Vivakor Signs Definitive Agreement to Acquire Endeavor Entities for $120 Million
- Acquisition of Endeavor Entities in the midstream oil industry with minimum revenue contracts.
- Deal valued at $120 million, including cash and stock components.
- Additional contingent consideration of up to $49 million based on 2024 EBITDA performance.
- Expected synergies to enhance operational efficiencies and cash flow for Vivakor.
- Closing targeted by the end of the fiscal quarter ending June 30, 2024.
- None.
Insights
The acquisition of the Endeavor Entities by Vivakor represents a strategic consolidation within the midstream oil segment, which is likely to have a significant impact on Vivakor's operations and financial performance. By integrating these entities, Vivakor aims to capture a larger portion of the oil value chain, potentially increasing its market share and operational efficiency. The 10-year take or pay contracts with White Claw Crude, LLC provide a stable revenue stream, which is a strong positive signal to investors regarding future cash flows.
From a valuation perspective, the structure of the deal, which includes a mix of common and preferred stock issuance, is notable. The use of stock valued above market price to finance the acquisition could dilute existing shareholders, but also indicates confidence in the long-term value creation potential. The contingent consideration based on EBITDA targets introduces an element of performance-based earn-out, aligning Jorgan's interests with those of Vivakor post-acquisition. This deal structure could serve as a model for similar transactions within the industry, balancing immediate acquisition costs with long-term performance incentives.
The financial intricacies of the transaction, including the use of convertible preferred stock and the specific thresholds for EBITDA performance, will have implications for Vivakor's balance sheet and earnings per share. The acquisition's financing method, particularly the issuance of common stock at a premium, suggests a strategic approach to avoid over-leveraging while also managing potential shareholder dilution. Investors will need to monitor the post-acquisition integration closely to assess whether the anticipated cost efficiencies and synergies materialize into tangible financial improvements.
Given the current market conditions and the focus on energy independence and infrastructure, the acquisition could place Vivakor in a favorable position to capitalize on both short-term and long-term industry trends. However, the success of the acquisition will largely depend on the effective management of the newly acquired assets and the ability to leverage the guaranteed contracts to maximize revenue and profitability.
The stipulation for approval under the Hart Scott Rodino Act indicates a recognition of the potential antitrust implications, which is a critical factor for investors to consider. The due diligence process and the requirement for audited financials also demonstrate a commitment to transparency and regulatory compliance, which can be reassuring for stakeholders.
Furthermore, the recusal of James Ballengee from the board vote due to his affiliation with Jorgan is an important governance practice that mitigates conflict of interest concerns. It's essential for investors to understand the governance dynamics in such transactions, as they can have a direct impact on the perceived integrity and stability of the company's leadership.
DALLAS, TX / ACCESSWIRE / March 25, 2024 / Vivakor, Inc. (NASDAQ:VIVK) ("Vivakor" or the "Company"), a socially responsible operator, acquirer and developer of clean energy technologies and environmental solutions, today is pleased to announce that as of March 21, 2024, it signed a definitive Membership Interest Purchase Agreement ("MIPA") to acquire Endeavor Crude, LLC, Meridian Equipment Leasing, LLC, including its subsidiary CPE MidCon, LLC, Equipment Transport, LLC., and Silver Fuels Processing, LLC , collectively the Endeavor Entities ("Endeavor Entities"), from Jorgan Development, LLC and JBAH Holdings, LLC (collectively "Jorgan"). Jorgan is an affiliate of James Ballengee, Vivakor's CEO.
The Endeavor Entities operate in the midstream segment of the oil industry, which targets oil logistics, gathering and storage, including crude oil and produced water trucking and disposal services, and also operate a crude oil pipeline gathering system and pipeline injection stations. Vivakor expects to benefit from the expected synergies these acquisitions will create. In addition, each of the material businesses have 10-year take or pay contracts with White Claw Crude, LLC, an affiliate of Jorgan, which began on January 1, 2024, that provide minimum revenue levels. In the crude oil and produced water trucking business, the Endeavor Crude, LLC contract with White Claw Crude, LLC guarantees a volume of 75,000 barrels of crude oil be transported each day. The pipeline gathering contract with CPE MidCon, LLC guarantees a minimum pipeline throughput revenue of
Under the terms of the MIPA, unanimously approved by the board of directors of each party, during which vote, James Ballengee recused himself from voting in his capacity as Chairman of the Board of Vivakor, upon a successful closing, Vivakor would acquire
The closing of the acquisition, is subject to, among other things completion of due diligence satisfactory to the parties, delivery of audited financials for the periods ended December 31, 2022 and 2023 for the Endeavor Entities, Vivakor's receipt of a satisfactory fairness opinion to the underlying transaction, approval under the Hart Scott Rodino Act, and other customary closing conditions. Vivakor is currently targeting the Acquisition to close by the end of the fiscal quarter ending June 30, 2024.
Vivakor Chairman and CEO James Ballengee commented, "We are excited to bring all of these operations and assets together under one roof at Vivakor. 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. Of note, the proposed transaction requires no cash, is risk mitigated due to the 10-year take or pay contracts, and most importantly, will provide Vivakor with positive free cash-flow to support on-going growth and current operations. 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."
Endeavor Crude, LLC is a interstate crude oil carrier headquartered in Dallas, Texas and presently operates 132 tractors which are leased from Meridian Equipment Leasing, LLC. Endeavor Crude, LLC presently operates in Texas, Louisiana, Oklahoma, New Mexico, Colorado, and North Dakota.
Equipment Transport, LLC is an active freight carrier which hauls produced water and other water products for the oil industry and operates primarily in Texas.
Meridian Equipment Leasing, LLC owns various trucking equipment which it leases directly to Endeavor Crude, LLC and/or Endeavor Crude, LLC's independent owner-operators.
CPE MidCon, LLC operates an approximate 40-mile oil gathering pipeline, and oil storage and logistics facility in Oklahoma.
Silver Fuels Processing, LLC operates multiple truck pipeline injection stations located in multiple regions of Texas, New Mexico, and North Dakota.
Clear Street, LLC acted as Financial Advisor to Vivakor while Lucosky Brookman LLP served as exclusive legal advisor to Vivakor on this transaction.
About Vivakor, Inc.
Vivakor, Inc. (NASDAQ:VIVK), is a clean energy technology company focused on the oil remediation and natural resources sectors. Vivakor's corporate mission is to create, acquire, accumulate, and operate distinct assets, intellectual properties, and exceptional technologies. Its Silver Fuels Delhi, LLC, and White Claw Colorado City, LLC subsidiaries include crude oil gathering, storage, and transportation facilities, which feature long-term ten year take-or-pay contracts.
Vivakor's patented Remediation Processing Centers allow for the environmentally friendly recovery of bitumen (heavy crude) and other hydrocarbons from the remediation of contaminated soils. Vivakor believes its RPC's are the only remediation system that can clean soils with more than
For more information, please visit our website: http://vivakor.com
Cautionary Statement Regarding Forward-Looking Statements
This news release may contain forward-looking statements within the meaning of the "safe harbor" provisions of the Private Securities Litigation Reform Act of 1995. Such forward-looking statements are based upon the current beliefs and expectations of our management and are inherently subject to significant business, economic and competitive uncertainties and contingencies, many of which are difficult to predict and generally beyond our control. Actual results and the timing of events may differ materially from the results anticipated in these forward-looking statements. Forward-looking statements may be identified but not limited by the use of the words "anticipates," "expects," "intends," "plans," "should," "could," "would," "may," "will," "believes," "estimates," "potential," or "continue" and variations or similar expressions. Our actual results may differ materially and adversely from those expressed in any forward-looking statements as a result of various factors and uncertainties, including, but not limited to, , the expected transaction and ownership structure, the valuation of the transaction, the likelihood and ability of the parties to successfully and timely consummate the acquisitions contemplated by the MIPA the risk that any required regulatory approvals are not obtained, are delayed or are subject to unanticipated conditions that could adversely affect Vivakor or the expected benefits of the MIPA, our ability to maintain the listing of our securities on the Nasdaq Capital Market, the parties failure to realize the anticipated benefits of the MIPA, disruption and volatility in the global currency, capital, and credit markets, changes in federal, local and foreign governmental regulation, changes in tax laws and liabilities, tariffs, legal, regulatory, political and economic risks, our ability to successfully develop products, rapid change in our markets, changes in demand for our future products, and general economic conditions.
These risks and uncertainties include, but are not limited to, risks and uncertainties discussed in Vivakor's filings with the U.S. Securities and Exchange Commission, which factors may be incorporated herein by reference. Actual results, performance or achievements may differ materially, and potentially adversely, from any projections and forward-looking statements and the assumptions on which those forward-looking statements are based. There can be no assurance that the data contained herein is reflective of future performance to any degree. You are cautioned not to place undue reliance on forward-looking statements as a predictor of future performance as projected financial information and other information are based on estimates and assumptions that are inherently subject to various significant risks, uncertainties and other factors, many of which are beyond our control. All information set forth herein speaks only as of the date hereof in the case of information about Vivakor and the Endeavor Entities or the date of such information in the case of information from persons other than Vivakor and the Endeavor Entities , and we disclaim any intention or obligation to update any forward-looking statements as a result of developments occurring after the date of this communication. Forecasts and estimates regarding the Endeavor Entities industries and markets are based on sources we believe to be reliable; however, there can be no assurance these forecasts and estimates will prove accurate in whole or in part.
Investors Contact:
P:949-281-2606
info@vivakor.com
ClearThink
nyc@clearthink.capital
SOURCE: Vivakor, Inc.
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