DALLAS – Vivakor, Inc. (NASDAQ:VIVK), a company specializing in clean energy technologies and environmental solutions, has entered into a definitive agreement to acquire Endeavor Crude, LLC and several related entities from Jorgan Development, LLC and JBAH Holdings, LLC. The transaction, valued at $120 million, was announced today and is expected to close by the end of the fiscal quarter ending June 30, 2024.
The acquisition includes Endeavor Crude, LLC, Meridian Equipment Leasing, LLC, CPE MidCon, LLC, Equipment Transport, LLC, and Silver Fuels Processing, LLC, which together form the Endeavor Entities. These entities operate in the midstream segment of the oil industry, focusing on oil logistics, gathering, storage, and transportation services.
Vivakor's CEO, James Ballengee, who recused himself from the board vote due to his affiliation with the seller, expressed optimism about the potential for operational synergies and cost efficiencies that the acquisition is expected to bring to the company. The Endeavor Entities have 10-year take-or-pay contracts with White Claw Crude, LLC, guaranteeing minimum revenue levels, which include daily transportation of 75,000 barrels of crude oil and monthly pipeline throughput revenue of $200,000.
The terms of the Membership Interest Purchase Agreement (MIPA) include payment in Vivakor common stock, valued at $1.00 per share, and non-voting, 6% cumulative, Series A convertible preferred stock. An additional contingent consideration of up to $49 million payable in preferred stock is based on the Endeavor Entities' EBITDA performance in 2024.
The closing of the acquisition is contingent upon satisfactory due diligence, audited financial statements, a fairness opinion, approval under the Hart Scott Rodino Act, and other customary conditions.
Vivakor's acquisition strategy aligns with its mission to operate socially responsible and environmentally friendly businesses. The company's patented Remediation Processing Centers focus on the recovery of hydrocarbons from contaminated soils, with operations planned in Kuwait and Houston, Texas.
This news article is based on a press release statement from Vivakor, Inc.
InvestingPro Insights
As Vivakor, Inc. (NASDAQ:VIVK) moves forward with its ambitious acquisition of Endeavor Crude, LLC and related entities, investors are closely monitoring the company's financial health and market standing. According to real-time data from InvestingPro, Vivakor's market capitalization stands at a modest $23.6 million. The company's revenue has seen a significant surge, with a growth of 424.91% over the last twelve months as of Q3 2023, indicating aggressive expansion efforts. Despite this impressive top-line growth, the company's gross profit margin remains low at 9.6%, reflecting the challenges in maintaining profitability amidst expansion.
Two notable InvestingPro Tips for Vivakor include its significant debt burden and the fact that it is quickly burning through cash. These factors are critical for investors to consider, especially in the context of a large-scale acquisition like the one Vivakor is undertaking. With the company not being profitable over the last twelve months and with short-term obligations exceeding liquid assets, there is a clear indication of financial stress that could affect the success of the acquisition and the company's future performance.
For those looking for a more in-depth analysis, additional InvestingPro Tips reveal that Vivakor does not pay dividends and valuation implies a poor free cash flow yield, which might be a concern for income-focused investors. To explore these insights further, investors can visit https://www.investing.com/pro/VIVK and use the coupon code PRONEWS24 to get an additional 10% off a yearly or biyearly Pro and Pro+ subscription. In total, there are 7 InvestingPro Tips available for Vivakor, offering a comprehensive look into the company's financial nuances and investment potential.
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