Evolve invests $600M in HOBO Renewable Diesel 120M gallons project

A $600 million investment in construction of a renewable fuels facility. A project that is expected to produce more than 120 million gallons of renewable fuels annually. That alone is enough to catch some attention, but who exactly is Evolve and how is HOBO Renewable Diesel getting in with them for this project? Who will be doing what?

In today’s Digest, all the answers on deal details, the project, construction, HOBO’s renewable diesel and sustainable aviation fuel, and more.

The deal

Let’s start with the investment. Houston, Texas-based Evolve Transition Infrastructure LP, a publicly traded limited partnership focused on the acquisition, development and ownership of infrastructure critical to the transition of energy supply to lower carbon sources, and HOBO Renewable Diesel, LLC, a renewable fuel project developer, announced an agreement for Evolve to fund the construction of HOBO’s initial project that is expected to produce more than 120 million gallons of renewable fuels annually.

Subject to the satisfaction of certain conditions, including HOBO securing a long-term strategic offtake agreement for the Fuels Project, Evolve will exclusively fund the development and construction of the Fuels Project and future renewable fuels projects that can produce renewable diesel and sustainable aviation fuel and contribute to the advancement of the transition to a low-carbon world.

HOBO and Evolve are also considering incorporation of additional carbon reduction opportunities into the Fuels Project and future projects which the management teams believe could result in the production of some of the lowest carbon intensity fuels in the US.

So who is Evolve Transition Infrastructure LP exactly? They are a publicly-traded limited partnership formed in 2005 focused on the acquisition, development and ownership of infrastructure critical to the transition of energy supply to lower carbon sources. They own natural gas gathering systems, pipelines, and processing facilities in South Texas and continue to pursue energy transition infrastructure opportunities.

And who is HOBO Renewable Diesel, LLC? They are a developer of renewable fuels projects that convert agriculture feedstocks into renewable fuels such as renewable diesel and sustainable aviation fuel.   HOBO is led by energy professionals who have demonstrated expertise across project development, engineering, operations, and financing, and the organization has partnered with a team of technology and engineering/construction companies as well as other advisors.

HOBO’s Story and Fuel

Perhaps an explanation as to where the HOBO Renewable Diesel name came from would be helpful, as it has nothing to do with the dictionary definition of hobo. In this case, HOBO refers to the Heating Oil to Bean Oil spread which in part reflects the margin for converting waste feedstocks into renew able diesel for renewable fuel producers.

Their website notes 2 current projects:

HOBO Project #1 is a 9,300 Barrel a day (120 million gallons annually) production facility located in the heart of the agricultural center of the country. The location makes proximity to feedstock supply (and associated transportation costs) a strategic and economic advantage when compared to most of their competitors and results in a more valuable end use product.

Project #1 expects to be in full production by Q4 2023.

HOBO Project #2 continues the location advantaged themes of Project #1 as well as the scale efficiencies. It also leverages the production enhancements made in the design of Project #1 to lower the Carbon Intensity of the finished product.

Project #2 is projected to be operating by Q2 of 2024.

HOBO Renewable Diesel is an environmentally friendly fuel made from 100% renewable resources (animal fats and vegetable oils) that has lower emissions and is cleaner burning. HOBO Renewable Diesel has up to 85% less sulfur than conventional diesel while retaining all the performance, stability, and cold flow advantages of traditional petroleum-based fuels with none of the negative environmental disadvantages.

HOBO Renewable Diesel is a 100% drop in replacement fuel requiring no modifications to the existing fuel distribution infrastructure or a vehicle’s fuel system. It can be mixed with petroleum diesel in a pipeline or storage tank significantly lessening the logistical cost of handling and dispensing. HOBO Renewable Diesel converts largely unusable waste streams as a feedstock and turns them into valuable fuel to power the American economy.

HOBO Renewable Diesel produces its fuel by employing a licensed propriety process which utilizes a combination of heat, hydrogen and catalyst to convert the chemical composition of its feedstocks into renewable diesel for use in the transportation industry. The resulting product meets and, in many ways, surpasses current Ultra Low Sulfur Diesel (ASTM D-975) specifications. The technology provider is Halder Topsoe and the specific technology being licensed is trademarked as “Hydroflex”.

Here’s a handy dandy comparison of biodiesel vs. renewable diesel from HOBO:

People on the Move

With the big investment in the project comes some personnel moves too. In furtherance of the Fuels Project and to support Evolve’s energy transaction focus, key members of the HOBO leadership team will join Evolve’s management team effective December 1st, 2021.

HOBO Co-Founder and Chief Executive Officer Randy Gibbs will join Evolve as the new Chief Executive Officer of, and as a member of the board of directors of Evolve’s general partner, HOBO Co-Founder and President Mike Keuss will join Evolve as the new President and Chief Operating Officer of Evolve’s general partner, and HOBO’s Chief Financial Officer Jonathan Hartigan will join Evolve as the new President and Chief Investment Officer of Evolve’s general partner. Each of Messrs. Gibbs, Keuss and Hartigan will accept employment with Evolve’s general partner effective November 3, 2021, and will transition to their respective director and executive roles effective December 1, 2021.

Messrs. Gibbs, Keuss and Hartigan have each had long and successful careers in both the fossil fuel and renewable energy spaces and bring extensive experience in project development, engineering, operations, and financing to Evolve’s management team. Gerald Willinger, the current Chief Executive Officer of Evolve’s general partner, plans to resign on December 1st but will assist in the onboarding of new management in November to ensure a smooth transition. Charles Ward, the current Chief Financial Officer of Evolve’s general partner, will continue in his role along with other existing Evolve employees.

Reactions from the Stakeholders

“We believe the initial and future HOBO projects are extremely attractive opportunities to execute on our previously announced business strategy shift to focus on the acquisition and development of infrastructure critical to the transition of energy supply to lower carbon sources. Randy, Mike and Jonathan are proven leaders and their skill sets and experience will be tremendous complements to our existing team,” said Chuck Ward, Chief Financial Officer of Evolve.

“Inclusive of Evolve’s participation in the previously announced Levo JV opportunity focused on fleet electrification, Stonepeak believes pursuing renewable fuels projects with HOBO further solidifies Evolve’s standing as a diversified energy transition vehicle with the full support of a strong sponsor,” said Michael Bricker, a member of the board of directors of Evolve’s general partner and Managing Director at Stonepeak Partners LP, a leading alternative investment firm specializing in infrastructure and real assets and an affiliate of Evolve’s general partner.

“HOBO management is thrilled to collaborate with Evolve and Stonepeak in this exciting and differentiated renewable fuel production platform.” said Randall Gibbs, Co-Founder and CEO of HOBO and incoming CEO of Evolve. “Our shared vision is to build multiple plants of similar design levering off of what we believe are strategic advantages when compared to our competitors.”

“We believe HOBO’s strategy of building for purpose renewable facilities positions our liquid renewable fuels at the lowest cost point in the marketplace and gives our customers the shortest time to commercialization, two primary reasons that we are seeing strong interest in long-term strategic offtakes for our initial project and also for additional projects” said Mike Keuss, Co-Founder and President of HOBO and incoming President and Chief Operating Officer of Evolve.

Bottom Line

As of Friday, Evolve was trading +9.27% pre-market after it announced the agreement to fund construction of HOBO Renewable Diesel’s initial project, so it seems this news will help the company, as well as the HOBO Renewable Diesel leaders who are getting some “equity inducement awards” in their new roles at Evolve.

But it goes way beyond that. This deal shows the bioeconomy is booming. Investments in renewable diesel projects are still happening. There is still money to be made and projects to be built to further biofuels and a more sustainable world.