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Syntroleum Corp. Reports Operating Results (10-K)

March 15, 2011 | About:
10qk

10qk

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Syntroleum Corp. (SYNM) filed Annual Report for the period ended 2010-12-31.

Syntroleum Corp. has a market cap of $169.1 million; its shares were traded at around $2.07 with and P/S ratio of 6.2.

Highlight of Business Operations:

At June 30, 2010, the aggregate market value of the registrants common stock held by non-affiliates of the registrant was approximately $107,000,000 based on the closing price of such stock on such date of $1.64 per share (assuming solely for this purpose that all of the registrants directors, executive officers and 10 percent stockholders are its affiliates).

The Energy Independence Act and Energy Policy Act of 2005 (EPACT) designates a tax credit of $1.00 per gallon for the production of renewable diesel and $0.50 per gallon for the production of renewable naphtha, for which our Bio-Synfined products are eligible. All of our 2010 production and future production in 2011 are eligible for this credit.

EPACT also provided for the United States Environmental Protection Agency (EPA) to establish the Renewable Fuels Standard (RFS) to set the volumes of renewable fuels that must be sold in the United States. Obligated parties must acquire 800 million gallons of biomass-based diesel, which includes renewable diesel, for 2011 or acquire 1.2 billion Renewable Identification Numbers, or RINs. Our diesel fuel generates 1.7 RINs per gallon. At December 31, 2010, D4 RIN prices were $0.75 per gallon and therefore worth $1.25 per gallon with the 1.7 multiplier. As of March 1, 2011, RIN prices are $1.10 per gallon and therefore worth $1.87 per gallon with the 1.7 multiplier. Dynamic Fuels intends to apply to the EPA to register the naphtha it produces for D Code 5 RINs. D 5 RINS were $0.52 on March 11, 2011.

Government Legislation. In 2007, the U.S. government enacted the Energy Independence Act of 2007, and in 2005, the U.S. government enacted two other significant pieces of legislation, the Energy Policy Act of 2005 (EPACT) and the Safe, Accountable, Flexible, Efficient Transportation Equity Act: A Legacy for Users (SAFETEA-LU), aimed at addressing a new, comprehensive national energy policy to promote domestic energy security. The Energy Independence Act and Energy Policy Act of 2005 designates a tax credit of $1.00 per gallon for the production of renewable diesel, which is defined as diesel derived from any organic material other than oil, natural gas or coal. Our Bio-Synfined products are eligible for the $1.00 per gallon credit. The $1.00 tax credit applies to both pure and mixed renewable diesel, with the credit calculated according to the percentage of renewable diesel present in the mixture. This credit applies to fuels derived from both virgin and non-virgin feedstocks.

EPACT also provided for the United States Environmental Protection Agency (EPA) to establish the Renewable Fuels Standard (RFS) to set the volumes of renewable fuels that must be sold in the United States. The RFS was originally set for biofuels to increase from 4 billion gallons in 2006 and to 7.5 billion gallons on 2012. In May, 2009, the EPA proposed rules for RFS2, which would expand mandates to 36 billion gallons of renewable fuels to be used by petroleum refiners by 2022, of which 1 billion gallons must be biomass based diesel by 2012 (biodiesel, renewable diesel and biomass to liquids based diesel) and 21 billion gallons must be advanced biofuel (excludes conventional corn ethanol) by 2022. The EPA issued final rules related to RFS2 in February 2010. Obligated parties must acquire 800 million gallons of biomass-based diesel, which includes renewable diesel, for 2011 or acquire 1.2 billion Renewable Identification Numbers, or RINs. Our diesel fuel generates 1.7 RINs per gallon. At December 31, 2010, D4 RIN prices were $0.75 per gallon and therefore worth $1.25 per gallon with the 1.7 multiplier. As of March 1, 2011, RIN prices are $1.10 per gallon and therefore worth $1.87 per gallon with the 1.7 multiplier. Dynamic Fuels intends to apply to the EPA to register the naphtha it produces for D Code 5 RINs. D 5 RINS were $0.52 on March 1, 2011.

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