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General Investing

KiOR (KIOR) Produces Commercial Biofuels; Exposed to RIN Values

August 20, 2013

KiOR (KIOR) has started commercial production of its biofuels from nonfood biomass out of its first facility. The renewable fuels company still shows risk, however, in the consistency of production through this new technology, and the company has exposure to regulatory risk, says Ben Kallo, Senior Analyst at Robert W. Baird & Co.

“A company like a KiOR, it built its first facility — this was slightly over budget, and it’s taken longer for them to ramp it up and have it start producing. Now the good news is, they have actually produced some commercial products out of it. It’s taken a little bit longer, and we do need to see consistent production before we know that the technology is derisked,” Kallo said.

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Kallo says KIOR is different from other biofuel companies that are looking to develop without depending on subsidies, and KIOR is more exposed to RIN values. He adds that the technology is still in the early innings, and there is opportunity in the space.

“A lot of their revenue will come from RIN values as they sell product; that does expose them to some regulatory risk, although the renewable fuel standards does have a lot of support. So people will give that a different amount of risk, but there is — a substantial portion of their revenue does come from RINs or projected revenue,” Kallo said.


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