SPRINGDALE — When Tulsa, Okla.,-based Syntroleum Corporation hitched its wagon to meat giant Tyson Foods in June 2007 with plans to make renewable fuel from chicken fat, plenty of analysts were skeptical.

The Tyson Foods-Syntroleum venture was an unlikely attraction of a Fortune 500 company to a business that had lost $322 million since going public in 1998.

Cathy Milostan, Morningstar analyst, warned in 2007 Syntroleum might not have enough cash to survivelong enough to reap any profit from the Tyson Foods venture.

But some three years later Syntroleum continues to reverse its losses in anticipation of seeing its fi rst fuel refinery completed by early next year, with the help of its Dynamic Fuels partner, Tyson Foods.

Syntroleum said its renewable fuel plant under construction in Geismar, La., is 76 percent complete on budget as of Sept. 30.

The company posted $7.1 million in net income for the nine months ended Sept. 30, compared to a loss of $3.3 million for the same period last year. Those earnings consisted of 10 cents per share, compared to 5-cent loss a year ago.

Syntroleum said it generated $11.8 million in cash flow for its operating leases in the past nine months, compared to negative cash flow of $1.7 million in the previous year’s period.

More importantly, Syntroleum has a cash position of $15.2 million - more than enough money to sustain operations until the Geismar plant goes online in early 2010, analysts said.

Milostan said, if the Dynamic Fuels plant is built on time and can run e◊ciently the upside in fi ve years or so is $3 per sharefor Syntroleum.

Shares of Syntroleum rallied more than 11.5 percent on the positive news, to close Thursday at $2.41.

Once fully operational, the facility is expected to produce 75 million gallons of fuel annually from animal fats, greases and vegetable oils supplied by Tyson Foods.

The unblended fuel can be used as a premium fuel in existing diesel engines with no engine modifications required and can also be upgraded into clean, high-quality jet fuel, according to Je◊Webster, director of Tyson Foods renewable products division.

News, Pages 3 on 11/06/2009

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