Delta Air Lines (DAL) upsizes SAF commitment and another airline commits. DAL increased the sustainable aviation fuel (SAF) commitment to 75 MGPY from 10 MGPY, or an extra 65 MGPY, under a seven year agreement that represents potential revenue of $2.8 billion, including green and other credits. Also, a member of the oneworld Alliance has committed to buy 30 MGPY, which represents potential revenue of $800 million.Contracted FSA portfolio remains high and added contracts likely later this year. While the two commitments move the contracted FSA portfolio to 194 MGPY from 99 MGPY, or potential revenue of ~$8.0 billion, other potential large commitments from CVX (up to 150 MGPY) and others remains on the horizon. The development pipeline remains very high at more than 1,500 MGPY, or revenue potential in excess of $30.0 billion, and the upsizing of DAL and additions of Kolmar and an unnamed airline are positives.Net Zero plant design remains 60 MGPY with ethanol as feedstock. Development cost in the $900 million range with potential annual EBITDA in the $150-$200 million range. The Kolmar, DAL and unnamed airline contracts fill up a significant portion (~83%) of three plants. The locations of additional Net Zero plants have yet to be determined, but co-locating one or more with Net Zero 1 in South Dakota might leverage plant infrastructure.Funding is visible over next several quarters, but development goal of 1 BGPY by 2030 likely to require added capital. Given 4Q2021 cash of $476 million and the scheduled financial closing of Net Zero One in 1Q2023, we don't believe that added capital is necessary right now. Current cash creates a funding fairway into late 2022/early 2023, and we expect the $500 million ATM program will not be tapped until the stock moves higher.Maintain Outperform rating and price target of $16/share. As evidenced by the current and potential supply contracts, the potential for renewable fuels remains very high and the addition of strong global partners is a game-changing event. While we expected profit taking after strong early 2021 stock price performance, we are very surprised by the weak stock price performance of 41% since the CVX LOI announcement, including a drop of 36% in 4Q2021 and a moderate rebound of 10% in 1Q2022. Read More >>