Dynamic Fuels co-owner reports loss

By Luke Geiver | July 13, 2010
Posted Aug. 2, 2010

Construction of Dynamic Fuels Inc.'s 75 MMgy biorefinery in Geismar, La. is nearly complete; however the joint venture's technology provider has reported a second quarter loss. The facility, which is being developed by Tyson Foods Inc. and Syntroleum Corp., will produce renewable diesel, naphtha and petroleum gas.

The good news for the technology provider Syntroleum, however, is that in comparison to losses recorded in 2009, the 2010 second quarter loss is much less. Syntroleum, which has constructed the plant, reported 2009 net income losses of roughly $3.8 million, but this year, only $1.02 million, according to Syntroleum's filings with the Securities and Exchange Commission.

The reason for the second-quarter loss this year, according to statements by Syntroleum in the SEC filing, results from increased staffing needed to complete construction of the facility. In 2009, Syntroleum reported a second-quarter loss on investment for the Dynamic facility of $898,000, and for 2010, $1.1 million. The project, which achieved mechanical completion on July 9, is set to begin initial fuel production in the third-quarter of 2010, the filing said. "We currently expect that the first facility will produce approximately 77 percent diesel, 13 percent naphtha and 10 percent liquefied natural gas," the SEC filing also said. The capital and working capital budget for the Geismar facility is roughly $170 million and in June of this year, Syntroleum made a $5 million investment in the plant and according to the filing, the company will also commit an additional $10 million in the second half of 2010.

The Tulsa-based company currently has approximately $24 million in cash and cash equivalents and said in the filing, "We believe that all of the receivables currently outstanding will be collected and have not established a reserve for bad debts." The plan for the next several years, the Syntroleum filing also said, is to invest in additional plants and earn revenue, "assuming the commercial success of the plants based on the Syntroleum Process."
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