EBITDA losses continued in 2Q2021, but cash higher due to RNG plant financing. Given the stage of development of the renewable fuels concept, it isn't surprising that EBTDA was negative $17.1 million due to higher development costs. We expect negative EBITDA to continue into at least next year. Cash increased $567 million from $525 million in 1Q2021 due to RNG debt financing of $69 million which was partially offset by the quarterly cash burn.RNG plant financed and under construction. BP identified as the customer. In 2Q2021, 1.5% debt financing of $69 million for the renewable natural gas (RNG) plant in NE Iowa was finalized. Construction began and capex will be reimbursed from funds held in trust over the next three quarters. BP is the customer, which is a positive.Engineering is moving forward on Net Zero One. EPC contractor announcement expected shortly. Due to design changes, the hard cost is now estimated at $720 million with a -/+ 30% factor. Including capitalized/other costs of $260 million, total project cost is $980 million. The financing mix remains 65% debt/35% equity and Gevo expects to fund all of the equity investment of ~$345 million. Estimated projected EBITDA increased into $150-$160 million range with cash distributions in the $80-$90 million range. More details expected with another fireside chat this week.Contract portfolio unchanged, but development pipeline continues to expand. While there was no change in the contracted portfolio of 54 MGPY, or ~$1.6 billion, the potential contract portfolio has moved into the 900 MGPY range, or more than $20 billion. Net Zero Two plans might change if significant contracts are signed. Upsizing capacity might make Net Zero Two more economical and profitable.Maintain Outperform rating and price target of $16/share. The potential for renewable fuels remains very high and progress on the RNG and Net Zero One plants is positive. While we expected profit taking after strong stock price performance early this year, including a gain of 131% in 1Q2021, we are surprised to see the stock down 26% in 2Q2021 and 28% in 3Q2021 to date. We remain positive on the stock’s high risk/high reward profile since we believe that 1Q2021 capital raises improve the funding fairway. Read More >>