Gevo and Chevron Partner to Invest in Manufacture of Sustainable Aviation Fuel

Source: Streetwise Reports   09/09/2021

Shares of renewable fuels technology and development company Gevo Inc. traded 35% higher after the company reported it is teaming up with Chevron U.S.A. Inc. to invest in development and production of sustainable aviation fuel derived from inedible corn.

Renewable fuels technology firm Gevo Inc. (GEVO:NASDAQ), today announced that it signed a letter of intent with Chevron U.S.A. Inc., a subsidiary of Chevron Corp. (CVX:NYSE), to establish a joint investment for the purposes of building and operating one or more new facilities dedicated toward turning inedible corn into sustainable aviation fuel. The companies stated that the process is expected to aid in lowering the lifecycle and carbon intensity of fuels used in the aviation industry. In addition to the alternative jet fuels, the new facilities will also be designed to produce corn oil and proteins.

The reported stated that as outlined in the letter of intent, Gevo would contribute and deploy its proprietary technology at the new facilities to operate and produce sustainable, lower-intensity aviation fuel and renewable blending components for motor gasoline. Chevron for its part would co-invest with Gevo in one or more projects and would receive offtake rights for around 150 million gallons per year to sell to its customers.

Chevron Corp.’s EVP of Downstream & Chemicals Mark Nelson commented, “Chevron is providing our customers with next-generation renewable fuels that can help them lower their overall carbon footprint…This potential investment leverages Gevo’s innovative approach to producing sustainable aviation fuel, complementing other renewable fuels investments we are making as part of our higher returns, lower carbon strategy.”

Gevo’s CEO Dr. Patrick Gruber stated, “We are pleased to collaborate with Chevron, who is willing to co-invest in building out Gevo’s capacity to produce renewable, high-performing hydrocarbons that can be used in existing equipment and engines.”

“Chevron’s advantaged market position would allow it to offtake production from this venture, helping to place sustainable aviation fuel with airline customers,” Dr. Gruber added.

The companies advised the terms of the proposed investment are still being negotiated and have not yet been finalized. The investment by Chevron remains subject to the execution of definitive agreements along with ordinary closing conditions and necessary regulatory approvals. The companies indicated that they have included the details of the proposed collaboration in an 8-K filing with the U.S. Securities and Exchange Commission on September 9, 2021.

Chevron Corp. is headquartered in San Ramon, California, and is one of the world’s largest integrated oil and gas, chemicals, and alternative energy companies with annualized revenues of over $140 billion and a $185 billion market cap. The firm is making the transition to more reliable, affordable, and ever-cleaner sustainable energy. Chevron is a major U.S. producer of crude oil and natural gas and in addition manufactures transportation fuels, additives, lubricants, and various petrochemicals. The company continues to expand its efforts to efficiently lower its carbon intensity and seek out renewables and other commercially viable low-carbon technologies.

Gevo Inc. is a renewable fuels technology and development company based in Englewood, Colorado. The firm works to convert renewable energy and carbon into energy-dense liquid hydrocarbons that can then be used for drop-in transportation fuels such as gasoline, diesel, and jet fuel. When the fuels are combined and burned together the potential result is a net-zero greenhouse gas emissions yield when measured across the full life cycle of the products.

In addition to applications for low-carbon impact fuels, Gevo noted that “its technology also enables certain plastics, such as polyester, to be made with more sustainable ingredients.” That company advised that it subscribes to the Argonne National Laboratory GREET model, which it asserted is “the best available standard of scientific-based measurement for life cycle inventory or LCI.”

Gevo started off the day with a market cap of around $1.1 billion with approximately 198 million shares outstanding and a short interest of about 13.5%. GEVO shares opened over 7% higher today at $6.21 (+$0.42, +7.25%) over yesterday’s $5.79 closing price. The stock has traded today between $6.15 and $8.27 per share and at present is trading at $7.84 (+$2.05, +35.41%).

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