Airlines Help Boost Biofuel Stocks

Joel Anderson |

Airlines Help Boost Biofuel StocksThe Syntroleum Corporation (SYNM) made major gains in the markets today after news that domestic airliner Alaska Air (ALK) would be using its oil-derived jet fuel for a domestic flight out of Seattle.

Syntroleum Spikes on Airline News

Shares in Syntroleum jumped over 32 percent on news that United Continental Holdings (UAL) and Alaska Air announced that they will begin using biofuels to power flights for the first time.  Syntroleum, which is working to commercialize their technology that produces a synthetic hydrocarbon from triglycerides and/or fatty acids. The process produces a renewable synthetic fuel that can be used to make anything from propane to jet fuel. The Alaska Air flight will be using a fuel that's 20 percent biofuel made by Dynamic Fuels, LLC, a joint venture between Syntroleum and Tyson Foods (TSN). The news was a boon for the $150M cap Syntroleum,which was trading at nearly six times its average volume.

United Continental, meanwhile, intends to use an algae-derived biofuel made by Solazyme (SZYM), in cooperation with Honeywell Industries (HON). The United Airlines flight will travel from Houston to Chicago on the Solajet fuel blend that is 60 percent petroleum and 40 percent biofuels.  Solazyme, which is based out of San Francisco, has struggled since its IPO in May and their stock has lost more than 50 percent of its value. That trend continued into today when the company declined an additional 5.45 percent during the session. After hours Solazyme began reversing that trajectory as the news broke regarding a deal with United, which entails the sale of 20 million gallons of Solajet fuel annually beginning in 2014.

Some Biofuel Stocks Rebounding

Biofuels stocks have been battered in recent months as an industry that relies heavily on government funding is left in flux while the Federal Government ponders major budget cuts, including the removal of the ethanol subsidy by the end of 2011, and the general economic struggles continue to hurt the industry. However, some biofuels stocks have been making a rally in recent weeks that could mean good things for the sector in the future. Pacific Ethanol (PEIX) saw its stock price battered by the likely end of ethanol subsidies, but a strong quarterly report released in late October has prompted an extended surge that pushed the stock up over 80 percent in the last week. KiOR, Inc. (KIOR), the maker of Re-crude, a crude oil substitute created from non-food biomass, gained over 3 percent today as it proceeds on a three months rally that has seen stocks shoot up over 30 percent from an August low of under $10 a share. KiOR shares had declined after its May IPO when it debuted at $15, but the company, among the largest in biofuel,  has returned to peak levels since August.

 

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Companies

Symbol Name Price Change % Volume
TSN Tyson Foods Inc. 57.83 0.44 0.77 1,308,521
UAL United Continental Holdings 71.78 0.81 1.14 1,125,149
CNU:CA CNOOC Limited american depositary receipts 167.08 0.00 0.00 0
ALK Alaska Air Group Inc. 86.37 1.57 1.85 358,085
HON Honeywell International Inc. 115.31 2.24 1.98 2,972,176
SZYM Solazyme Inc. n/a n/a n/a n/a
PEIX Pacific Ethanol Inc. 8.83 0.03 0.28 81,335

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