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    Stock Alert for Syntroleum Corp. (SYNM)

    Syntroleum Corp. (SYNM), along with its subsidiaries, is engaged in the commercialization of its technologies to produce synthetic liquid hydrocarbons that are free of contaminants found in hydrocarbon products.  It owns the Syntroleum® Process for Fischer-Tropsch (FT) conversion of synthesis gas derived from biomass, coal, natural gas and other carbon-based feedstocks into liquid hydrocarbons, the Synfining® Process for upgrading FT liquid hydrocarbons into middle distillate products such as synthetic diesel and jet fuels, and the Bio-Synfining(R) technology for converting animal fat and vegetable oil feedstocks into middle distillate products such as renewable diesel and jet fuel using inedible fats and greases as feedstock.  Dynamic Fuels, a 50/50 venture owned by the Company and Tyson Foods Inc. (NYSE: TSN), was formed to construct and operate multiple renewable synthetic fuels facilities, with production on the first site beginning in 2010. SYNM intends to use its portfolio of technologies to develop and participate in synthetic and renewable fuel projects.

    Share Statistics (14-Feb-11)   FY












    Symbol SYNM Revenue, $Mn 27.43 8.41 -69.3% 1.26 1.18 -6.3%
    Current price $1.30 Gross marg. 86.7% 65.9% -24.0% 34.1% 51.7% 51.6%
    52wk Range: $0.76-$2.45 Oper. margin -26.8% -38.4%
    Avg Vol (3m): 425,327 Net margin 18.4% -113.4% -716.3% -307.9% -389.8% 26.6%
    Market Cap. 127.33M              
    Shares Outstanding 97.95M EPS, $ 0.07 -0.12 -271.4^ -0.05 -0.05 0.0%

    Source:, SEC Filings.

    Investment Highlights

    SYNM shares rose as much as 40% yesterday, extending Monday’s gain, following news that Dynamic Fuels and Mansfield Oil Co. (Mansfield) have inked a deal to supply renewable diesel to Norfolk Southern Corp. (NYSE: NSC), one of the nation’s largest transporters of coal and industrial products. Norfolk Southern has primarily been using a 100% pure Dynamic Fuels renewable diesel at its Meridian, Mississippi rail yard since early January.

    SYNM shares have gained 22.6% in the last five days and 21.5% in the last month.  Year-to-date, the stock is down 14.5%.

    Dynamic Fuels is a 50/50 venture of Tyson Foods and SYNM that produces next-generation renewable and synthetic fuels from animal fats and greases. Its Geismar, Louisiana, plant was designed to produce 75 million gallons of renewable diesel, naphtha and LPG per year, of which the primary product is ASTM D975 renewable diesel. Due to its molecular properties (it’s a pure hydrocarbon), renewable diesel is a “drop in” fuel that can replace 100% of petroleum diesel in a diesel engine without engine modification.

    Commenting on the latest development, Ron Stinebaugh, senior vice president of SYNM, stated: The contract with Norfolk Southern is the first manifestation of Dynamic Fuels’ partnership with Mansfield. We look forward to working with Norfolk Southern to lower their emissions and increase the renewable content of the fuel they burn. Renewable diesel is a sustainable, ultra clean burning, high cetane fuel that reduces carbon emissions and significantly reduces particulates and NOx when combusted in existing diesel engines. Supplying a prestigious company like Norfolk Southern validates our belief that customers are looking for renewable options that increase sustainability and lower emissions without sacrificing fuel quality.”

    It was earlier this month when SYNM announced that Dynamic Fuels signed strategic marketing alliance, commercial off-take and supply chain management agreements with Mansfield to efficiently distribute synthetic renewable diesel to the commercial fleet vehicle market.

    The strategic marketing alliance is expected to provide Dynamic Fuels access to Mansfield’s existing commercial accounts while expanding Mansfield’s large portfolio of renewable fuel products for its customers. In addition, company officials believe the commercial off-take agreement will also help ensure Dynamic Fuels has immediate access to fleet markets for its renewable diesel. The supply chain management agreement allows Dynamic Fuels to outsource supply chain services to Mansfield, including logistics management, customer service support, invoicing and billing services.

    SYNM gained $0.20, or 18.2%, to close at $1.30, with close to 6.17 million shares exchanged. Yesterday’s trading volume was nearly 17 times the 10-day average.


    Financial Summary

    For the quarter ended September 30, 2011, SYNM reported an operating loss of $452 K resulting from total revenues of $1.2 million and operating expenses of $1.6 million. For the nine months ended September 30, 2011, the Company reported an operating loss of $2.3 million resulting from total revenues of $3.2 and operating expenses of $5.5 million. The Company’s revenues relate to engineering services provided to Dynamic Fuels and other customers for process design and research support and revenues for royalties from the Dynamic Fuels commercial production of renewable fuels.

    For the quarter ended and nine months ended June 30, 2011, the Company reported a loss from Dynamic Fuels of $5.3 million and $12.3 million respectively. This compares to a loss of $4.8 million for the quarter ended March 31, 2011.  During the quarter and nine months ended June 30, 2011, the plant produced 7.5 million and 14.0 million gallons of renewable fuels, respectively, of which 7.3 million and 13.0 million gallons were sold, respectively for the same periods.

    Net loss was $4.6 million or $0.05 per share and $14.0 million or $0.16 per share, respectively, for the three month and nine month periods ended September 30, 2011, compared with a net loss of $3.9 million or $0.05 per share and $4.5 million or $0.06 per share, respectively for the corresponding periods in 2010.

    As of September 30, 2011, SYNM’s available cash position was $28.4 million.


    Financial Strength (14-Feb-2012)




    S&P 500

    Quick Ratio (MRQ) 0.13 0.68 0.58
    Current Ratio (MRQ) 23.16 0.21 0.92 0.92
    LT Debt to Equity (MRQ) 0.00 11.95 12.87 170.57
    Total Debt to Equity (MRQ) 0.00 20.88 17.45 227.91
    Interest Coverage (TTM) -0.47 0.14 3.72 27.14

    Source:, SEC Filings.

    Technical Analysis


    SYNM is above the upper Bollinger Band, implying that it is currently extended from its recent trend. Be aware, however, that a cross outside of the Bollinger Bands can sometimes be a signal of trend strength and not, necessarily, trend reversal.

    The MACD for SYNM currently indicates a strong bullish signal for two reasons. First, the MACD is above the signal line, a 9-day moving average. Second, the MACD is above 0, which implies that the underlying moving averages are trending higher.

    Comparative Analysis

    Company Name Ticker Price per Mrkt. Cap. P/E P/S
    Feb14-2011 symbol Share, $ $ Mn 2011 2012 2011 2012
    BP plc BP 46.47 146.98B 7.27 6.67 0.41 0.37
    Rentech Inc. RTK 1.78 400.88M 16.18 29.67 2.20 2.45
    Sasol Ltd. SSL 51.97 31.28B 9.84 9.66 1.25 1.17
    Oil & Gas Refining & Marketing Median       11.44 n/a 0.41 n/a
    Syntroleum Corp. SYNM 1.30 127.33M n/a n/a 15.14 1.78

    Source: Thomson Financial

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