OOIL May 2010

Analyst: Victor Sula, Ph.D. Report Update May 11th, 2010

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OriginOil, Inc. 5645 W Adams Blvd Los Angeles, CA 90016

Phone: (323) 939 6645 Fax: (888) 317-1850 E-mail: ir@originoil.com Website: www.originoil.com

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Company Introduction MARKET DATA

Symbol OOIL Exchange OTC BB Current Price $0.25 Rating Speculative Buy Outstanding Shares 161.84 Mn Market Cap. $46.23 Mn Average 3M Volume 92,407 Source: Yahoo Finance,

OriginOil Inc. (OOIL) is developing and has begun commercializing new technologies for producing oil from algae, a next-generation biofuel feedstock that may yield 30 times more energy per acre than crops such as soybeans. The biofuel produced by the OriginOil System can replace petroleum in various applications such as diesel, gasoline, jet fuel, plastics and solvents. In addition, by-products of algae oil extraction can be used for animal feed. By creating a fuel that replaces fossil fuel, OOIL also helps producers garner saleable carbon credits. The OriginOil System may be operated as a standalone production system or connected in a parallel network.

Efficiently producing oil from algae in a closed system requires cultivating an algal strain with high lipid content and a rapid growth rate, which in turn requires the right combination of water, sunlight, nutrients and carbon dioxide. In addition, algae organisms are protected by a tough cell wall, which must be cracked to extract the oil. This is normally an energy-intensive process. OOIL has developed a cultivation and extraction system that is safe, costeffective and energy-efficient.

In May 2010, the Company announced its first algae-producing customer, MBD Energy, for its breakthrough systems to feed algae and extract its oil. The parties recently signed a Memorandum of Understanding on a multi-phase commercialization program under which OriginOil will supply MBD Energy, an Australian based company, with its Quantum Fracturing™ and Single Step Extraction™ systems. In the initial phase, OriginOil will equip MBD Energy’s research and development facility at James Cook University in Queensland, Australia, where testing will take place.

The two companies agreed that, subject to the success of the initial

OriginOil, Inc. (OTCBB: OOIL)

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Analyst: Victor Sula, Ph.D. Report Update May 11th, 2010

test phase, MBD will purchase significantly larger versions to serve facilities planned for coal-fired plants in Victoria, New South Wales and Queensland.

Technology Update OOIL is making rapid progress towards commercializing next-generation technologies that greatly enhance oil extraction and creation of a high-yield, cost-competitive replacement for petroleum. The Company’s industrial process, with its patent pending devices and methods, help algae cells grow at their natural maximum rate achieving a doubling of the algae population in as little as a few hours. The process also controls harvesting and oil extraction cycles, enabling high-speed, round-the-clock, streamlined industrial production of algae oil. Instead of waiting hundreds of millions years for algae to become oil, OOIL’s technology and process can transform algae into oil in a matter of days.

Layered-Growth Invention OOIL has recently introduced a new direct-solar growth design that uses growth layers to harness the sun’s energy more effectively than existing pond systems, while greatly reducing the land surface required. The Company simply stacks the algae layers to multiply the benefits of ‘free’ solar energy, thus obtaining an ideal mix of sustainable growth and industrial-grade concentration.

The Layered-Growth Invention, or MultiReactor, overcomes the challenges of growing algae with 100% artificial light. While potentially very productive, artificially lit systems require significant electrical energy, and are generally cost-effective only when energy is available from waste sources (e.g. process heat) or in special circumstances where there is excess energy capacity (e.g. geothermal generation).

The MultiReactor reduces the operating costs of algae growth by utilizing direct solar energy. The unique multi-layered design also reduces pumping energy costs, using gravity to move algae culture throughout the system. The MultiReactor combines the energy advantages of open ponds and single-plane reactors with a small operational footprint and high productivity.

OriginOil, Inc. (OTCBB: OOIL)

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Analyst: Victor Sula, Ph.D. Report Update May 11th, 2010

Source: http://www.originoil.com/pdf/OriginOil_The_Growth_Challenge_NAA_20100429_V2a.pdf

The new design uses an array of lenses to direct solar radiation from the top through a system of algae channels.

Algae culture is pumped continuously to the top of the array and then trickles down through the layers, ensuring equal exposure. Tapping units at the end of the stack capture valuable gases.

The growth units are oriented east-west to capture the sun’s rays throughout the day. Adjustments are made for seasonal changes in the sun’s angle of incidence. The resulting system may be 10 to 20 times more efficient than single-layer systems. OOIL is currently working in the lab with the new design and plans to build it into a standard 40-foot container for field testing.

The Company has filed for patent protection of its new layered solar growth design, its ninth patent application, entitled “Multi-Plane Growth Apparatus and Method.” While currently focused on algae, the invention also has applications in accelerating growth of other crops.

Intellectual Property Portfolio The Company’s business model focuses on licensing of its technology rather than manufacturing oil so securing patent protection for its inventions is crucial. To date, OOIL have filed the following patent applications with the U.S. Patent and Trademark Office: OriginOil, Inc. (OTCBB: OOIL)

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Analyst: Victor Sula, Ph.D. Report Update May 11th, 2010

1. On July 28, 2007, to protect the intellectual property rights for “Algae Growth System for Oil Production”.

2. On May 23, 2008, to protect the intellectual property rights for “Apparatus and Method for Optimizing Photosynthetic Growth in a Photo Bioreactor”.

3. On May 30, 2008, to protect the intellectual property rights for “Modular Portable Photobioreactor System”.

4. On January 6, 2009, to protect the intellectual property rights for “Apparatus and Method for Optimizing Photosynthetic Growth in a Photobioreactor”.

5. On April 17, 2009, to protect the intellectual property rights for “Device and Method for Separation, Cell Lysing and Flocculation of Algae From Water”.

6. On July 13, 2009, a provisional filing to protect the intellectual property rights for “Algae Growth Lighting and Control System”.

7. On July 26, 2009, a provisional filing to protect the intellectual property rights for “Procedure for Extraction of Lipids from Algae without Cell Sacrifice”.

8. On September 30, 2009, a provisional filing to protect the intellectual property rights for “Methods and Apparatus for Growing Algae on a Solid Surface”.

9. On April 28, 2010, a provisional filing to protect the intellectual property rights for “Multi-Plane Growth Apparatus and Method”.

The Company’s technology innovations have been combined to create an algae production system that optimizes the production of oil from algae: OOIL’s Algae Production System and Technology Portfolio The diagram below illustrates how OriginOil’s suite of inventions and technology optimizes the algae production process. (OriginOil’s proprietary technologies are shown in light blue.)

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Analyst: Victor Sula, Ph.D. Report Update May 11th, 2010

International Patent Application In April 2010, OOIL filed an international PCT patent application relating to the Single-Step Extraction™ system, the Company’s fifth patent pending. The application - “Systems, Apparatus and Methods for Obtaining Intracellular Products and Cellular Mass and Debris from Algae and Derivative Produces and Process of Use Thereof,” covers the Company’s proprietary system and industrial process for dewatering algae slurry, extracting algae lipids, separating biomass, and recovering process water in an algae production system. OOIL’s Single Step Extraction system is classified as wet or aqueous extraction, which can bypass multiple stages in the algae harvesting process, with substantial potential energy and equipment reductions.

The Company’s management described the advantages of Single-Step Extraction™ system at the World Biofuels Markets Congress in Amsterdam on March 16, 2010. OOIL’s system is unique in that it separates the oil and biomass without first dewatering, which dramatically reduces energy requirements. Energy costs associated with OOIL’s process are approximately one-tenth of the energy costs required with conventional methods.

Pilot Plant Establishment In January 2010, OOIL unveiled its comprehensive pilot system for algae growth and harvesting at an exclusive event held at its Los Angeles headquarters. The Company’s suite of technologies was combined, for the first time, in an end-to-end algae-to-oil production, as a preliminary step to developing commercial pilot systems.

At the heart of the new system is a series of 200-gallon tanks which can be individually configured and managed for various strains, growth strategies, and lighting geometries. The tanks are illuminated with LED light sticks submerged in icicle-like arrays. A stirrer circulates the algae slowly around the lights.

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Analyst: Victor Sula, Ph.D. Report Update January May 28th, 11th, 2010

Once the algae reaches harvest concentration, it is sent to the integrated extraction system, a combination of ultrasound generation and low-power electromagnetic pulsing. After extraction, a series of settling tanks separates the oils and biomass for eventual use as fuel and valuable by-products. A water recycling system completes the loop so the process can start again.

The Company’s Dynamic Control System manages the operation of the growth phase, releasing CO2 and other nutrients as the algae needs it. While bottled CO2 is currently used, an in-house generator is planned to test realworld scenarios where exhaust gas is processed for its CO2.

In the near future, OOIL plans to launch its ALGAE MAX (Mobile Algae eXtraction) mobile laboratory. The mobile lab is outfitted with a complete Single Step Extraction system with complete analysis capabilities. It will tour to algae producers to demonstrate and market the Company’s aqueous extraction system for potential commercial pilot projects in the second half of 2010.

Technology Commercialization Initiatives First algae-producing customer OOIL announced in May the signing of MBD Energy as its first algae-producing customer. Anglo American, one of the world’s largest mining companies, is a cornerstone investor in MBD Energy. The parties signed a Memorandum of Understanding, under which OOIL will equip MBD Energy with its Quantum Fracturing and Single Step Extraction systems. Three of Australia’s largest coal fired utilities have committed to built test facilities adjacent to their generators which will use MBD’s proprietary growth system to capture smoke-stake CO2 emissions and use them to grow oil-rich algae in the company’s proprietary solar reactors. OOIL will initially equip MBD Energy’s R&D facility based at James Cook University in Queensland, Australia, where pilot scale testing will be done. If initial tests are successful, MBD will incorporate OOIL technology in much larger oil extraction facilities planned for power station projects in Queensland, Victoria and New South Wales. Through this arrangement, OOIL gains a partner and first customer funded to scale up its algae production technology on a commercial scale.

Jet fuel vertical The Company is forming an industry working group to develop jet fuel from algae using waste streams. The aviation industry has been an early adopter of algae-based jet fuel. On January 30, 2009, Japan Airlines made a successful biofuels flight test using a blend of camelina, algae, and jatropha; testing by the airline’s pilots showed that the blend was more fuel-efficient than traditional kerosene. KLM has also announced plans to fly commercial biofuels flights in 2011.

The working group is co-sponsored by OOIL and Electricore, a non-profit consortium. The initiative is an extension of OriginOil’s ongoing initiatives to develop useful fuels from its cost-effective algae production.

Its first industry partners are biodigester builder Biogas Energy and ionic technology developer Ceramatec.

These partners will provide some of the key technologies needed, such as anaerobic digestion and fuel cells.

OriginOil’s own Helix Bioreactor™ and Single Step Extraction™ systems provide a daily harvest of algae oil and biomass, which can be tailored to meet the ASTM standards for jet fuel.

In addition, OOIL recently announced that Carbonomics, a leading expert in emission-trading, has joined the OriginOil, Inc. (OTCBB: OOIL)

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Analyst: Victor Sula, Ph.D. Report Update May 11th, 2010

group. Carbonomics will help develop a new carbon “asset class” for this activity. Initially, Carbonomics will determine if the activity complies with the Voluntary Carbon Standard, the American Carbon Registry and possibly the Kyoto Protocol’s Clean Development Mechanism. Once a protocol has been established and validated, Carbonomics will work with OOIL and the other partners to register projects, perform annual audits, and identify opportunities for credit sales.

Previously, the Company announced a partnership with Research Institute of Tsukuba Bio-Tech (RITB) to support its Algae to Jet Fuel Project.

Partnership with Desmet Ballestra OOIL continues to work with Desmet Ballestra, to finalize an agreement for embedding of OriginOil’s Single Step Extraction System™ into DB’s next-generation algae oil extraction systems, for which it has registered significant industry demand.

Desmet Ballestra, an international pioneer in oil and fats technologies, could help OOIL commercialize algae-tofuel technology on a global scale. Single-Step Oil Extraction technology could help Desmet Ballestra create a more efficient algae oil extraction system. In early studies, Desmet and OOIL have estimated that energy efficiency gains may reach 90% in certain configurations.

As a part of the partnership, OOIL has recently filed an international PCT patent application related to the SingleStep Extraction™ system.

Desmet Ballestra is a private company based in Zaventem, Belgium, serving the seed crushing, oil refining, oleochemical, surfactant, and detergent markets. It has operations in Egypt, Nigeria, Sudan, Argentina, Brazil, Columbia, Mexico, the United States, China, India, Malaysia, Singapore, South Korea, Taiwan, the United Arab Emirates, Belgium, Bulgaria, Romania, Russia, Spain, Turkey, and the United Kingdom.

Financial Analysis OOIL is currently developing a technology for cost-effectively producing bio-fuel from algae. The Company plans to eventually license this technology, but has not yet signed any licensing agreements or generated licensing revenues.

Income statement, $ 2008 Revenue Selling & marketing expense Administrative expense Research & development Stock compensation expense Depreciation & amortization Total operating expenses Operating income Total other income Net loss Diluted EPS

2009

% chg

Since inception

-

-

n/m

-

298,034 964,202 258,771 13,126 1,534,133

521,064 1,395,288 732,483 2,211,306 55,772 4,915,913

74.8% 44.7% 183.1% n/m 324.9% 220.4%

839,572 2,784,911 1,002,685 2,211,306 68,898 6,907,372

(1,534,133) 27,855 (1,506,278) -0.01

(4,915,913) 842 (4,915,071) -0.03

n/m -97.0% n/m n/m

(6,907,372) 39,932 (6,867,440) n/m

Source: SEC Filings

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Analyst: Victor Sula, Ph.D. Report Update May 11th, 2010

The Company’s net loss increased by $3,408,793 or 226.3% to $4,915,071 for 2009, compared to 2008. The majority of the increase was due to accounting for non-cash stock compensation expense, and the overall increase in operating expenses as a result of management’s efforts to advance OOIL’s technology and increase its visibility.

Liquidity and capital resources Since its inception, the Company has consumed cash flow in its operations. OOIL will likely continue to consume cash for the foreseeable future and seek additional capital to fund its research and development activities and ongoing operations.

At year-end 2009, OOIL had $356,179 in cash and equivalents, down from $710,060 in September. The cash decline was due primarily to ongoing costs for preparing OOIL’s technologies for commercial launch.

Balance sheet $ Dec 31, 2008 Cash and cash equivalents Total current assets Long term assets Total assets Total liabilities Total shareholders’ equity, including Accumulated deficit

Mar 31, 2009

Jun 30, 2009

Sep 30, 2009

580,055 596,984 167,726 764,710

216,374 236,031 164,276 400,307

380,820 388,706 150,333 539,039

710,060 729,204 158,148 887,352

356,179 389,046 136,465 525,511

70,481 694,229 (1,952,369)

38,292 362,015 (2,622,883)

38,504 500,535 (3,397,413)

14,239 873,113 (5,969,185)

55,718 469,793 (6,867,440)

Dec 31, 2009

Source: SEC Filings

Net cash used in operating activities was $2,678,694 in 2009, up significantly from $1,478,641 used in the prior year. Net cash used in investing activities was $24,511, versus $163,174 one year earlier.

Net cash flows provided from financing activities increased to $2,479,329 in 2009 from $954,200 in 2008. The increase reflects the proceeds from an equity financing. In July 2009, OOIL completed a private placement of 6,256,875 shares which generated aggregate proceeds of $1.3 million.

Also in July 2009, OOIL’s board of directors approved the 2009 Incentive Stock Plan, which reserved 15 million shares to be used to retain executives and selected employees and consultants and reward them for making contributions to the success of the Company. The Company granted certain employees 4,150,000 stock options at an exercise price of $0.32 in February 2010.

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Analyst: Victor Sula, Ph.D. Report Update May 11th, 2010

Analyst Summary Since our January 2010 update, OOIL’s share price has declined 14% to $0.25, which we attribute to lack of updates regarding the Company’s technology and commercial opportunities. Over the last 12 months the stock has traded between $0.22 and $0.41.

The Company continues to advance its technology and has completed further refinements to its Optimized Algae Production System, which now for the first time has been combined in an end-to-end algae-to-oil production.

OOIL has also assembled an algae production pilot plant and secured MBD Energy as its first customer for its algae feeding and extraction systems, which should lead to revenues being booked in the second half of 2010. In the near future, the Company expects to launch a mobile algae extraction laboratory (ALGAEMAX) which will travel to algae producers and demonstrate OOIL’s technology, setting the stage for additional commercial pilot projects.

In addition, OOIL continues to strengthen its intellectual property portfolio. Its latest invention is a LayeredGrowth System, or MultiReactor, which overcomes the challenges of efficient energy use in growing algae by using solar power rather than artificial light. The MultiReactor with its multi-layer design captures the maximum amount of solar energy for algae growth and reduces pumping energy costs by using gravity to move algae culture throughout the system.

The Company has also established a working group comprised of several technology companies to develop jet fuel from algae using waste streams. The working group is co-sponsored by OOIL and the non-profit consortium Electricore.

We think algae have great potential for producing biofuels in sufficient quantities to replace fossil petroleum. There is still a long way to go before the technology will be fully marketable, but we believe OOIL is in the forefront of this transition and has a good chance to succeed. We continue to rate OOIL a Speculative Buy, based on its technology leadership, improving visibility, leading position within this important alternative energy segment and huge market opportunity. However, the Company will continue to rely on external financing and record losses for at least the next several quarters so investors should be aware that OOIL’s stock price may continue to be volatile.

OriginOil, OriginOil, Inc. Inc. (OTCBB: (OTCBB: OOIL) OOIL)

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Analyst: Victor Sula, Ph.D. Report Update May 11th, 2010

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Information contained in our report will contain “forward looking statements” as defined under Section 27A of the Securities Act of 1933 and Section 21B of the Securities Exchange Act of 1934. Subscribers are cautioned not to place undue reliance upon these forward looking statements. These forward looking statements are subject to a number of known and unknown risks and uncertainties outside of our control that could cause actual operations or results to differ materially from those anticipated. Factors that could affect performance include, but are not limited to, those factors that are discussed in each profiled company’s most recent reports or registration statements filed with the SEC. You should consider these factors in evaluating the forward looking statements included in the report and not place undue reliance upon such statements.

We are committed to providing factual information on the companies that are profiled. However, we do not provide any assurance as to the accuracy or completeness of the information provided, including information regarding a profiled company’s plans or ability to effect any planned or proposed actions. We have no first-hand knowledge of any profiled company’s operations and therefore cannot comment on their capabilities, intent, resources, nor experience and we make no attempt to do so. Statistical information, dollar amounts, and market size data was provided by the subject company and related sources which we believe to be reliable.

To the fullest extent of the law, we will not be liable to any person or entity for the quality, accuracy, completeness, reliability, or timeliness of the information provided in the report, or for any direct, indirect, consequential, incidental, special or punitive damages that may arise out of the use of information we provide to any person or entity (including, but not limited to, lost profits, loss of opportunities, trading losses, and damages that may result from any inaccuracy or incompleteness of this information).

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All decisions are made solely by the analyst and independent of outside parties or influence.

I, Victor Sula, Ph.D, the author of this report, certify that the material and views presented herein represent my personal opinion regarding the content and securities included in this report. In no way has my opinion been influenced by outside parties, nor has my compensation been either directly or indirectly tied to the performance of any security listed. I certify that I do not currently own, nor will own and shares or securities in any of the companies featured in this report.

Victor Sula, Ph.D. - Senior Analyst Victor Sula, Ph.D. has held the position of Senior Analyst with several independent investment research firms since 2004. Prior to 2004, Mr. Sula held Senior Financial Consultant positions within the World Bank sponsored Agency for Restructuring and Enterprise Assistance and TACIS sponsored Center for Productivity and Competitiveness of Moldova, where he was involved in corporate reorganization and liquidation. He is also employed as Associate Professor at the Academy of Economic Studies of Moldova. Mr. Sula earned his Ph.D. degree in 2001 and bachelor’s degree in Finance in 1997 from the Academy of Economic Studies of Moldova. Mr. Sula is currently a level III candidate in the CFA program.

OriginOil, Inc. (OTCBB: OOIL)

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