Vivakor Inc (NASDAQ:VIVK) announced that it has signed a definitive Membership Interest Purchase Agreement to acquire a group of assets from Jorgan Development for $120 million in stock.
The company said it will acquire Endeavor Crude, Meridian Equipment Leasing, including its subsidiary CPE MidCon, Equipment Transport, and Silver Fuels Processing, known collectively as the Endeavor Entities.
The Endeavor Entities operate in the midstream segment of the oil industry targeting oil logistics gathering and storage, which is expected to result in beneficial synergies for oil remediation-focused clean energy technology company Vivakor.
Notably, each of the material businesses being acquired has 10-year take or pay contracts with White Claw Crude, an affiliate of Jorgan, which began on January 1, 2024, that provide minimum revenue levels.
For example, in the crude oil and produced water trucking business, Endeavor Crude’s contract with White Claw Crude guarantees a volume of 75,000 barrels of crude oil to be transported per day.
Meanwhile, a pipe-gathering contract with CPE Midcon guarantees a minimum pipeline throughput revenue of $200,000 per month.
To-be-acquired Silver Fuels Processing’s injection stations are, by contract, due to deliver 200,000 barrels per month of throughput at $0.275 per barrel. Additionally, Silver Fuels Processing is constructing a new Permian Basin station which is due to add 30,000 barrels per month, bringing the total minimum to 230,000 barrels per month.
"We are excited to bring all of these operations and assets together under one roof at Vivakor,” the company's CEO James Ballengee commented.
“We believe there are strong synergies between the business segments which will allow Vivakor to more completely capture the value chain and expect to be able to streamline operations that should result in significant cost efficiencies,” he said.
He highlighted that it was noteworthy that the proposed transaction requires no cash, with risk mitigated by the 10-year take or pay contracts.
Vivakor will acquire 100% of the Endeavor Entities for $120 million consisting of Vivakor common stock to be valued at an above-market price of $1 per share, subject to certain conditions, and shares of non-voting, 6% cumulative Series A convertible preferred stock.
Should the Endeavor Entities generative earnings before interest, taxes, depreciation, and amortization (EBITDA) of more than $12 million in 2024, additional consideration of up to $49 million is payable to Jorgan in Vivakor Series A convertible preferred stock.
“We look forward to moving this acquisition toward closing by the end of June and will continue to update our valued shareholders and the financial community as we move this transaction toward a successful close,” Ballengee said.
Jorgan is an affiliate of Vivakor CEO Ballengee, the company noted.