Q3 2025 Gevo Inc Earnings Call
Speaker #1: After the speaker's presentation, there will be a question-and-answer session. To ask a question during the session, you'll need to press *11 on your telephone.
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Speaker #1: I would now like to turn the conference over to our speaker for today, Eric Frey, Vice President of Finance and Strategy. Eric, you may begin.
Speaker #2: Good afternoon, everyone, and thank you for joining us on today's call to discuss Gevo's third quarter 2025 results. I'm Eric Frey, Vice President of Finance and Strategy at Gevo.
Speaker #2: With me today, we have Patrick Gruber, our Chief Executive Officer; Leike Agiri, our Chief Financial Officer; and Chris Ryan, our President and Chief Operating Officer.
Speaker #2: And Paul Bloom, our Chief Business Officer. Earlier today, we issued a press release that outlines our third quarter 2025 results and some of the topics we plan to discuss.
Speaker #2: A copy of the press release is available on our website at www.gevo.com. Please be advised that our remarks today, including answers to your questions, contain forward-looking statements within the meaning of the Private Securities Litigation Reform Act.
Speaker #2: These forward-looking statements are subject to risks and uncertainties that could cause actual results to be materially different from those currently anticipated. Those statements include projections about the timing, development, engineering, financing, and construction of our alcohol digest projects.
Speaker #2: Our future carbon credit sales, our Gevo North Dakota and RNG plants, and other activities described in our filings with the Securities and Exchange Commission, which are incorporated by reference.
Speaker #2: We disclaim any obligation to update these forward-looking statements. In addition, we may provide certain non-GAAP financial information on this call. The relevant definitions and GAAP reconciliations may be found in our earnings release, which can be found on our website at www.gevo.com in the Investor Relations section.
Speaker #2: Following the prepared remarks, we'll open the call for questions. I'd like to remind everyone that this conference call is open to the media and we're providing a simultaneous webcast to the public.
Speaker #2: A replay of this call and other past events will be available via the company's investor relations page at www.gevo.com. I'd now like to turn the call over to the CEO of Gevo, Patrick Gruber.
Speaker #2: Pat?
Speaker #3: Thanks, Eric. What a change we've had. The acquisition of our ethanol plant, carbon capture plant, and Class 6 sequestration well turning out even better than we imagined.
Speaker #3: All of this is located at Gevo North Dakota, or GND, as we refer to it internally, and it's all operating really well. We've learned that our carbon sequestration well is unusual because, A, it has a Class 6 sequestration well that's been operating since June of 2022.
Speaker #3: B, we are the only ones using the formation of our well, and that simplifies the auditing as such. And C, it's in an unusually good geology.
Speaker #3: In fact, a European certification group, Pure Earth, which is owned primarily by NASDAQ, certified our well as a 1,000-year performance well. We understand that we're the only alcohol production site in the world so far with this certification.
Speaker #3: Also, I must say that North Dakota has an outstanding state in which to do business and grow. It's pro-agriculture and pro-energy business environment. So we fit in really well.
Speaker #3: Great assets combined with a great business environment combined with growing markets. I believe leads to great opportunities for growth and making money. That's what's in front of us.
Speaker #3: At Gevo, we have long believed that carbon is an important co-product. If we can monetize the value of carbon, we can unlock economics for growth products like jet fuel.
Speaker #3: We are pleased to find out that we can, in fact, monetize carbon value through a variety of methods that Paul Bloom, our Chief Business Officer, will explain in a few minutes.
Speaker #3: In our business model, we view selling carbon as a key initiative. On a separate and unrelated front, we are learning how to generate and sell production tax credits.
Speaker #3: These credits are based in the volume of ethanol produced and the carbon intensity score of that ethanol. Because we have a very efficient ethanol plant, with a carbon capture and sequestration well beneath it, we can achieve very low CI scores utilizing the rules of Section 45(z) of the One Big Beautiful Bill.
Speaker #3: Leike Agiri, our CFO, will give more color on this topic in a few minutes, but I can't hold back. I am just so pleased that we sold all of our credits for 2025 production for a total of $52,000,000 worth of credits.
Speaker #3: I got to say, we had a lot of learning to do about this too. Lots of auditing, lawyers, insurance people to make these deals as bulletproof as possible.
Speaker #3: When we start adding up the potential adjusted EBITDA from selling carbon, generating tax credits, making more ethanol, using more of the well, we can see a picture for GND where we could potentially generate more than $100 million a year of adjusted EBITDA just from that site.
Speaker #3: Get this, this is all without deploying any large capital projects or building a jet fuel plant. Now, the question is, how best to go about it?
Speaker #3: Obviously, we're going to go for the low-hanging fruit first, like incremental expansions of CO2 volume, driven by incremental ethanol expansion and by optimizing which markets we place our carbon credit products in.
Speaker #3: It's all pretty exciting. If you haven't seen our recent investor deck, please go take a look at it. It spells out more clearly what we're thinking.
Speaker #3: When we meet with investors and they see what we're doing at GND, they suggest that we should figure out how to use more of the well, produce more ethanol, to improve the adjusted EBITDA base.
Speaker #3: And then, of course, get on with getting the jet plant built. GND provides an outstanding platform from which to grow. It's obvious what people see what we're doing.
Speaker #3: GND does, in fact, present a great site to build a jet fuel plant. We have ethanol feedstock, great farmers to supply the ethanol plant, carbon sequestration, an industrial complex that's already built, and so now adding a jet fuel plant is incremental.
Speaker #3: It makes a lot of sense. When we look forward, we think that adding a $30 million gallon jet fuel plant would add an additional adjusted EBITDA uplift of about $150 million to the site.
Speaker #3: Think of that. We recently were notified by the Department of Energy that they consider shifting their loan guarantee to Gevo North Dakota from South Dakota.
Speaker #3: I suspect they see the same things we do. Infrastructure already exists. The plants that are there make money, and we can build upon that.
Taken together these steps positive adjusted EBITDA generation recurring monetization of 45 the tax credits.
A credible pathway to breakeven operating cash flow positioned us with steadily improving cash generation and financial flexibility.
Now I'll hand, it over to Paul Paul.
Thanks Lee.
One of the most exciting parts of our progress. This year is how we are capturing and optimizing the value of our carbon dioxide co product, which is approximately 165000 tons per year.
Sequestering at our Cts site in North Dakota.
During Q3, roughly 90% of all the carbon benefits associated with our CRT sequestration remained attached to ethanol gallons and were sold into low carbon fuel markets.
We're seeing strong values and select low carbon fuel markets and look to take advantage of those where we have active pathways that include Ccs.
Going forward, we are applying for more pathway approvals and low carbon fuel markets that include Ccs, allowing GMO optionality to target those markets with the highest returns.
More importantly, we are expanding the portion of our carbon value derived from Ccs that we separate from the few and sell into the carbon dioxide removal, where CVR credit markets.
A recent $26 million five year agreement with buyer retro for carbon dioxide removal credits is a prime example of this growth.
In addition earlier this year, we were featured in Nasdaq's corporate sustainability report as one of their suppliers of high integrity durable carbon dioxide removal credits.
This is great recognition and we believe it shows the major corporations are looking for the high integrity carbon removal credits that <unk> can provide.
We think the Hydra ability and quality of our carbon dioxide removal credits.
Our critical components of the credit value and market acceptance.
We anticipate our CVR sales will continue to grow from $1 million in the second quarter to $3 million to $5 million by the end of 2025.
We expect this business to keep growing in years to come back by a combination of spot sales in multi year agreements.
Our ctr credits are certified under the <unk> standard, which we believe is becoming one of the leading frameworks for corporate buyers.
When you're buying carbon credits the Sidoti has already been verified as being sequestered over a mile underground in the appropriate geological formation, where mineralized as over time and is rated to remain secure for at least the calendar years.
We also believe our ability to produce and deliver high integrity credits to the market today is a differentiator for <unk>.
According to the reporting platform CVR FYI that focuses on the durable carbon credit removal market approximately $38 5 million metric tons of carbon dioxide removal credits have been sold but only two 5% of these have actually been delivered.
This puts <unk> in a unique position of being able to produce and deliver credits today, while others are still working to activate their projects in this growing global market.
We understand has a total value exceeding $10 billion.
We believe the ability to detach the carbon value from the commodity fuel is unique and powerful because it allows us to serve the market more efficiently.
This approach also aligns with our planned synthetic aviation fuel business.
For example, the agreement, we signed with future energy global or LPG in April demonstrates our intention to offer customers more choices.
And improved service by selling voluntary carbon credits separately from our commodity jet fuel.
Since it will take time for SaaS to be available at major airports worldwide. Our agreement with LPG will allow airlines and corporate customers to purchase carbon credits from SPG, which had been separated from the physical fuel we produce to offset their emissions through a book and claim approach and.
And of course, we believe all of this will be better enabled by parity or digital carbon tracking and verification platform to deliver the prove customers need while avoiding double counting.
Through measuring reporting and producing verifiable carbon intensity from farm to flight, where fleet Verity aims to simplify carbon accounting through complex supply chains to track final fuel products and carbon credits with the transparency trust and truth customers require.
It's going to help us farmers and other biofuel producers turned carbon into measurable and marketable co product, while bringing new transparency to the low carbon fuel ecosystem.
And to that point Verdi has been installed at our GMO North Dakota facility and we anticipate it will be fully functional by the end of the year.
In addition in Q3 frontier infrastructure Holdings, LLC announced the strategic partnership with <unk> and GMO to offer North America's first integrated carbon management platform for ethanol producers frontier.
<unk> frontier plans to deliver <unk> by rail solutions and permanent sphere to storage in Wyoming, while Verity provides the digital platform for full carbon tracking.
<unk> anticipates. This unique combination will provide carbon management solutions to ethanol plants don't have direct access to geological storage, where access to proposal two pipelines, while verity brings our carbon accounting platform to the table to help ethanol producers monetize their carbon dioxide co product.
We like this approach for GMO as it kind of unlocked new potential atg 30 sites that we can explore with more verified low carbon ethanol producers and with that I'll hand, it over to Chris Chris.
Thanks, Paul at this time of year, the thing that takes up a lot of our attention in operations as corn harvest at.
<unk> in North Dakota, we're happy to have a great relationship with the farmers up there who supply us with the 23 million bushels per year corn, we need to keep the plant running.
This year those farmers have done a great job turning out a record harvest in North Dakota in spite of the early frost that occurred in the western part of the state.
This season as a good reminder, that while weather can have a negative impact on some farmers overall the AG industry continues to get more crop out of the same amount of land, which creates a need for new uses such as SaaS, which I'll talk about in a minute.
Farmers in North Dakota are nearing the end of harvest and achievable North Dakota, where nearly full of our $3 million bushel capacity with our cash bits currently around 40% to 60 per bushel under the Chicago Board price dependent upon delivery model.
This is important for our investors to understand the point is when thinking about making products like SaaS.
Alcohol to jet, we have a lot of low cost low carbon easy to handle feedstock at scale that begins with our relationship with the farmers.
Related to that a few weeks ago, we had our second community event, where we had nearly 100 farmers and community members spend a couple of hours with us at GMO, while we've talked about our improvements at the North Dakota site and our vision for the future.
The audience was very engaged and supportive which makes our work up they're much more meaningful.
Moving beyond the farmers to our GMO North Dakota operations I'd like to acknowledge once again, the great job, our team is doing and maintaining improving and operating the assets there.
The improvements include fundamental things such as new truck scales critical for receiving corn and selling feed.
Proving the roads to ensure safety for those farmers and several energy efficiency improvements.
The operations team successfully completed a safe turnaround of the plant and five days in September and came back online quickly.
For Q3, the ground over 5 million bushels of corn, while producing and selling over 16 million gallons of fuel ethanol 46000 tons of high protein animal feed nearly 5 million pounds of corn oil all while sequestering 42000 tonnes of carbon dioxide, which generates the carbon dioxide.
Total credits Paul mentioned.
That brings us to over 550000 metric tons of Cotwo, that's been sequestered at the site since the sequestration operation began in June 2022.
That's proof that we can capture carbon reliably each and every day, we operate which is well over 350 days of the year.
And remember that the captured Cotwo. There was it was originally pulled from the air through photosynthesis by plants.
Then release during our fermentation process and nearly pure form for us to sequester underground.
In addition to the operations team, we have a team of engineers achieve or engaged in engineering, a number of improvements of the site along with engineering. The Atg 30 plants, which is designed to make sense.
Improvements include expanding the ethanol plant.
Both incremental and step change expansions, expanding corn storage and receiving expanding our carbon sequestration and utilization improve.
Improving energy efficiency.
We expect the incremental improvements will lead to substantial increases in adjusted EBITDA at North Dakota.
And the step change projects, we have in mind could make it even bigger.
The ACG 30 project and expected adjusted EBITDA would be even more growth on top of it all.
On the Atg 30 project design and engineering work are progressing well.
We're leveraging our patents and Knowhow from previous project design work to shorten our design time, simplify construction increase efficiencies and manage carbon.
We currently estimate the installed capital cost to be around $500 million, not including financing related costs.
I'm happy to report that we've partnered with the state of North Dakota on a couple of our improvements. Thanks to the North Dakota Department of AG for their generous grants of over $3 million to help us improve energy efficiency of the plant and expand infrastructure required for the Atg 30 project.
Our long term vision for the future of jet fuel plants straightforward build atg 30, right here, achieving north Dakota prove it out and then copy and paste that same blueprint.
Ross other strategic locations in the U S and globally.
Today, we want the site to showcase farming in carbon management done right.
In the future, we want Haj 30 to showcase alcohol to jet done right a model that can be replicated efficiently using abundant domestic feedstocks and proven carbon management systems.
Behind all of this progress is a talented team of operators engineers and community partners, who make it happen every day and of course, we couldn't do it without the support of our pharma partners in the state of North Dakota, which continues to be a terrific place to do business back.
Back to you Pat.
Thanks, Chris Paul and <unk>.
We have advanced we've been Derisking, our plans to get the jet fuel production, we've known that to achieve the best economics carbon scores project youll that ethanol on the atg process need to be integrated.
And that we need a carbon sequestration to achieve our carbon footprint goals I'd like Preston, we would've had to build all three greenfield, albeit the sequestration would have been done in cooperation with the summit pipeline.
Today, we have an outstanding ethanol plant and sequestration, great de risks and we make money on those assets to boot.
We get.
You get to learn how to monetize the carbon with real carbon products.
Now we should maximize the adjusted EBITDA from those assets and get on with the ATK plant. The pieces are coming together, let's go ahead and open it up for questions operator.
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Please standby, while we compile the Q&A roster.
Our first question comes from Derrick Whitfield with Texas capital.
Good afternoon, guys and congrats on all your progress over this last quarter.
Hey, Derrick yeah. Thank you it's been pretty cool.
Referencing slide 12 it is.
<unk> North Dakota represent significant upside to your EBITDA projections, maybe speaking of this slide could you elaborate on the incremental capital in steps required to optimize your operation.
On a reasonable timeline to achieve $110 million of EBITDA.
Yes, so it's incremental capital incremental capital is like in that $15 million ish, plus or minus a few million dollars range. That's what we think it is it could change and this is about debottlenecking the ethanol plant towards natural get it <unk>.
Bruce maximally with what we have there also optimize the energy use the capture more carbon dioxide all those kind of normal things you can do remember theres leverage every time, we do something like that because as you produce more ethanol you get more cotwo capture Marci are too we can talk.
<unk> energy capture more <unk> et cetera, and.
When Chris is referring to.
Step change that'd be adding additional ethanol capacity per se like a whole another plant we're going to look at that too I just don't have a timeline for that so what you see on slide 12 in our investor presentation and for everybody else, but Derek is referring to is that we have a net EBITDA something like $40 million left.
<unk> adjusted EBITDA on the left side of the slide it's $40 million on the right side, it's plus $100 million that say over the next 18 months to 24 months, we could get up there to a 100.
$10 million, how fast we do it I don't know it depends on how the world is working for US we are well on the way if anyone is paying attention. They should see this we're well on our way to moving towards that $40 million. This is all about just doing what we're doing.
And have a full year at it and getting better at capturing more value from the car, but we expect our Ci scores go down in the future. So that makes more for the 40 <unk> tax credit.
We have.
Paul's team it really learning how to maximize value from the.
Carbon by selling it.
As a bundle with a gallon the carbon value with a bundle as a gallon and low carbon fuel markets are separating the carbon and selling it separately and maximizing that value as they learn how to do that I expect that.
That they will continue to increase but thats.
What I am most keen on is watching those numbers around carbon value per ton.
So.
We made a good move by buying this plant there is no question.
Certainly a great acquisition for you guys and as my follow up I wanted to touch on that loan extension that you guys announced a few weeks ago.
Could you elaborate on kind of how that extension and the scope.
<unk> scope that you guys are pursuing increases the likelihood of DRA financing.
I would say.
Well I'll comment first let me hand over to <unk> to give it a little more color, but from my point of view whenever you have.
Change of administrations like this the fact that we survive straight away was good I mean, that's a good thing. It says we're kind of in there and there is one of things that are interesting and attractive they have taken a long time to get leadership in place they have been and im talking about at the secretary level, but the secretary.
And so it took a while for people to get into place and musical chairs, a little bit or getting their act together theyre looking at it based knee realistically.
And I'm going to reiterate this when you compare the site that we have as a practical thing is greenfield taking that and moving.
Ignores to North Dakota, where we have an ethanol plant that operates and makes money have a sequestration right underneath the plant it makes money.
It is a different game to play in terms of how one thinks about the possibilities of financing.
Now remember they were committed.
Conditional commitments in actual commitment to do the financing if we do all the prerequisites against the rest of the funding in place et cetera.
Okay.
Right.
They suggested.
They suggested.
Shifting it up to North Dakota, because we think it's a good idea to so it was a kind of a meeting of the minds thing. So we're very pleased about that but it's just the very beginning and we got to go work through it.
So I think they liked it before at Lake Preston, they're going to like it a heck of a lot better up in North Dakota, we all make more money and it doesn't require as much external financing. The project is much smaller right. Because you only have to build any TJ increment plus do some energy.
Does that help you.
It does thanks for the color I'll turn it back to the operator.
Our next question comes from Amit Dayal with HC Wainwright.
Okay.
Hey, good afternoon, guys. Thank you for taking my questions great to see the indication continue to come through.
With respect to.
The EBITDA drivers for next year.
Can we maybe just get a little bit color on whether it's primarily going to come from.
The sequestration capacity expansion or some of these.
Debottlenecking efforts you may be implementing.
Essentially.
<unk>.
How we should think about growth and cash flows for next year. Yeah. So on slide 12 in our presentation on the left hand of that slide is what I think a picture of what is closer to what 2026 should look like it's something like that.
And give or take still we're working on it we will finalize something after the first year is when we really think but thats kind of the picture and remember we're ramping up and so this is kind of a curve that's going upward and so how fast does it go up or how much faster tenant go upward we know for a fact that there is going to be improvements carbon score and.
2026 built into the big beautiful Bill.
So we know we're going to make more money at that front and then on I think on the carbon side.
Side and I'll, let Paul comment on it.
Next year to give a picture of that and I think that's the one I am keeping my eye on mostly I want to see that grow its incremental already we're projecting as to what we should be able to do it from where we are today and on an upward trajectory. The ethanol itself is going to be ethanol. The R&D is going to be replant Super conservatively on R&D and this is simply.
Because we're realistic on this market. It is just a tough market with <unk>.
In general, but our plant operates really well. So we are these big.
Arent patting anything or at being Super optimistic about that although it generates value for us. So it's good and hopefully if the market turns great it'll be a huge upside for us, but we are not planning that.
Optimistically, but Paul I think this question of what's the growth look like I'm going to rephrase yours, Amit Paul give us some color on what you think.
Per ton going forward, how does it work.
That buildup like what's in front of us how does that capanne out because we're doing something different than everybody else here, yes.
Yeah. Thanks, Thanks, Pat So just a little more color on the carbon business trying to as we talked about during this quarter.
We're moving more you see 90% of our carbon value today being sold in fuels.
But we'd like to buy a record deal we're selling much more into a separated carbon dioxide removal market right. These credits.
And that's exciting for us because those can be liked by record deal longer term.
Deals in the market, where we're bringing in more ratable revenue, we're not as subject to the ups and downs in the volatility that you see in low carbon fuel markets, even in the low carbon fuel credit prices. So that's going to continue to grow that with the even though by a record deal right, we start growing into $5 million.
Just.
A year down down the road with that type of a deal and then we're going to look to do more of those right. So you see this a big piece in this is how long term. We think this can start adding in this $30 million type range over.
Over the next two years between the compliance markets in the voluntary market as we balance that we see either of those markets go but we've got a lot of flexibility that's what we like and that's why we're continuing to do both right we're putting on more pathways.
The compliance and the regulatory fuel markets, where we can go after the low carbon fuel within Ccs value attached or we can separate that out into the carbon dioxide removal markets, where we have that flexibility to maximize our returns.
And then I think the way to look at the slide 12 is on the right side of that slide is.
A little further out and I don't have a timeframe on it per se because we could do it faster or slower depending upon how projects get done but that includes an incremental expansion of the ethanol plant taken it up to like 75 million gallons, a year and that produce more ethanol marcio too. So you can imagine how that number has increased because of that because we have leverage right, we're making more ethanol, we make more cotwo generate more Craig.
Jerry more production tax credit etcetera, and Thats why you see those numbers. So that's what our picture looks like and as we work through stuff.
And this is all with the low capital version, it's kind of exciting its a good place to be.
Atg is completely on top of all of that whether it'd be a different spend in a different bucket of different project.
Alright that makes sense. So it seems like you're expanding the ethanol capacity to 75 million gallons per year is pretty natural I guess in terms of how you are executing and all the other infrastructure you have order to be able to monetize that.
What I'm trying to get at is if you were to.
Well it has to make a call between Egypt, Turkey and.
Much larger expansion of the ethanol capacity.
Do you lean more towards the Egypt with.
With or without the <unk> funding.
Well the Atg 30 plan right now the way it pencils in with our contracts that would be at an uplift of about 150 million Bucks a year of EBITDA.
Now.
Fortify turning back to ethanol ethanol the 45 Z credits.
Are they.
And at the end of 2029.
So if youre looking at long term plans of building new plants, what's going to be in the money well atg.
Plant jet plan is it dependent upon our long run economics.
40, <unk> tax credit remember our site, we're lucky we can take a queue.
And so we're pretty much indifferent between those two at the moment the way that.
The world is structured and remember Q runs out for 12 years.
So we're in good shape on that kind of a front and so we don't take it's not crucial.
We'd love to have an extended love to but what.
It'll be what it is it's going to compete economically Paul will be successful and his team will be successful selling carmine so.
It'll be what it is ethanol if we could get it built really fast and if you like.
Let's say duplicate of what we currently have of capacity how fast can we get a bill color on where the credits last really.
You don't want to be in a business such as to an ethanol you do not want to be in a plain old ethanol business. That's not a good business staying volatile. This is why Paul was emphasizing turning carbon into a product of selling it gets us into a ratable business by a record deal was a multiyear contracts that are multiyear contracts selling carbon really that's what we just did.
And we're getting more of that that changes the game of what's possible and gets us out of this volatility over the long run. So that's how we're thinking about it.
Getting to 75 million gallons is a natural expansion of what we should do and Debottlenecking there'll be other things, we can do to optimize energy lower the Ci score further we're already at very very low Ci score.
And it will go lower.
As we improve well.
Hi.
After 75 million gallons now we got to build a brand new plant and Thats in the to do that capacity that's in the multiple dollars per gallon.
To call it a rounding it to $2 50, a gallon for new capacity once youre doing a full sized plant say 50 million gallons 100 million gallons, it's in that kind of a range ballpark.
So.
Does it makes sense under what circumstances that makes sense.
And so we will start that out later, but thats not our focus we're going to evaluate and make sure. We understand it. So we can jump all over it to make it happen if.
If we need to if the right market conditions are there.
But I'll tell you first things first.
Hello hanging fruit get to 75 million gallons get the credits generate more credits generate more revenue.
Learn get better and better at selling the carbon remember we have an advantage we have a sequestration site directly underneath our our.
Plant were the only ones in the world with that we don't have all the complexity as everybody else has.
Pipelines and sharing and all those kind of stop ours is relatively straightforward and still it is a huge amount of work to get it audited insured and all the rest to generate these viable credits.
So we need to be to get good at this so we're going to do that walking before we run expand incrementally use our capital wisely save our powder will debottleneck save our powder with the Doe.
<unk> worked with them get that plant financed and.
And the economics are good.
And we will also treat that.
A full build out.
A new ethanol plant.
As an opportunity to be evaluated on the marketing conditions as we see them and working with partners who want to do it.
Alright understood.
That's how we think about.
Usually we got maximize what we got expand the T J.
And then making sure we're not losing sight of these other opportunities to grow because we could have them there might be very much real.
I'm sorry, just.
Last one on the Verity offering how much more development work.
It needs to be done before you can get more aggressive towards commercializing offering.
Paul go ahead Nashville.
Yes, so I think we're getting to that point right now.
So this is what I was talking about getting this implemented at GMO North Dakota is a critical step for US I mean, we've already got it implemented with other customers, but having it running in our own operation will be able to show even other verity potential customers say, hey come look at it right stop by our plant see how.
We're using it and see how it simplifies your lifestyle. It makes everything better totals up all your carbon for voluntary markets for compliance markets for tax credits right. It's really a simplification tool and so we think that we're really nearing that point right, where we can now scale just like Chris was talking about atg.
32.
Copy paste.
This is where we can start to do that the copy and paste for for Verity really more broadly with biofuel producers. So we're in a we're in a really good spot.
Interestingly I think this is going to be.
Really interesting catalyst.
And for everyone's perspective as ever and their brothers going high we know how to count carbon.
Measure Ci August no actually don't it's actually kind of complicated and you've got to keep track of a heck of a lot of stopped their simple on the Internet you can find.
Everyone does their chat GPT version, sorry to get a product that someone buys and transfers money actual cash on the barrel head to pay you for something that takes a whole lot more diligence to make sure. It's right to have multiple parties auditing. It in our case you heard <unk> talk about that.
Getting even insured.
Does that work.
Getting that system operating well working well and then with Verity that offers a whole new level of assurance and gets it tracking it back to farm by farm field by field.
Integrating the plant and its energy and given that you've got a stronger score that can be verified and audited. This is the important part auditing throughout the whole supply chain. That's why we can get paid now that's why we will get paid in the future and why <unk> is important because we can take that technology.
And.
Use it as a service and get paid with other plants.
That's why it's important and why it's interesting we're doing an antenna solution. Other people aren't there just what pieces and parts and using their equivalent of Internet says.
Not doing that.
That's all I guess, thank you so much more on the color I appreciate it.
Okay.
Yes.
Our next question comes from Craig Irwin with Roth Capital Partners.
Okay great.
Hey, Pat Good evening, everyone. Thank you for taking my questions.
Can you maybe update us on the conversations with potential customers.
It could be using your wells in in Richardson to sequester the carbon.
I guess that would be tolling customers or customer.
Customers, where you provide the service for them.
Where do you stand with those.
Those potential incremental additions to the overall profitability.
So I'm going to restate. Your question. So we have this big site our capacity is a million tons per year. We're currently only use them.
About 16%, 17% of that well, we should use more of it and so Craig is right. We should use more of it Paul what's the plan.
So Craig.
Couple of things one as we expand our footprint there and make more fuel will have more cotwo to sequester. So that's that's one step one right so that can.
We love that because we don't have to go anywhere else. We've already got the capacity. The second part is if you think about our complex win.
We're thinking about GMO North Dakota, we're also thinking about what energy sources, we need all the different stuff that we have to put in place.
To really build out the atg 30 plant, but hey, it could be other partners as well. So we are looking and have ongoing discussions today with other companies that would maybe want to co locate with us and take advantage of some of that sequestration wells. So we can be storing sidoti for others.
And obviously getting fees for that helping them sell their carbon credits all those type of things and so we're pretty excited about that and then just like this this deal where frontier is looking at.
Taking <unk> rail to North Dakota, Theres always options like that we think we talked about our one of our earlier calls around.
Looking at how can we take more cotwo in kind of virtual pipeline style.
Those are things that we're contemplating today, we don't have any concrete plans, but all of that coupled helps to use that capacity that we've already invested in so it's really about how do we harvest that value from the investment that we've already made.
With this great purchase.
North Dakota, because of that extra pore space that you're.
Using ourselves either for third parties absolutely.
Yes, so amplifying what Paul said this thing about the virtual quite but what that means is taking cotwo rail. That's all US here too is transported has been transport forever.
And we could do that the deal with frontier contemplates that and tracking and tracing at the deal we had.
Our rail terminal for example, we can offload.
Oh, two and put it down the hole for others.
That also accomplishes yet another thing I think that.
In a few years' time call. It in the five year timeframe, the Bakken is going to need more to add.
And maybe it will be a market for enhanced oil recovery <unk>. So I think the world at large and that area is going to be interested in <unk> collection.
Sourcing.
Treating <unk> as a product great people wanted to put out a whole awesome. We can get paid for that cool get more credit for that great or sell to somebody else.
So it's a paradigm shift and that <unk> is a product should be valued should be collected and utilized. So we have to put those plans together, but thats part of what we're working on and figuring out.
That kind of incremental expansion is not included in our slide 12 that we referred to earlier, it's not part of that that.
That would be on top of it that's gravy on top of what you see there.
Understood understood. So then actually I wanted to go back to a little bit of the content on your slide 12.
The Ci the incremental C&I improvement that you guys are tracking for over the next number of quarters, how should we go about projecting that our forecasting that from our side because it ends up having a fairly material impact on the overall level of profitability and is this something that we should we should parse C.
The capital plan and the different pieces of your capital plan that are likely to be completed on.
On a finite time horizon or what should we do to kind of take kind of understand it may be a little bit ahead of the curve.
As we see the Ci Ci score improvements over the next couple of years.
I think <unk> you can help with this one but there is basically in the big beautiful Bill the Ci score drops automatically nextera, that's a large part of it.
And.
So go ahead and give that some color later, then we'll come back to it.
Thanks, Pat So high level I think that are you sort of touched on it.
And the Big Beautiful Bill.
Look that reduces our Ci score.
By tangible amounts which effectively increases.
Our 45 Z generation.
<unk> 10 cents per gallon.
And then the last bit of the puzzle, which for US. We're working on is are there other decarbonization measures that we can introduce our facility.
<unk> reviewed with you get another 10 cents per gallon increase in credit generation.
So the 52 million.
<unk> credits that we sold this year from Jeevan with Dakota, I think folks can easily do the math based on our ownership of the asset for 11 months 12 months.
That number of rounds up to about call. It 80 cents per gallon of cogeneration. So next year. We are working actively with the no I look and the other decarbonization strategies, we're hoping to be closer to a $1 per gallon and keep in mind.
Production tax credit is also subject team.
Inflation in those annual inflation for example, this year.
Thats released by the IRS was around six point.
6% and some change.
Maybe inflation is not going to be that high next year, but you have to factor that into your math as well so next year.
<unk>.
We're going to have tangible increase in debt.
Fortifies the generation from where we are today does that help.
Yes.
That definitely helps that definitely helps well that's also going to help your cash flow. So congratulations.
Congratulations on the progress.
It's an interesting game isn't it Greg I mean, it's like.
The World we did good our timing was good and were learning how to sell those cars being having a real carbon product to figure out a real tangible thing where it's actual tons.
And then what does it mean in terms of Ci score how do you monetize tax credits one of the things thats different from what we're doing from what I think everyone else is doing it we're selling them directly linked <unk> team has done an outstanding job of interfacing directly with the purchasers of these carbon credits, we are going to a broker where the broker has to go figure it out later.
Our stuff is done.
<unk> real Ci scores audited by multiple parties stuff Thats based on carbon that's gone down a hole.
And then lately its been able to strike really good deals getting good value when he.
He says remember, it's a 67 million gallon plant. He is talking about a dollar a gallon the maximum value can get is about one dollar a gallon from the 45. So we are one of the lowest Ci score plans under.
Under the 45.
The big Beautiful Bill.
It looks like we're in a really good position.
An awesome thing and this is before we've done anything.
Round de carbonization of the energy at the plant, it's just that it's a very.
Efficient plant.
It is not taken into account agricultural practices like so many people talk about is not taking that into account.
It's just well run great sequestration plant, where our team is good at capturing carbon downhole.
So maybe I can ask another question right.
Red Trail, what did they do right on the commissioning of their well there's another well that was supposed to be testing maybe commission, yes. It's another class six well for I guess, the third guy that's supposed to be on but they've been late.
We are not eager to confirm that theres, a ribbon cutting on Wednesday alright.
You guys have brought up your well generated credits consistently offered and.
Obviously, it had pretty clean execution.
But really what it red shale really do right the team achieved now.
That allows you to execute consistently yes, Chris would you want to go ahead and explain this yes go ahead.
Fascinating story.
Well, Okay. Let me tell you that it starts with the former CEO of Red Trail.
By the name of Gerald Bachmeier, who really led that.
And key earlier in his career he did oil and <unk>.
Involved in drilling so key.
I would argue he knew how to pick the right contractors to do the work.
And are you really focused on doing good quality execution, because the guidance around that plant, including Gerald we're.
Where boots on the ground.
Good or Don guys that know how to get things done.
Know how to get things done well.
And so that's really the nation that really led to doing that.
Doing that well so.
So what you got here is remember up in that area you got farmers if I remember a retro is a co op big giant co op 9900, plus members but.
Corn, guys are oil guys and vice versa there.
So it's a very it's actually a wonderful place to have a plant like this who are trying to work with the petrochemical industry.
And the guys are big farmers anyway, and so everybody cooperates. So they have a lot of expertise about how to drill wells. That's what Gerald was about and knowing how to do it and he definitely had his own way of going about it that was different than what was being sold to others that ive been told over and over again and I believe it to be true.
And so that's why I think we didn't have the problems that other people have seen.
Understood well, we don't have to talk about those problems.
I will say congratulations for your success.
Thanks for taking my questions of.
Of course.
As a reminder, if you'd like to ask a question at this time. Please press star one one on your Touchtone phone.
Our next question comes from Peter gastric with water Tower research.
Hi, congratulations on the results and thanks for taking my questions.
The partnerships that you've discussed with frontier its certainly very interesting it looks like it presents a lot of opportunities for you.
Some of the pipeline has obviously been very very quiet just curious if we look at the frontier entering this market are they coming in as a potential competitor here to summits or should we think of frontier more as being complementary and maybe focusing on the ethanol plants that are not on that pipeline route like how should we think about this.
This entry into the market.
I'll go ahead and take that on please.
Great question.
Thank you.
If you look at what we had in frontier really had in the announcement.
I talk a lot about how many plants are kind of stranded they don't have access to geological sequestration. They don't have access to pipelines today.
I think thats really the first and foremost market because like Pat said.
Two is transported by rail over time. So this gives those plants that optionality basically so now.
You think about either have the right geology, you may have access to a pipeline, where if you don't know you've got a real opportunity to go to.
Sequestration side like what they have in Wyoming, and we haven't in North Dakota.
Okay got it. Thank you just a second question about overseas market could you talk a bit more about the agreement that you've entered with house in Europe.
And the ethanol to jet facilities with.
With the fat feedstock restrictions in Europe, what's the strategy there and also just curious broadly your fracs in overseas markets, and where you see the best prospects there.
I'll go ahead and take that one again.
Sure. How she is an interesting company that we really have enjoyed working with him.
<unk> got a good focus their hydrogen companies fundamentally.
<unk>.
So as we're trying to find the right combination of sites in feedstocks.
We think we've got a good partner.
When we think about the feedstock right. There are limitations. So we do need to think about refill EU doesn't allow corn ethanol crop based fuels to qualify. So we are looking at sources carbohydrate source is still for ethanol, obviously, but can it come from waste and residue type feedstocks that will qualify.
For those markets. So that's that's kind of where we're focused those exist. We have a whole team that that's taken a look at that and then the question really comes down to what are the economics net backs from from Europe versus North America, but like Chris said, we really see Atg 30.
A global business, so even not just Europe. This is like where can we find the right carbohydrate feedstocks.
Ethanol is ubiquitous and so it's really about how do we have a plan and then have the right partners in those geographies that we can execute.
Okay. That's great. Thank you very much and congrats against the team.
Yes.
That concludes today's question and answer session I would like to turn the call back to Patrick Gruber for closing remarks.
Yes, one of the interesting things if I would encourage people to take a look at the growth of the jet fuel demand.
Demand out to the future it's quite interesting in that it's continuing to increase here in the U S and around the world.
Refining capacity, however is not increasing.
Out here in the U S. In fact of decreasing there's only a finite amount of jet fuel in a barrel. This.
This means that there is going to be.
Shortage of jet fuel here in the U S. A shortage, it's incremental shortage, but it adds up to a big number so about $2 4 billion gallons a year by about.
2024, and we have to do.
Something different bring it in imported or make it through alternative sources, you'll find that if anyone does start searching and looking at this youll find that.
The world predict that everything is going to be fulfilled with SaaS.
And SaaS courses jet fuel plus its carbon but think of it as just jet fuel.
And so the question is will all that get built really and you look at these projections and it's already behind schedule everywhere in the world that means jet fuel prices likely to go up in liquidity with the U S will have to import more jet fuel with this administration theyre not big on importing products and we can make them domestically remember our premise we can because we get that.
<unk> a value from a core product of carbon because we get net backs for protein and the oil corn oil, we can deliver cost competitive jet fuel to the marketplace cost competitive with Petro.
Pretty fascinating.
Two points.
4 billion gallons remember, it's more like 70 plants needed in the U S over the next decade.
Well, that's a target rich environment, that's what we're looking at here that's what makes it interesting and why we don't lose track of those E. T. J plants, we can use more ethanol we can use more corn.
And it makes a huge job growth improves energy security. It is a good overall practical story of doing cost competitive energy delivered to the marketplace.
As an alternative.
And do I think that will wind up building 70 plants no that's not.
The ethanol industry did it with a blue when they when went big when ethanol did their boom between what 2007 2012, they did more than that so it is possible to do but for us realistically no I'll just take a bite of that though that would be great. And then we can do the same thing around the world. That's what's in front of US we've got a great platform.
<unk> North Dakota, this acquisition turned out better than we ever expected.
Cash flow coming it's good to see if we can expand it and then we have this huge opportunity and platform along with all of our electro property and designs around the jet one last comment around the <unk> that I mentioned, because I think it's relevant to the questions that we get in the marketplace is that.
In technology readiness sense every single step that were planning on deploying at our.
At <unk> 30 every one of them is proven proven.
Commercially.
Already in this world technology ready level is 9% for all the steps that's different than anyone else's Atg technology.
Thank you all for joining us.
Appreciate it.
Thanks for all your support.
I'm proud of my team proud of what we've done.
Thank you.
This concludes today's conference call. Thank you for participating you may now disconnect.