Vivakor Inc (NASDAQ:VIVK) told investors it has signed a 10-year contract with Hot Oil Transport, LLC (HOT), a supplier of asphalt materials, that could be valued at up to $250 million over the life of the deal based on current prices.
The South Salt Lake City, Utah-based company explained that Hot Oil Transport in turn supplies to Southwest Liquid Asphalt & Emulsions (SLA), a major supplier of polymerized asphalt in Southern Nevada. SLA’s largest customer is Las Vegas Paving, one of the largest road construction companies in the state of Nevada, with revenues of more than $500 million annually.
“As this is our first long-term contract for (the) sale of our asphaltic binder, it is an important milestone for Vivakor,” the company’s CEO Matt Nicosia said in a statement. “We have worked closely with HOT to refine our product to meet their specifications.”
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Under the agreement, Vivakor can provide HOT with up to 50,000 tons of ratable asphalt cement from its Vernal, Utah site upon completion of anticipated scaled up operations, annually for ten years.
Pricing will be based on the asphalt wholesale index price for the Rocky Mountain region at the time of delivery. Based on the current index pricing range of $510 to $600 per ton, Vivakor said the contract could generate between $25 million and $30 million in annual sales once the project is operating at full capacity.
To operate at full capacity and take advantage of the maximum opportunity under the contract with HOT, Vivakor estimated it would need to add three additional Remediation Processing Centers (RPCs), as well as ramp up other required infrastructure at the Vernal site, at an estimated total cost of $18 million.
“We have already produced tonnage of asphaltic cement with our Vernal, Utah RPC and believe that by the end of the year, we will have ramped up our infrastructure to include three additional RPCs to operate the site to the level required to fulfill the full amount of material requested by HOT on an annualized basis,” Nicosia continued. “This could be a significant event for shareholders as this project when fully-scaled, could contribute meaningful profits.”
Demand for asphaltic binder has been increasing as a direct result of new governmental infrastructure spending and general supply constraints, HOT manager Gene Chrisenbery added.
“This long-term contract for Vivakor’s asphaltic binder will help meet this increased demand and thus, give us an added benefit of asphaltic binder that is reclaimed from waste and produced in an environmentally conscious manner,” Chrisenbery said. “Our customers are seeking supplies manufactured in the cleanest possible manner and we believe that our relationship with Vivakor will allow us to deliver just that.”
Vivakor is a clean energy technology company focused on oil remediation and natural resources. Its corporate mission is to create, acquire and accumulate distinct assets, intellectual properties, and exceptional technologies that produce solid returns to its valued shareholders and partners.
The company currently focuses on its patented Remediation Processing Centers that allow for the environmentally friendly recovery of bitumen (heavy crude) and other hydrocarbons from the remediation of contaminated soils.
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