Why Vivakor, Inc. (VIVK) stock rose 100% on Wednesday?

Vivakor, Inc. (NASDAQ: VIVK) stock soared 101.95% to US$3.4533 at 1:51 pm ET on Wednesday after announcing a 10-year contract with asphalt supplier Hot Oil Transport, LLC.

The Utah based company said the contract is valued at around US$250 million based on the current asphalt wholesale index price for the Rocky Mountain region. 

Hot Oil Transport supplies asphalt to the Southwest Liquid Asphalt (SLA) Emulsions, a polymerized asphalt supplier in Southern Nevada.  

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Under the agreement, Vivakor will provide up to 50,000 tons of ratable asphalt cement annually to Hot Oil Transport for 10 years from its Vernal site in Utah. 

The company estimates that it would need three additional Remediation Processing Centers (RPCs) and an infrastructure upgrade at Vernal to execute the contract. Vivakor estimates a total cost of US$18 million for the capacity enhancement.

The stock doubled in value in a single day following the announcement. It is the company’s first long-term contract for asphaltic binder.

Vivakor CEO Matt Nicosia said the company would refine the product as per the demand from Hot Oil. He added that the required infrastructure would be ready by the year-end. 

Nicosia said the final pricing would be determined based on the wholesale index price at the time of delivery. If the project runs at full capacity, the contract is expected to generate US$25 million to US$30 million in annual sales as per the current price. 

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Vivakor Inc:

Vivakor is a clean energy technology company. Its eco-friendly processes protect the soil while separating hydrocarbons, which are used to produce cement and petroleum products. 

The company has a market capitalization of US$51.7 million. Its stock reached the highest price of US$4.65 and the lowest of US$1.69 in the last 52 weeks. 

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Financials:

The company posted a revenue of US$1.09 million for fiscal 2021 compared to US$1.46 million a year ago. It incurred a net loss attributable to common shareholders of US$5.48 million or US$0.46 per share diluted against US$2.18 million or US$0.23 per share diluted in fiscal 2020. 

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Bottom line:

The demand for asphaltic binder has grown propelled by new infrastructure projects. Vivakor hopes to meet the long-term need for asphaltic binder. Hot Oil manager Gene Chrisenbery said the contract would enable the company to deliver eco-friendly products to its customers.