Kiewit Energy Group leading FEED work and likely to be EPC contractor. Another sign of progress on moving Net Zero concept forward. Kiewit Energy Group, a leading US-based engineering company with extensive energy industry experience, will take over and now lead the FEED effort. Kiewit Energy Group was also identified as the likely Engineering, Procurement, Construction (EPC) contractor. The narrowing of the -/+ factor on plant costs should accelerate now that the likely EPC contractor has been identified.Letter of intent (LOI) with Chevron (CVX) remains a game changer. Not only does the addition of a major integrated oil company as a major partner and co-investor validate the renewable fuel concept, visibility improves on the funding and off-take fronts. The LOI is subject to finalizing terms of the co-investment and fuel supply agreements by May 31, 2022.Co-investment agreement should extend funding fairway and fuel supply agreement (FSA) should materially boost contracted supply portfolio of 54 MGPY. Not only will the co-investment agreement expand the development plan and improve capital availability, the FSA commitment from CVX seems likely to land in the 150 MGPY range.Funding is visible into next year so equity issuance is not expected. Given 2Q2021 cash of $567 million, we don't believe that added capital is required right now. Current cash creates a funding fairway into at least 2H2022 and we expect the refreshed $500 million ATM program will be inactive. We expect the ATM to be used opportunistically and see the minimum strike price of $8.50/share on the CVX warrants as the lowest price that would trigger ATM activity.Maintain Outperform rating and price target of $16/share. The potential for renewable fuels remains very high and adding CVX as a partner represents s a game changer. While we expected profit taking after strong stock price performance earlier this year, including a gain of 131% in 1Q2021, we are surprised to see the stock down 26% in 2Q2021 and down 9% in 3Q2021. We are even more surprised to see the stock up only 14% since the CVX LOI was announced in September. We remain positive on the stock’s high risk/high reward profile since we believe that 1Q2021 capital raises improved the funding fairway and the addition of the CVX LOI and Kiewit as the FEED contractor and likely EPC contractor further bolsters the development plan. Read More >>