Category Archives: Downstream

Sugar Land petrochemical company taken private for $247 million

The company manufactures specialty petrochemical products and waxes from its two plants in Silsbee, TX (30 miles north of Beaumont) and Pasadena, TX. It has revenues of $300 million.

The company was originally formed in 1967 as the Arabian Shield Development Company. The company’s original intent was to develop a copper and zinc mine in southwestern Saudi Arabia. It went public in 1972 and continued to raise funds to develop the mine.



In 1987, the company made its first acquisition in the US by buying the facility in Silsbee. By 2006, the company hived off the Saudi mine into a joint venture as it realized it would cost more than anticipated to complete it. The mine eventually started commercial production in 2012.

In 2015, the company changed its name to Trecora Resources. Its sold its 33% stake in the mine JV in 2019 for $70 million.

In late 2020, the company, with the help of its adviser, Guggenheim Securities, began exploring a merger-of-equals transaction in which Trecora would be the acquiror. However, in late summer 2021, after spending nearly $5 million in fees, the Board pulled out of the proposed transaction.

Also, in 2021, two separate activist shareholders, not acting in concert, amassed a combined 20% stake in the company. Both were critical of the Board and management’s strategy for the company. Both believed the company should put itself up for sale.

The company did just that in October 2021. It contacted 72 financial and strategic acquirers. After a formal bidding process, Balmoral won out, paying 11.4 times 2021 adjusted EBITDA.

All the officers of the company are staying on in their roles.

[06-30-22 – UPDATE Trecora filed an 8-K with the SEC.  CEO Patrick Quarles has left the company to be replaced by new hire, Brad Crocker, who is currently the CEO of another portfolio company of Balmoral.  Mr. Quarles will get a golden parachute payment of cash and equity worth $4.4 million.]

SEC filing – Trecora taken private

LNG services company completes IPO

Excelerate Energy has completed its initial public offering by raising $384 million. The company  offered 16 million shares at $24 per share. This was at the high end of the range of $21 to $24 and values the company at over $2.5 billion.



The company originally filed back in January, but war in Ukraine has increased interest in LNG.

Excelerate, which has its head office in The Woodlands, provides flexible LNG infrastructure solutions, primarily in emerging markets. The company has a fleet of 10 Floating Storage Regasification units (FSRU).

Natural gas is cooled to approximately -160C at the source of production to reduce its volume down for transportation on an LNG carrier. The LNG needs to be brought back to its gas state at the area of consumption. One option is to have an LNG facility constructed on land, another is to do it offshore using a FSRU. The latter is often cheaper and quicker, especially in emerging markets.

Excelerate was formed in 2003 by George Kaiser, a Tulsa-based investor who is also the majority owner in BOK Financial Corporation (which also operates under the brands of Bank of Oklahoma and Bank of Texas).

For the 12 months ended September 2021, the company had revenues of $658 million. Currently the company has eight contracts in place for delivering regasified LNG to customers in Argentina, Brazil, Bangladesh, Israel, Pakistan and the UAE.

Steven Kobos has been the CEO of Excelerate since March 2018 and served as its counsel for the previous 11 years. Dana Armstrong is the CFO. She joined in April 2020 and was previously the CFO at Scientific Drilling.

S-1 filing – Excelerate Energy

Chemical company to spend $118 million to reduce air pollution at three Texas plants

Chevron Phillips has agreed to spend $118 million to reduce harmful air pollution at three Texas plants, including one in the Houston-area. The company has also agreed to pay $3.4 million in a civil penalty. This is part of a settlement reached with the Justice Department.



Chevron Phillips is a joint venture between Chevron and Phillips 66 that has its head office in The Woodlands. The company was formed in 2000 by merging the chemical operations of the two companies. In 2021 the company had revenues of $14 billion

The three plants are Cedar Bayou in Baytown, Sweeney and Port Arthur.

Flare Stack controls absent

Companies are allowed to vent gases in a flare stack as a control device in a petrochemical plant. Combustion of the gases must occur in the flare stack. For that reason, the flares must have monitoring equipment. Many flares use steam to assist in combustion by promoting turbulence in a flare’s flame. The steam-to-vent gas ratio must be calculated. Too much steam snuffs out the flame, and too little causing excessive smoke. In either case, air pollutants escape.

The Justice Department alleges that the company regularly ‘oversteamed’ the flares, allowing harmful gases (including benzene) to escape.

The company has agreed to install a gas recovery system, by September 2023, at Cedar Bayou that will allow the gases to be recycled, instead of being combusted in a flare. At the other two plants, ChevonPhillips will amend its air quality permits to limit the flow of gas at selected flares. The company will also create waste minimization plans at all three sites.

In October last year, in a similar settlement, LyondellBasel agreed to spend $50 million to reduce flaring at six facilities, including four in the Houston area.

https://www.justice.gov/opa/pr/chevron-phillips-chemical-company-agrees-reduce-harmful-air-pollution-three-us-chemical

LyondellBasel to spend $50 million to settle pollution allegations

LyondellBasel has agreed to spend $50 million to reduce air pollution at six petrochemical plants, including four in the Houston area.



This is part of a settlement with the Department of Justice and the Environmental Protection Agency (EPA) to resolve allegations that the company failed to operate and maintain flaring. The company also agreed to pay a civil penalty of $3.4 million.

Two of the plants are in Channelview (North and South Facilities) and two are in La Porte (Acetyls and Equistar facilities). The others are in Corpus Christi and Clinton, Iowa.

Flare Stack controls absent

Companies are allowed to vent gases in a flare stack as a control device in a petrochemical plant. Combustion of the gases must occur in the flare stack. For that reason, the flares must have monitoring equipment. Many flares use steam to assist in combustion by promoting turbulence in a flare’s flame. The steam-to-vent gas ratio must be calculated. Too much steam snuffs out the flame, and too little causing excessive smoke. In either case, air pollutants escape.

The EPA alleged that, since 2009, the company

  • made modifications to the stacks without getting the necessary permits
  • failed to install or properly operate flow monitors
  • failed to have sufficient controls to maintain the steam-to-vent gas ratios within specifications
  • operated the flares with excessively high steam content

The EPA singled out the Channelview facilities as subjecting the surrounding area to especially high particulate matter, ozone, toxic cancer risk and respiratory hazard.

One year to install controls

The company has agreed to install the monitoring and control systems within one year. This includes a fenceline monitoring system at each of the plants.

It has also agreed to minimize the amount of waste gas that it sends to the flares. It must submit its initial waste gas minimization plan to the EPA within one year. This includes a root cause analysis of what’s causing the waste gas. An updated plan, taking into account reductions identified as part of the root cause analysis is due within two years.

2007 consent decree

Back in 2007, the company settled other pollution allegations with the DOJ. That settlement covered seven plants in total, including four on the list today. The company paid a penalty of $2.5 million and spent $125 million to reduce air, water and hazardous waste violations.

The settlement comes two weeks after the company pledged net zero emissions by 2050.

In 2020, the company made an operating profit of $2 billion (before impairments). Between 2016-2019, the company had an operating profit of between $4 billion and $5.5 billion each year.

https://www.justice.gov/opa/pr/lyondellbasell-companies-agree-reduce-harmful-air-pollution-six-us-chemical-plants

 

Sugar Land refiner appoints new CFO

Dane Neumann has been promoted to CFO at Sugar Land-based CVR Energy. He was the VP of Finance and Treasury until he was appointed interim CFO in August following the departure of Tracy Jackson.

CVR operates two refineries in Kansas and Oklahoma as well as related pipelines and infrastructure. The company has a market capitalization of $1.9 billion, up $600 million since  Ms. Jackson resigned. That’s because, in September, the Environmental Protection Agency (EPA) proposed big cuts to US biofuel blending requirements. This benefits oil refiners at the expense of farmers. Analysts speculate that CVR will re-instate regular dividends once the change is finalized.

Mr. Neumann joined CVR in June 2018 and also worked for Andeavor and its affiliates from March 2011 until June 2018. He will receive a base salary of $400,000.

The predecessor to Ms. Jackson was Susan Ball. She resigned last week from her position as the CFO of Team Inc.

SEC filing – CVR Energy – new CFO

CFO at Sugar Land refiner steps down

Tracy Jackson has resigned as CFO of Sugar Land-based CVR Energy, with immediate effect. She is replaced, on an interim basis, by Dane Neumann, VP – Finance and Treasurer.



No reason was given for Ms. Jackson’s departure and no severance details were disclosed. [UPDATE 08-25-21 – The company filed an update. Ms. Jackson will get $789,000 through August 2024.]. However, there is clearly some turmoil at the company, as Matthew Bley also resigned last month as the Chief Accounting Officer. Ms. Jackson joined CVR in 2018 from San Antonio-based Andeavor. Mr Bley joined the same day and had worked with Ms. Jackson at Andeavor.

CVR operates two refineries in Kansas and Oklahoma as well as related pipelines and infrastructure. Activist investor, Carl Icahn, owns 72% of CVR, which has a market capitalization of $1.3 billion.

Until recently CVR also owned a 15% stake in Delek, a convenience store fuel retailer. Mr. Icahn lost a recent proxy battle with Delek when his three proposed board nominees failed to get elected. As a result, in June, CVR issued a special dividend of $492 million comprising $241 million in cash and the remainder in shares of Delek.

Mr. Neumann joined CVR in June 2018 and also worked for Andeavor and its affiliates from March 2011 until June 2018.

Jeffrey Conaway has been appointed Chief Accounting Officer, replacing Mr. Bley. He joined the company in August 2020, having previously been with Patterson-UTI Energy

SEC filing – CVR refining – CFO steps down

Huntsman looks internally for its new CFO

Huntsman Corporation, based in The Woodlands, has appointed Phil Lister as its new CFO. He replaces Sean Douglas, who resigned in April to take a senior leadership position with The Church of Jesus Christ of Latter-day Saints.



Mr. Lister is currently the VP of Corporate Development, a role he has been in since May 2019. He has spent his entire career with the company or its predecessors. He started out his career with ICI in the UK, shortly before it was acquired by Huntsman in 1999.

No compensation was disclosed for Mr. Lister, other than he will receive an initial equity award of $610,000 that will vest over three years. By comparison, Mr. Douglas had a base salary of $650,000.

SEC filing – Huntsman appoints new CFO

Stock of Stabilis Solutions to be relisted on Nasdaq

The stock of Stabilis Solutions will once again be traded on the Nasdaq, effective April 29. It was publicly-traded for a few months in 2019.



Stabilis is a small-scale producer and distributor of Liquified Natural Gas. The company builds and operates cryogenic natural gas processing facilities, called “liquefiers”, which convert natural gas into LNG through a multiple stage cooling process. It sells the LNG to energy and industrial companies.

Stabilis Energy, as it was known then, went public in July 2019 when it completed a reverse takeover of AETI, based in Bellaire. Stabilis is owned by Casey Crenshaw, who had also been a director and shareholder of AETI since 2012. It has its head office in west Houston.

Immediately after the transaction was completed, the company received a delisting notice from Nasdaq because it neither had a minimum of 1 million publicly-held shares nor a minimum market value of $15 million for the publicly-held shares. That was due to Crenshaw owning 77% of the combined company.

As a result, the shares were suspended in October 2019 and ultimately delisted later that year. The market cap for the company (traded over-the-counter) is now around $120 million. As a result, the public float exceeds $15 million. The 25 current stockholders will be happy with this.

You can see the full list of Houston-area public companies on my website here

SEC filing – Stabilis relisting

 

New CFO appointed at LNG company

Ben Atkins has submitted his resignation as the CFO of NextDecade. He has been replaced by Brent Wahl, who joined the company in June 2019 and is currently the Senior VP of Finance.

The company is based in downtown Houston and is trying to build a LNG terminal in Brownsville, Texas.  NextDecade went public in July 2017 via a reverse takeover of a blank check company.



The company has received permits from the Federal Government for the terminal but won’t start construction until it has signed long-term contracts with customers. Currently, the company has enough cash to last it through the end of this year.

So far, the company has only a 20-year contract with Shell, covering about 20% of the proposed output. Late last year, Engie, a French company, delayed making a decision on a proposed contract with NextDecade. The French government, which owns 24% of Engie, wants the Engie to source cleaner energy. The company suffered another blow last week when Ireland dropped a plan to build a terminal in Cork that would have imported LNG from the proposed Brownsville facility.

Mr. Atkins had been the CFO since November 2015. Prior to that he worked for GE Capital and McKinsey.

Before joining NextDecade, Mr. Wahl was the Head of Midstream Investment Banking for North America at Macquarie Group. He spent nine years there, working on raising finance for LNG facilities in North America.

Mr. Atkins will receive a base salary of $350,000.

SEC filing – NextDecade CFO

CEO at struggling LNG company steps down

Meg Gentle has stepped down as CEO of Tellurian. She has been replaced by Octavio Simões. He joined the company in 2019 and was most recently its VP of Marketing and Business Development. Prior to that, he was the CEO of Sempra LNG & Midstream.



The current chairman of Tellurian is Charif Souki. He was a co-founder of Cheniere and its CEO from 2002 until he was forced out in 2015.  He formed Tellurian in 2016 with a plan to build a LNG terminal in Louisiana called the Driftwood Project.

Ms. Gentle has been the CEO since August 2016 and, prior to that, spent 12 years at Cheniere. No reason was given for her departure but it appears to be related to the stalled progress on the Driftwood Project. For the 2019 financial year, the Board did not give bonuses to Ms. Gentle and most other senior executives because the company failed to achieve ‘Final investment decision’ (FID) on the project. In other words, they didn’t secure enough firm long-term contracts with customers to allow construction to start.

Petronet pulls out

In early November, Petronet of India decided not to invest in the project. They had signed a Memorandum of Understanding with Tellurian back in September 2019 to take a $2.5 billion stake in the company. The MOU was announced during the visit to Houston by Narendra Modi, Indian Prime Minister.

The stock price of Tellurian was around $8 until doubts about the Petronet deal began to surface in February. It is currently $1.49.

Severance

Ms. Gentle will continue to receive her annual salary of $721,000 through December 2021. She was also get a future lump sum of $721,000. She also retains 3.25 million shares of restricted stock, other options and awards that will vest upon FID. These could be worth up to $21 million.

Mr Simões will receive a base salary of $725,000.

SEC filing – Tellurian CEO