Vertex Energy, Inc. was formed as a Nevada corporation on May 14, 2008. Pursuant
to an Amended and Restated Agreement and Plan of Merger dated May 19, 2008,
by and between Vertex Holdings, L.P. (formerly Vertex Energy, L.P.), a Texas
limited partnership (“Holdings”), us, World Waste Technologies,
Inc., a California corporation (“WWT” or “World Waste”),
Vertex Merger Sub, LLC, a California limited liability company and our wholly-owned
subsidiary (“Merger Subsidiary”), and Benjamin P. Cowart, our Chief
Executive Officer, as agent for our shareholders (as amended from time to time,
the “Merger Agreement”). Effective on April 16, 2009, World Waste
merged with and into Merger Subsidiary, with Merger Subsidiary continuing as
the surviving corporation and becoming our wholly-owned subsidiary (the “Merger”).
In connection with the Merger, (i) each outstanding share of World Waste common
stock was cancelled and exchanged for 0.10 shares of our common stock; (ii)
each outstanding share of World Waste Series A preferred stock was cancelled
and exchanged for 0.4062 shares of our Series A preferred stock; and (iii) each
outstanding share of World Waste Series B preferred stock was cancelled and
exchanged for 11.651 shares of our Series A preferred stock.
We are an environmental services company that recycles industrial waste streams
and off-specification commercial chemical products. Our primary focus is recycling
used motor oil and other petroleum by-products. We are engaged in operations
across the entire petroleum recycling value chain including collection, aggregation,
transportation, storage, re-refinement, and sales of aggregated feedstock and
re-refined products to end users. We operate in three divisions Black Oil, Refining
and
Marketing, and Recovery.
We currently provide our services in 15 states, primarily in the Gulf Coast
and Central Midwest regions of the United States. For the rolling twelve month
period ending December 31, 2016, we aggregated approximately 91 million gallons
of used motor oil and other petroleum by-product feedstocks and managed the
re-refining of approximately 65 million gallons of used motor oil with our proprietary
TCEP, VGO and Base Oil processes.
Our Black Oil division collects and purchases used motor oil directly from third-party
generators, aggregates used motor oil from an established network of local and
regional collectors, and sells used motor oil to our customers for use as a
feedstock or replacement fuel for industrial burners.
Our Refining and Marketing division aggregates and manages the re-refinement
of used motor oil and other petroleum by-products and sells the re-refined products
to end customers. We operate a refining facility that uses our proprietary TCEP
and we also utilize third-party processing facilities. We also acquired our
Marrero, Louisiana facility, which facility re-refines used motor oil and also
produces vacuum gas oil ("VGO,") and our Myrtle Grove re-refining
complex in Belle Chasse, Louisiana in May 2014. At the same time we acquired
Golden State Lubricant Works, LLC ("Golden State"), a blending and
storage facility in Bakersfield, California which we no longer operate as of
the date of this report.
Our Recovery division includes a generator solutions company for the proper
recovery and management of hydrocarbon streams as well as a company named E-Source.
E-Source provides dismantling, demolition, decommission and marine salvage services
at industrial facilities throughout the Gulf Coast. E-Source also owns and operates
a fleet of trucks and other vehicles that are used for shipping and handling
equipment and scrap materials.
Black Oil Division
Our Black Oil division is engaged in operations across the entire used motor
oil recycling value chain including collection, aggregation, transportation,
storage, refinement, and sales of aggregated feedstock and re-refined products
to end users. We collect and purchase used oil directly from generators such
as oil change service stations, automotive repair shops, manufacturing facilities,
petroleum refineries, and petrochemical manufacturing operations. We own a fleet
of 26 collection vehicles, which routinely visit generators to collect and purchase
used motor oil. We also aggregate used oil from a diverse network of approximately
50 suppliers who operate similar collection businesses to ours.
We manage the logistics of transport, storage and delivery of used oil to our
customers. We own a fleet of 15 transportation trucks and more than 150 aboveground
storage tanks with over 7.3 million gallons of storage capacity. These assets
are used by both the Black Oil division and the Refining and Marketing division.
In addition, we also utilize third parties for the transportation and storage
of used oil feedstocks. Typically, we sell used oil to our customers in bulk
to ensure efficient delivery by truck, rail, or barge. In many cases, we have
contractual purchase and sale agreements with our suppliers and customers, respectively.
We believe these contracts are beneficial to all parties involved because it
ensures that a minimum volume is purchased from collectors and generators, a
minimum volume is sold to our customers, and we are able to minimize our inventory
risk by a spread between the costs to acquire used oil and the revenues received
from the sale and delivery of used oil. We also use our proprietary TCEP technology
to re-refine used oil into marine fuel cutterstock and a higher-value feedstock
for further processing (we are currently utilizing TCEP to pre-treat our used
motor oil feedstock prior to shipping them to our facility in Marrero, Louisiana;
but have not operated our TCEP for the purpose of producing finished cutterstock
since the third quarter of fiscal 2015, due to market conditions). In addition,
at our Marrero, Louisiana facility we produce a Vacuum Gas Oil (VGO) product
that is sold to refineries as well as to the marine fuels market. At our Columbus,
Ohio facility (Heartland Petroleum) we produce a base oil product that is sold
to lubricant packagers and distributors.
Our Refining and Marketing division is engaged in the aggregation of feedstock,
re-refining it into higher value end products, and selling these products to
our customers, as well as related transportation and storage activities. We
aggregate a diverse mix of feedstocks including used motor oil, petroleum distillates,
transmix and other off-specification chemical products. These feedstock streams
are purchased from pipeline operators, refineries, chemical processing facilities
and third-party providers, and are also transferred from our Black Oil division.
We have a toll-based processing agreement in place with KMTEX to re-refine feedstock
streams, under our direction, into various end products that we specify. KMTEX
uses industry standard processing technologies to re-refine our feedstocks into
pygas, gasoline blendstock and marine fuel cutterstock. We sell all of our re-refined
products directly to end-customers or to processing facilities for further refinement.
The used oil recycling industry is comprised of multiple participants including
generators, collectors, aggregators, processors, and end users. Generators are
entities that generate used oil through their daily operations such as automotive
businesses conducting oil changes on consumer and commercial vehicles and industrial
users changing lubricants on machinery and heavy equipment. Collectors are typically
local businesses that purchase used oil from generators and provide on-site
collection services. The collection market is highly fragmented and we believe
there are more than 400 used oil collectors in the United States. Aggregators
are specialized businesses that purchase used oil and petroleum by-products
from multiple collectors and sell and deliver it as feedstock to processors.
Processors, or re-refineries, utilize a processing technology to convert the
used oil or petroleum by-product into a higher-value feedstock or end-product.
Used oil is any oil that has been refined from crude oil or any synthetic oil
that has been used and, as a result of such use, is contaminated by physical
or chemical impurities. Physical impurities could include contamination by metal
shavings, sawdust, or dirt. Chemical impurities could include contamination
by water or benzene, or degradation of lubricating additives.
Conventional re-refineries typically employ vacuum distillation and hydrotreating
processes to transform used oil into various grades of base oil. Vacuum distillation
is a process that removes emulsified contaminated water and separates used oil
into vacuum gas oil and light fuels. The vacuum gas oil is then hydrotreated
to produce lubricating base oil. Hydrotreating is a process which combines chemical
catalysts, heat, and pressure to remove impurities such as sulfur, chlorine,
and oxygen and to stabilize the end product. A re-refined lubricating base oil
is of equal quality and will last as long as a virgin base oil. In addition,
other re-refining processes transform used oil into product grades slightly
lower than base oil. These products, along with vacuum gas oil
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