Vivakor Inc (NASDAQ:VIVK) has announced plans to acquire two companies with assets in the key US oil states of Louisiana and Texas in a deal worth around $37.4 million.
The company struck a definitive agreement to acquire Silver Fuels Delhi LLC, operating in Louisiana, and White Claw Colorado City LLC, which operates in Texas. California-based Vivakor said the acquisitions will allow the company to enter a synergistic segment of the energy industry with the combination of a crude oil gathering, storage, and transportation facility, which feature long-term ten-year take or pay contracts.
Shares of the clean energy technology company popped on Thursday, trading around 33% higher at US$2.34 by midmorning.
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Vivakor CEO Matt Nicosia called the potential acquisitions a “monumental opportunity” for Vivakor.
“If we are able to close these acquisitions, we would add significant revenue and Earnings before Interest, Taxes, Depreciation and Amortization (EBITDA) while putting in place the necessary infrastructure to continue to grow our historical business of cleaning areas contaminated by hydrocarbons,” Nicosia said in a statement. “When we have additional RPC machines manufactured and available, we would anticipate placing a RPC at each location and believe the synergies provided will result in Vivakor increasing revenue and earnings at such locations.”
SF Delhi, which owns and operates a crude oil gathering, storage, and transportation facility located on approximately 9.3 acres near Delhi, Louisiana, is guaranteed a minimum gross margin under a 10-year take or pay contract under existing crude oil supply agreements with White Claw Crude. The firm is currently gathering approximately 1,400 to 1,700 barrels of crude oil on a daily basis.
Meanwhile, White Claw Colorado City (WCCO) owns a 120,000 barrel oil storage tank, in the heart of the Permian Basin, near Colorado City, Texas. The storage tank is presently connected to the Lotus pipeline system. Vivakor said it hopes to further connect the tank to the Medallion and Wolf pipeline system if the acquisition is successfully completed.
Under the terms of an already existing agreement, WCCO has agreed to lease the oil storage tank for a period of 10 years. WCCO would provide Vivakor with the infrastructure to blend and sell oil which has been recovered via Vivakor's RPC machine from tank bottom sludge and contaminated soil which exists in the Permian Basin, it added.
Deal terms
The deal is structured as a membership interest purchase agreement with Jorgan Development LLC and JBAH LLC, the owners of SF Delhi and WCCO, to sell 100% of the membership interests of SF Delhi and WCCO to Vivakor for total consideration of approximately $37.4 million, subject to post-closing adjustments.
The consideration consists of Vivakor shares equal to 19.99% of the total amount of issued and outstanding shares immediately prior to closing, Vivakor promissory notes, and Vivakor's assumption of certain liabilities, the company said.
CEO Nicosia also said that the firm is looking to welcome James Ballengee, the principal of Jorgan and JBAH and a proven expert in the oil industry to the Vivakor team.
The acquisitions are anticipated to be completed within 30 days.
--Updated to include share price movement--
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