief or other highlight material to be provided and sponsored by and for the company. This Interview with Mark A. Agee President & COO of Syntroleum Corporation, is accompanied by an Investors Brief containing corporate information.

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