Chemoil Energy issues profit warning for its third quarter ending 30 September 2007

due to its logistics operational issues in Singapore, as well as volatile conditions in both

the petroleum and energy futures markets. This is a spillover from the impact of its

floating storage issues in Singapore as previously mentioned in its second quarter

results announcement. Apart from the above, the group incurred interim losses from its

global supply operations. A portion of the group?s inventory was hedged against crude

oil markets that witnessed a lack of correlation with the group?s fuel oil inventory. The

Company currently expects its fourth quarter 2007 earnings to be an improvement over

its second and third quarter results. If there is a recovery in September, Chemoil

believes that 3Q will be breakeven, giving 9M07 results that are flat with 6M07. If

September is disappointing, the company will report a 3Q loss. (Chemoil)

Comments: It seems best to place our recommendation under review until we have

additional information from the company. In a business with thin margins, control over oil

price fluctuations through effective hedging is an important element of the story. If this is

not possible, the quality of Chemoil's future earnings is poor.