Syntroleum (SYNM)

Cash and Cash Equivalents and Restricted Cash

Cash and cash equivalents consist of cash and highly liquid investments with an original maturity of three months or less, primarily in the form of money market instruments. The Company’s cash and cash equivalents are held in a few financial institutions; however, management believes that the Company’s counter-party risks are minimal based on the reputation and history of the institutions selected.

The Company has restricted cash held in escrow at December 31, 2006 and 2005 related to its agreement with Sovereign Oil and Gas Company II, LLC (“Sovereign”), a consulting firm that assisted the Company in acquiring oil and natural gas fields worldwide, in the amount of $1,573,000 and $1,684,000, respectively. These balances are reported in Current Assets of Discontinued Operations as of December 31, 2006 and 2005. The Company also has restricted cash held in escrow pending the release of a ground lease with the city of Reno (see Note 4) of $166,000 at December 31, 2006.

Cash and Cash Equivalents and Restricted Cash

Cash and cash equivalents consist of cash and highly liquid investments with an original maturity of three months or less, primarily in the form of money market instruments. The Company’s cash and cash equivalents are held in a few financial institutions; however, management believes that the Company’s counter-party risks are minimal based on the reputation and history of the institutions selected.

The Company has restricted cash held in escrow at December 31, 2005 and December 31, 2004 related to its agreement with Sovereign Oil and Gas Company II, LLC (“Sovereign”), a consulting firm that has assisted the Company in acquiring oil and natural gas fields worldwide, in the amount of $1,684,000 and $202,000, respectively. The Company also had restricted cash held for lease acquisition purchases in the amount of $19,000 for the year ended December 31, 2004.

3. Cash, Cash Equivalents and Restricted Cash

Cash and cash equivalents consist of cash and highly liquid investments with an original maturity of three months or less, primarily in the form of money market instruments. The Company’s cash and cash equivalents are held in a few financial institutions; however, management believes that the Company’s counter-party risks are minimal based on the reputation and history of the institutions selected. The Company has restricted cash on hand at June 30, 2005 related to its agreement with Sovereign Oil and Gas Company II, LLC (“Sovereign”), a consulting firm that has assisted the Company in acquiring oil and natural gas fields worldwide, and to secure a $10,000,000 letter of credit provided to Yinka Folawiyo Petroleum Co. Ltd. (“YFP”) pursuant to the terms of a Joint Venture Agreement between YFP and the group of companies assembled by the Company (the “Participants”) to develop OML 113 offshore Nigeria. This letter of credit is required to be secured by cash. YFP has the right to draw the full amount from the letter of credit as liquidated damages if the initial well is not drilled on OML 113 before February 2006. The Participants have contributed their respective shares of the cash required to secure the letter of credit and other costs associated with the letter of credit. The Company has recorded its 10 percent of the cash on deposit as security for the letter of credit as restricted cash on the balance sheet as of June 30, 2005. Restricted cash on hand at December 31, 2004 related to the Company’s agreement with Sovereign.

3. Cash, Cash Equivalents and Restricted Cash

Cash and cash equivalents consist of cash and highly liquid investments with an original maturity of three months or less, primarily in the form of money market instruments. The Company’s cash and cash equivalents are held in a few financial institutions; however, management believes that the Company’s counter-party risks are minimal based on the reputation and history of the institutions selected. The Company has restricted cash on hand at March 31, 2005 related to it’s agreement with Sovereign Oil and Gas Company II, LLC (“Sovereign”), a consulting firm that has assisted the Company in acquiring natural gas fields worldwide, and to secure a $10,000,000 letter of credit provided to Yinka Folawiyo Petroleum Co. Ltd. (“YFP”) pursuant to the terms of a Joint Venture Agreement between YFP and the group of companies assembled by the Company (the “Participants”) to develop OML 113. This letter of credit is required to be secured by cash. YFP has the right to draw the full amount from the letter of credit as liquidated damages if the initial well is not drilled on OML 113 before February 2006. The Participants have contributed their respective share of the cash required to secure the letter of credit and other costs associated with the letter of credit. The Company has recorded its ten percent of the cash on deposit as security for the letter of credit as restricted cash on the balance sheet as of March 31, 2005. Restricted cash on hand at December 31, 2004 related to the Company’s agreement with Sovereign.