What happened with VIVK today?
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Vivakor helps oil producers move crude from production sites to storage terminals, pipelines and buyers. It operates trucks and pipelines across oil-producing regions in Texas, Oklahoma and Colorado, and terminals in Colorado City, Texas, and Delhi, Louisiana. Producers and other customers pay for transportation, handling, blending and storage. Some long-term contracts require customers to pay for minimum volumes even if they use less capacity.
Vivakor also buys oil from producers and other suppliers, generally at market-linked prices less transportation and marketing fees, and resells it to refiners and end users through its network. These sales account for most revenue but leave a thin margin; transportation contributes most gross profit. A significant share of revenue comes from Jorgan Development, LLC, controlled by CEO James Ballengee and a customer of the Colorado City terminal. Business depends on nearby producers continuing to produce oil and use the network. Vivakor and its customers also need government permits to operate.
Vivakor is developing a waste-processing business. Its first Remediation Processing Center at San Jacinto River & Rail Park in Texas is under construction, designed to recover saleable hydrocarbons from oilfield waste and contaminated material. This remains a developing activity, rather than an established source of commercial revenue.
The risk section is the longest, dullest part of the filing. This keeps only what can really hurt you: where it hits, how hard, when it plays out.
Every company claims an edge. Each one is checked against hard numbers like margins and returns: which hold, and which line gives way first.
Vivakor depends chiefly on crude-oil transport volumes and asset use, making the Plains/Phillips 66 STACK network fed by its Omega pipeline more important to watch than the municipal-waste economics of most supplied candidates.
ExxonMobil provides a contracted buyer for oil sold through Vivakor’s Delhi, Louisiana terminal: its subsidiary Denbury Onshore has agreed to buy 60,000 net barrels per month. For Vivakor holders, purchases under that agreement matter more directly than ExxonMobil’s broader oil-production and refining results.
ConocoPhillips is a customer of Vivakor’s business moving, storing and buying and selling oil, tying Vivakor to a company that produces and markets crude. Watch ConocoPhillips’ crude-oil volumes and any flow disruptions for clues to its need for transportation and storage, rather than treating all its worldwide energy sales as business for Vivakor.
EIA Crude Oil Stocks Change (Oct/16)
Vivakor’s trucking, pipelines and terminals earn fees for moving and storing crude, while its trading business buys and resells crude and related products, so US crude and fuel stock levels can shift throughput and trading margins through prices and demand.
Read the stock figures as a signal of supply and demand: rising crude or fuel stocks can point to looser supply and pressure prices, potentially weakening service use or trading margins; falling stocks can point to tighter supply and support prices, potentially helping service demand while raising crude purchase costs.
ExxonMobil Holdings Corporation earningsXOM
ExxonMobil’s report will show whether its subsidiary Denbury Onshore continues buying the contracted 60,000 net barrels a month through Vivakor’s Delhi terminal.
Look for Denbury Onshore’s purchases or evidence that the agreement is being performed; ExxonMobil’s overall production and refining results are not Vivakor business. Purchases near the monthly contracted volume would show this customer continues to provide throughput at the Delhi terminal. Lower or interrupted purchases would weaken the transport and terminal activity Vivakor gets from this relationship.
Vivakor, Inc. earningsThis company
Vivakor’s report will show whether its transport and terminal services earn enough gross profit to help fund operations as the company uses cash.
Read gross profit from transportation and logistics and from terminaling and storage alongside operating cash flow; keep supply-and-trading revenue separate, because high sales there can carry very thin gross profit. Rising service gross profit with lower cash use would show the core business is better able to support itself. Weaker service profit or continued heavy cash outflow would mean operating and funding pressure remains, even if total revenue grows.
