Gevo Turns to Marine, Off-Road Markets With Latest Biofuel Deal

Gevo's  (GEVO) wild ride continues to get wilder as shares closed up 12.7% to close at 59 cents Thursday.

The Colorado-based biofuels company announced that it partnered with Musket Corp., which is owned by Oklahoma-based Love's Family of Companies, to provide its isobutanol product as a blend for gasoline for marine and off-road markets. Gevo's announcement follows a week in which it also announced a common stock offering as well as a collaboration with Alaska Air (ALK) .

"We believe Musket is an excellent partner to expand the use of isobutanol in gasoline blends, as our isobutanol production at Luverne builds," CEO Pat Gruber said in a statement announcing the partnership. "Musket and Love's are significant players in fuel distribution and retail in the U.S., so they have great reach to get our isobutanol into the market."

Representatives for Love's and Gevo did not immediately respond to requests for comment.

Thursday's announcement comes on the heels of the company announcing last week a "best efforts" public offering of shares of its common stock in an effort to raise $9.5 million for working capital and other corporate purposes. The announcement sent Gevo's shares plunging to the announced offering price of 45 cents just days after the company's stock touched above $1 in intraday trading on news that Alaska Air flew two flights with Gevo's alcohol-to-jet fuel.

News of partnerships and other deals is sorely needed for Gevo as the company announced last month that it retained Cowen & Co. as its financial advisor as it explores strategic alternatives to manage its balance sheet.

"We've been operating on an extremely tight budget," Gruber told Real Money last week about the offering. "Our back was to the wall. Having some cash is extremely useful at this stage in creating the best strategic options."

Even though agreements with Love's and the flights with Alaska are endorsements of Gevo's products, the company still has a lot of work ahead of it -- particularly in getting its products ready for commercial use.

"Our problem is, we don't have a scale production capacity big enough to make a difference for anybody right now. We're at a demo-plant scale for our jet fuel," Gruber told Real Money.

While the airline industry is working to get in front of regulations that will set new standards for carbon dioxide emissions, it has been difficult to rely solely on biofuels. Airlines can also improve the technology on their aircraft to help to reduce emissions and take other measures.

"One of the challenges of biofuels is just making it -- having a producer who can make a commercial volume at cost parity," Carol Sim, Alaska Air's director of environment regulation, said in a phone interview with Real Money Wednesday. "The other challenge is having it delivered to the airport, having it blended and putting it in the aircraft."

More partnerships, such as the one Gevo just announced for off-road and marine use, may be the nudge the company needs to get to scale.

Editor's Note: This article was originally published at 5 p.m. EDT on Real Money on June 16.

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