The company has recently acquired a high-tech biofuels manufacturing plant ideally suited to be re-fitted for the resin coating of our frac sand. The acquisition savings to the company in comparison to finding a location and building a resin coating plant from is substantial.
Additionally, the potential to re-start the biofuels production is expected to yield profits each month secured from contracts being pursued with oil and gas companies who provide the feedstock to the plant and need biofuel output to meet federal regulations.
While replacing petroleum with biofuels is a tough business, with many of the current small companies struggling to survive, this biofuels operation has been successful with its proof of concept. The operation actively pursues and generates tolling opportunities with large oil and gas companies who are required to produce biodiesel. These companies provide the feedstock, and the biofuels firm is paid a set fee for each gallon of product produced, with the final product returned to the tolling partner for distribution. This model reduces exposure to commodity prices and cash requirements, creating a profitable revenue stream and the staying power to pursue the government ramp-up for biodiesel for 2012 and the government mandate of 21 billion gallons of “advanced” biofuels by 2022.