ORYXE Energy International announced two new investors Tuesday as Royal DSM and Ridgewood Capital joined in an $11-million Series C round.

The Irvine, California-based company has developed OR-LED, a diesel additive that it claims reduces both ozone- and smog-forming emissions without reducing engine efficiency.

ORYXE’s new investors are participating in the company’s third round, which is expected to close June 30. Aside from Royal DSM and Ridgewood Capital, other major investors include Odyssey Venture Partners, Sail Venture Partners, and Galpin Ford. ORYXE is a Red Herring Top 100 Innovative company (see Top 100 list).

Odyssey, Sail, and Ridgewood have the option of investing an additional $5 million. A $16-million round would be worth about 25 percent of the company, said CEO Walter Schindler. The money will be used to produce the company’s first product, OR-LED.

So far, the company has raised a total of $25 million since it was founded in 2001, but this round will be ORYXE’s last, said Mr. Schindler.

“We are on track to capture approximately 40 percent of the Texas oil and diesel emission market,” he said, adding that the company also expects to become profitable this year.

ORYXE also announced it has signed a production agreement with Afton Chemical, and will begin delivering OR-LED by September.

Afton Chemical, a petroleum additives manufacturer, will construct a manufacturing facility in Pasadena, Texas. The plant will have the capacity to supply the entire Texas market with OR-LED, said Mr. Schindler.

The plant will be fully functional by September, and will produce a limited quantity before then, he said.

Mr. Schindler said ORYXE selected Afton Chemical to produce and deliver OR-LED because “we wanted to assure the petroleum industry that we had the highest-quality solution.” Customers will “splash-blend” the additive with their diesel at their own facilities, he said.

Last month, ORYXE announced its first two customers, Direct Fuels and SemFuel.

Direct Fuels, an independent fuel distributor in Northern Texas, placed a $5-million order and said it planned to buy enough additive for 150,000 barrels of diesel per month.

SemFuel, a Denver-based wholesale distributor of refined petroleum, also signed a $5-million contract for diesel for the Houston area.

Mr. Schindler said ORYXE expects to record $25 million in revenues in the fourth quarter, and expects to have an annual run rate of $100 million beginning in October.

Texas stands to lose $12 billion in federal highway funding if it doesn’t meet the Environmental Protection Agency’s air-quality standards, so Texas has reduced the maximum emissions for diesel fuel sold in areas with bad air quality. The regulations go into effect in October.

Texas will be ORYXE’s first market, said company President Kevin McGlensey. The Texas Commission on Environmental Quality has approved the use of the additive for refineries to meet emissions standards.

That puts ORYXE in a good position to take advantage of the market. Of course, the company’s success depends heavily on environmental regulations. If they don’t become stricter, ORYXE might lose its market, and a number of refineries are fighting the stricter Texas regulations.

But ORYXE has other products on the way. Mr. Schindler said the company plans to launch a product in July that will make residual fuel (“bottom-of-the-barrel” crude oil used in public utilities and shipping) more efficient, with reductions in smog-forming nitrous oxides emissions.

ORYXE is also getting ready to test a third product, a diesel additive geared toward California’s emissions standards. That product will launch by the end of the year, said Mr. Schindler.

“ORYXE Technology offers the promise of making petroleum a much cleaner fuel than anyone had imagined was possible,” he said. “Our investors have been very patient and understanding, and their virtue will be rewarded.”