VLS.L Regulatory News (VLS)

News release

Velocys plc

("Velocys" or "the Company")

26th November 2015

Technology optimisation, improving plant economics

Velocys plc (VLS.L), the company at the forefront of smaller scale gas-to-liquids (GTL), is pleased to announce the successful completion of pilot plant tests that demonstrate significant process intensification, increasing capacity and productivity and improving commercial plant economics.

The tests:

· Demonstrate that continuous improvements over the last 18 months have resulted in a greater than 50% increase in capacity, without changing the commercial catalyst formulation or the reactor design.

· Prove that superior yields of high value liquid hydrocarbon products can be maintained while simultaneously achieving these high productivities. Carbon monoxide conversions of 70% per pass, or 91-92% overall, are achieved concurrently with a C5+ selectivity (the percentage of the products that are liquid rather than low-value gaseous hydrocarbons) of about 90% and a methane selectivity as low as about 5%.

· Show industry-leading yields of the highest value, longer chain hydrocarbons (such as those used in the production of speciality chemicals) at high productivities. This increases the potential revenue from a plant with a given input, enabling plant operators to access higher value markets and reducing the impact of oil price volatility.

· Employed a new start-up protocol enabling the pilot plant to reach target operating conditions in eight hours; a very significant improvement. As a result, this will improve further the economics of commercial plants and increase their availability.

Advances made at the pilot plant have already been incorporated into the design of the 4,800 barrel per day Ashtabula GTL plant that the Company is developing in Ohio.

Dr Paul Schubert, Chief Operating Officer of Velocys explained the significance of the latest Velocys pilot plant results in a BRR Media webcast, which can be viewed here.

Dr Paul Schubert, Chief Operating Officer of Velocys, said:

"These results are a reflection of the tremendous progress that our in-house technical teams have made and are continuing to make, quietly in the background, in what has been a delivery-focused year for the business.

"Velocys technology has now been tested for over 24,000 hours at the pilot and demonstration scale and for over 1.3 million hours in the laboratory. We enter our commercial phase with a technology that has been developed with rigour and thoroughness and in which we, our clients and partners can have every confidence."

- Ends -

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Notes to editors

About Velocys

Velocys is the company at the forefront of smaller scale gas-to-liquids (GTL) that turns natural gas or biomass into premium liquid products such as diesel and jet fuel. Smaller scale GTL adds value to shale gas and bio-waste, and makes stranded or flared gas economic - an untapped market of up to 25 million barrels per day.

Velocys technology, protected by several hundred patents in over 30 countries, is specifically designed for smaller scales, combining super-active catalysts with intensified reactor systems. The Company's standardised modular plants are easier to ship and faster to install, at lower risk, even in the most remote or challenging locations. Together with world-class partners, Velocys works flexibly to unlock gas resources of 15,000 to 150,000 mmbtu per day, allowing more companies to take advantage of more opportunities.

Velocys plc is listed on the AIM market of the London Stock Exchange (LSE: VLS). The Company is well capitalised and has a multi-disciplinary staff of around 100 operating from its commercial centre in Houston, Texas, USA and technical facilities near Oxford, UK and Columbus, Ohio, USA. Its first commercial plant, funded by Waste Management (NYSE: WM), NRG Energy (NYSE: NRG) and Ventech Engineers, is expected to reach mechanical completion in H1 2016.

www.velocys.com

Think Smaller™. Velocys is changing the way fuels are made.

About Velocys technology

Velocys' Fischer-Tropsch (FT) reactor and catalyst system delivers high conversion efficiency and high yield of high value products.

Particularly in today's oil price environment, project owners and developers need to select the technology that will allow them to achieve the best possible economic returns from their plant. Velocys technology:

· Offers high CO conversion using a 1-stage (with recycle) approach to the FT process. Total CO conversion exceeds 91%, which is higher than that offered by other smaller scale FT technologies.

· Delivers high yields of liquid products. C5+ selectivities of up to 90% are achieved, leading to an overall C5+ product yield of around 82%. This results in high plant efficiencies, less equipment per unit of feedstock and a lower capital expenditure.

· Can be configured to produce high proportions of high value long-chain products. Velocys technology typically runs with an alpha (the standard measure for the proportion of products in an FT process) of 0.93 at the start of run. This increases the revenues that are possible from a plant with a given input, enabling plant operators to access high value markets and insulating projects from oil price volatility

· Incorporates a high stability catalyst leading to a long catalyst life and increased plant up-time. Velocys' customers can expect to use each batch of catalyst for at least two years, and maybe much longer, before change-out.

· Is robust and optimised not only for peak performance but also to meet the challenges of everyday feed and situational variances.

· Is operationally ready. All the protocols required to operate a commercial plant have been demonstrated at the Velocys pilot plant.