Zeev,
You would have to be in competition with myself as I was broaching these very same views this afternoon, BEFORE I read your post... :0)
Again, I approached my conversation with Mr. Evans from a pseudo-anonymous perspective. I didn't start dropping Bill's or Spencer's name. Rather I merely stated that I had been intrigued by EVSI announcement yesterday... la de da and so on. I had never spoken with anyone from EVSI until this afternoon, although I knew that Microcap was representing them as well. I guess I should have paid a little closer attention to EVSI complete business market.
One other factor that Mr. Evans mentioned to me about the economics of installing a processor in Texas. They have a variety of contracts to provide lube oil ( basically heavy weight motor oil) to a number of drilling operations in their area. As a value added service they haul back a comparable amount of waste oil on the return trip. This waste oil then has to be disposed of, for which EVSI has to pay a fee ( I believe he stated .06-.08/gal ) to a waste oil collector for them to take it off his hands. In addition, EVSI has to pay an .08/gal surcharge which goes to the state of Texas for their fund to manage waste oil collection. He sees that the GRNO processor will not only allow EVSI to process this waste oil in house, (which they obtain free, remember), but also will possibly negate their having to pay the surcharge to Texas.
This is one of the reasons that purchasing a GRNO processor makes so much economic sense to them. They sold 8 million gallons of diesel last year, netting an 8% profit margin above the rack price that they paid for it wholesale. They hope to augment 20% of their current diesel sales from GRNO fuel product which will seriously impact their earnings in a very positive manner and assist in smoothing some of the cyclicality they currently suffer from.
AND DEEJAY.. just saw your post. EVSI apparently buys fuel at wholesale and then depending on the client they are providing fuel to, (texaco, shell, etc..) they then add the appropriate additives to meet the clients specifications. This fuel is then shipped out to the local filling station. (and we thought that each national namebrand personally mixed their own fuel... silly us :0) They currently service 211 independent stations and their petroleum market generated $60 million in revenues for them last year. Their diesel is primarily marketed toward agricultural, marine, and construction markets that avoid the federal highway tax. (That is why diesel is priced as you observed.. Uncle Sam is extracting his "hunk o' flesh").
Any more question?? Too bad... I'm going to bed early tonight. The wife is scowling at me.
Regards,
Ron |
