Long SYNM@$2.83
In the world of wine, Chaptal added sugar to Sauternes over two centuries ago to aid the fermentation process. And, of course, it opened the appellation's production process to abuse by inferior competitors.
But, in the world of synthetic (non-food) fuel, adulturation tends to provide benefits not crutches. In the case of use by aircraft it means lower fuel density (thus higher payloads) and lower emissions. More generally it is compatible with existing infrastructure (ethanol corrodes pipelines).
Synthetic fuel producers may arguably be part of a transitive technology in the renewable energy debate. They may have a chequered history (particularly where the economics of gas-to-liquids is concerned). But it appears their day may be here.
Rentech and Syntroleum are two of the 'major' players (if small caps can be thus described). DBS had the chance to buy the former at just 0.65 cents a share but passed on some, to his mind, questionable PR during the last quarterly results.
They are now $2.29 on the back of various announcements - most notably an agreement to supply ground vehicle fuel at Los Angeles airport from 2012. 2012 because they have not even broken ground on the factory to make the stuff. Nor is the financing fully in place.
Contrast with Syntroleum whose JV with Tyson is well advanced and ought to be producing from Q1 2010. They are one announcement away from a share price jump: the plant is up and running on time; achieving certification for use in airline engines; a first plant contract with a customer; and so on.
The squiggles are passable but this time it is the fundamentals and theme that carry the day.
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