Renewable Energy Group: Biofuels Digest’s 2015 5-Minute Guide

Renewable Energy Group, Inc. is a leading North American advanced biofuels producer and developer of renewable chemicals. REG utilizes a nationwide production, distribution and logistics system as part of an integrated value chain model to focus on converting natural fats, oils and greases into advanced biofuels and converting diverse feedstocks into renewable chemicals. With 10 active biorefineries across the country, research and development capabilities and a diverse and growing intellectual property portfolio, REG is committed to being a long-term leader in bio-based fuels and chemicals.

For more than a decade, REG has been a reliable supplier of advanced biofuels which meet or exceed ASTM quality specifications. REG sells REG-9000™ biomass-based diesel to distributors so consumers can have cleaner burning fuels that help diversify the energy complex and increase energy security. REG-9000™ biomass-based diesel is distributed in most states in the US. REG also markets ultra-low sulfur diesel and heating oil in the northeastern and midwestern US.

Rankings

50 Hottest Companies in Bioenergy: #13, 2014/15

The Situation

In many ways, REG is the entire industrial biotech business in a nutshelll. They’re fermentation (through REG Life Sciences), and thermocatalytic (through REG Geismar and their extensive biodiesel business). They use both sugars and lipids as feedstocks. They make both biodiesel and drop-in renewable diesel. They make fuels and an array of chemicals. They’re in the distribution and blending business — distributing their fuels blended with traditional fossil distillates. They have multiple plants and labs in the West, Midwest and Eastern sections of the country. They’re deep into some of the most exotic commercial synthetic biology out there.

In other ways, they achieve what others aspire to. Multi-feedstock, multi-product — it’s a reality, not a goal. Publicly traded after a successful IPO — a reality. Generating substantial cash flow — a reality. And don’t let the  “aw, shucks” demeanor fool you for a moment — if they don’t “talk the talk” with the hyperbole of Silicon Valley, they “walk the walk” when it comes to building capacity, building revenues, and building reputation.

Major Investors

West Central, DNB Asset Management, Norges Bank, and Oppenheimer Funds

Type of Technology

Integrated biorefinery process technology

Feedstocks

• Commercialized: Animal fats (pork, beef, poultry), Inedible corn oil, Used cooking oil, Vegetable oils (soybean, canola)

•Development/Research State – Algae, Camelina, Jatropha

Fuel Type

Biodiesel

Co-products

• Glycerin (three grades)

• Free fatty acid

• Soapstock

• Oleolipids

Top Past Milestones

In December 2014, REG announced its wholly-owned subsidiary has completed the acquisition of IC Green Energy’s (ICG) majority equity ownership position in German biodiesel producer Petrotec AG. REG European Holdings B.V. purchased ICG’s 69 percent equity ownership in Petrotec AG for US $20.9 million, or US $1.235 per share, paid in 2,070,538 newly-issued REG shares.  The REG subsidiary also purchased ICG’s loan to Petrotec AG in the amount of approximately US $15.4 million.  REG European Holdings B.V. intends to make a cash tender offer in the next several weeks for all other Petrotec shares at a price no less than the value per share received by ICG.

Also in December 2014, Renewable Energy Group and Neste Oil have entered into a Settlement and License Agreement whereby the parties have settled Neste’s US patent infringement lawsuit against REG and REG’s Singapore patent infringement lawsuit against Neste and REG has licensed certain Neste Oil NEXBTL technology and intellectual property rights for use at REG Geismar.

In October 2014, the company announced announced commercial-scale quantities of renewable hydrocarbon diesel (RHD) produced at the company’s Geismar, Louisiana biorefinery are now available for sale. The first truckloads of REG-9000™/RHD produced at the 75-million gallon nameplate biorefinery since REG acquired it in June left the plant October 23. The advanced biofuel from REG Geismar, located south of Baton Rouge, meets or exceeds ASTM D975 specifications.

In February 2014 REG broke ground on a $13.2 million upgrade to its Newton plant. The expansion will add distillation capabilities to the 30 million gallon nameplate facility, which was built in 2006. The plant, which has been online since 2007, currently processes high and low free fatty acid feedstocks.

In January, REG announced it had acquired LS9 for a purchase price of up to $61.5 million, consisting of up front and earnout payments, in stock and cash. Most of the LS9 team, including the entire R&D leadership group, will join the newly named REG Life Sciences, LLC, which will operate out of LS9’s headquarters in South San Francisco, CA.

Under the terms of the agreement between REG and LS9, REG paid $15.3 million in cash and issued 2.2 million shares of REG common stock (valued at approximately $24.7 million based on a trading average for REG stock) at closing. In addition, REG may pay up to $21.5 million in cash and/or shares of REG common stock consideration for achievement of certain milestones over the next five years related to the development and commercialization of products from LS9’s technology.

In December 2013, REG announced that it would acquire substantially all of the assets of Syntroleum Corporation, and assume substantially all of the material liabilities of Syntroleum, for 3,796,000 shares of REG common stock worth $40.08 million at today’s market close.

Syntroleum has pioneered Fischer-Tropsch gas-to-liquids and renewable diesel fuel technologies, has 101 patents issued or pending, and owns a 50% interest in Dynamic Fuels, LLC, a 75-million gallon renewable diesel production facility in Geismar, Louisiana.

Back in November, REG opened the latest in a series of major enhancements to its biodiesel operations Friday with a ribbon cutting at the new barge loading facility at the company’s Seneca, Illinois biorefinery.

State and local officials and business leaders joined REG leadership to mark the occasion, as well as witness the first barge shipment of 420,000 gallons of biodiesel from the multi-feedstock, 60-million gallon annual nameplate capacity plant located by the Illinois River. The barge loading facility will be supported by the addition of 2.5 million gallons of new terminal storage. REG’s total investment in these upgrades is about $4.5 million.

In August 2013, the company completed the purchase of a 30-million gallon per year capacity biodiesel plant in Mason City, Iowa, formerly owned by Soy Energy, LLC.  “We are happy to be restoring jobs to the community and look forward to working with local businesses as we work to re-open the plant.”

Future Milestones

1. Build upon market leadership through strategic acquisitions of existing biodiesel plants

2. Commercialize REG Life Sciences technologies

Business Model

Producer and marketer of renewable fuels and chemicals

Competitive Edge

• Processing technology resulting in advanced fuel quality

• Nationwide marketing distribution

• Industry collaboration and partnership

• Experienced and expert management team

Distribution, Research, Marketing or Production Partnerships or Alliances

As largest biodiesel producer and marketer in North America, with a well established reputation for quality and reliability, REG sees significant growth opportunity fueled by the implementation of RFS2. REG leads the industry in its U.S. biodiesel distribution network having sold biodiesel in every state except Alaska.

REG is able to process the widest array of commercially available feedstocks and has aggressively converted the majority of its biodiesel production assets into waste feedstock biodiesel facilities. REG has also partnered with low cost waste feedstock providers to provide large, consistent, reliable volumes of waste feedstock, which is indexed to the energy markets rather than the agricultural markets, enabling REG to more effectively manage commodity risk for itself and its customers.

Research • General Atomics DARPA Algae‐to‐Jet Fuel Project Team Member • Battlefield Clutter: Waste‐to‐Energy Program through General Atomics • Locomotive biodiesel engine performance testing in collaboration with Interstate

Railroad and Kansas University

Company website