Gevo Inks $210M Deal For Ethanol And CCS Assets, Eyes Net-Zero Aviation Fuel Future

Gevo, Inc. GEVO shares are trading higher after it inked a deal to acquire the ethanol production plant and carbon capture and sequestration (CCS) assets of Red Trail Energy for $210 million.

The acquisition encompasses CCS assets with a total sequestration capacity of 1 million metric tons per year, of which 160,000 metric tons are currently used. The site has the potential to support numerous future Net-Zero and related projects.

The purchase includes ethanol and CCS assets. Gevo expects this acquisition to boost shareholder value by integrating carbon abatement with advanced liquid fuels and providing a Net-Zero site for sustainable aviation fuel production in the U.S. and Canada.

Gevo CEO Patrick Gruber said, “This acquisition gives us the opportunity to build capability as a company and is a terrific training ground for our Net-Zero 1 project, as we inherit a trained cadre of employees who understand plant operations.”

“Carbon abatement for fuels and chemicals is core to our business. This acquisition enables immediate market development for sequestered carbon.”

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Gevo expects to achieve positive Adjusted EBITDA in 2025 by combining earnings from Red Trail Energy’s ethanol and CCS assets, its RNG business, and other ventures.

The transaction is set to close by first-quarter of 2025, pending regulatory approvals, equity holder consent, and acquisition financing.

Gevo President and COO Chris Ryan stated, “We believe this site is ideal for production of sustainable aviation fuel using Gevo’s integrated alcohol-to-jet technology and defossilized energy, combined with CCS. The CCS well gives us optionality for our Net-Zero 1 carbon sequestration needs.”

“We plan to immediately begin optimizing the asset with partners through combined heat and power, which will further lower the carbon intensity and increase annual carbon sequestration. This not only decarbonizes the current ethanol production further, but also enables the site for net-zero SAF and chemical production.”

Gevo plans to finance the deal with a combination of asset level debt and cash from the balance sheet. It ended the second quarter with cash, cash equivalents and restricted cash of $315.3 million.

Price Action: GEVO shares are up 28.1% at $0.95 at the last check Thursday.

Photo via Shutterstock

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