Rentech announces big jump in operating income as low gas prices reduce costs

In California, Rentech announced consolidated net income of $1.7 million or $0.01 per share for the three months ended December 31, 2011. During the three months ended December 31, 2011, Rentech Nitrogen generated operating income of $22.6 million as compared to $14.6 million during the comparable period in the prior year.

Raymond James analyst Pavel Molchanov commented “With the IPO of Rentech Nitrogen Partners, RTK shares have generally traded in parallel with RNF units – and thus inversely with natural gas prices – given that the parent company’s cash flow comes from its 61% ownership of the partnership. Strong demand for nitrogen fertilizer, plus the added advantage of cheap domestic natural gas…does not automatically equate to a positive stance on RTK shares…Rentech’s renewables strategy is in a transitional phase, and until we get better clarity on what RTK investors can look forward to beyond exposure to RNF, we maintain our Market Perform rating.

“With its new capital-light approach to synthetic fuels, Rentech continues to evaluate opportunities that fit the new strategy. In the meantime, the company’s integrated bio-refinery (IBR) project is expected to meet the DOE’s operating requirement of 2,000 hours in mid-summer (pushed back from April). Rentech currently plans to run the IBR beyond the minimum requirement as it pursues discussions with potential partners that may be willing to fund R&D efforts or technology deployment.”