About Vertex Energy

Vertex Energy, Inc. (Vertex) operates as an energy transition company. The company engages in refining and marketing high-value conventional and lower-carbon alternative transportation fuels. The company engages in operations across the petroleum value chain, including refining, collection, aggregation, transportation, storage and sales of aggregated feedstock and refined products to end-users. Segments The company operates through two segments: Refining and Marketing, and Black Oil and Recovery. The company’s Refining and Marketing segment manages the refining of crude oil and distributes finished products across the southeastern United States through a high-capacity truck rack, together with deep and shallow water distribution points capable of supplying waterborne vessels. The company’s Black Oil and Recovery segment aggregates and manages the re-refinement of used motor oil and other petroleum by-products and sells the re-refined products to end customers. Refining and Marketing segment The company’s Refining and Marketing segment is engaged in the refining and distribution petroleum products and includes the Mobile Refinery and related operations. Effective April 1, 2022, the company completed the acquisition of the Mobile Refinery, a 75,000 bpd crude oil refinery ten miles north of Mobile, in Saraland, Alabama and related logistics assets, which include a deep-water draft, bulk loading terminal facility with 600,000 Bbls of storage capacity for crude oil and associated refined petroleum products located in Mobile, Alabama (the ‘Blakeley Island Terminal’). The terminal includes a dock for loading and unloading vessels with a pipeline tie-in, as well as the related logistics infrastructure of a high-capacity truck rack with 3-4 loading heads per truck, each rated at 600 gallons per minute (the ‘Mobile Truck Rack’). The Mobile Refinery processes heavy and sour crude to produce heavy olefin feed, regular gasoline, premium gasoline, jet fuel, and diesel fuel. In addition, the company aggregates a diverse mix of feedstocks 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. The company has a toll-based processing agreement in place with Monument Chemical Port Arthur, LLC (‘Monument Chemical’) to re-refine feedstock streams, under the company’s direction, into various end products that the company specifies. Monument Chemical uses industry standard processing technologies to re-refine the company’s feedstocks into pygas, gasoline blendstock and marine fuel cutterstock. The company sells all of its re-refined products directly to end-customers or to processing facilities for further refinement. In addition, the company is distributing refined motor fuels, such as gasoline, blended gasoline products and diesel used as engine fuels, to third party customers who typically resell these products to retailers and end consumers. Black Oil and Recovery segment Discontinued operations of Vertex include the company’s Heartland Assets and Operations, which is part of the company’s Black Oil business. The company’s Black Oil business 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. The company collects and purchases used oil directly from generators, such as oil change service stations, automotive repair shops, manufacturing facilities, petroleum refineries, and petrochemical manufacturing operations. The company owns a fleet of 65 collection vehicles, which routinely visit generators to collect and purchase used motor oil and perform other collection services. The company also aggregates used oil from a diverse network of approximately 30 suppliers who operate similar collection businesses to the company. The company manages the logistics of transport, storage and delivery of used oil to the company’s customers. The company owns a fleet of 25 transportation trucks and more than 80 aboveground storage tanks with over 8.0 million gallons of storage capacity. These assets are used by both the Black Oil segment and the Refining and Marketing segment. In addition, the company utilizes third parties for the transportation and storage of used oil feedstocks. Typically, the company sells used oil to its customers in bulk to ensure efficient delivery by truck, rail, or barge. In many cases, the company has contractual purchase and sale agreements with the company’s suppliers and customers, respectively. In addition, at the company’s Marrero, Louisiana facility, it produces a Vacuum Gas Oil (VGO) product that is sold to refineries, as well as to the marine fuels market. At the company’s Columbus, Ohio facility (Heartland Petroleum), divested on February 1, 2023, the company produces a base oil product that is sold to lubricant packagers and distributors. The company provides its services in 15 states, primarily in the Gulf Coast, Midwest and Mid-Atlantic regions of the United States. For the rolling twelve-month period ending December 31, 2022, the company aggregated approximately 86.3 million gallons of used motor oil and other petroleum by-product feedstocks and managed the re-refining of approximately 79.5 million gallons of used motor oil with the company’s proprietary TCEP, VGO and Base Oil processes. The company’s Black Oil and Recovery segments include two business lines. The Black Oil business 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 the company’s customers for use as a feedstock or replacement fuel for industrial burners. The company operates a refining facility that uses its proprietary TCEP and the company also utilizes third-party processing facilities. TCEP’s original purpose was to refine used oil into marine cutterstock; however, in the third quarter of fiscal 2015, that use ceased to be economically accretive, and instead, the company operated TCEP for the purposes of pre-treating the company’s used motor oil feedstock prior to shipping to the company’s facility in Marrero, Louisiana. During the fourth quarter of 2019, the original purpose of TCEP once again became economically viable and at that time the company switched to using TCEP to refine used oil into marine cutterstock; provided that with the decline in oil prices and challenges in obtaining feedstock during early 2020, the company switched back to using TCEP for the purposes of pre-treating the company’s used motor oil feedstock prior to shipping to the company’s facility in Marrero, Louisiana, and continuing as of December 31, 2022. The company’s Recovery business includes a generator solutions company for the proper recovery and management of hydrocarbon streams, as well as metals, which includes transportation and marine salvage services throughout the Gulf Coast. The company also operates a facility in Marrero, Louisiana, which facility re-refines used motor oil and also produces VGO and a re-refining complex in Belle Chasse, Louisiana, which the company calls its Myrtle Grove facility. The company’s Recovery business includes a generator solutions company for the proper recovery and management of hydrocarbon streams, the sales and marketing of Group III base oils through January 2021, and other petroleum-based products, together with the recovery and processing of metals. Thermal Chemical Extraction Process The company owns the intellectual property for its patented TCEP. TCEP is a technology, which utilizes thermal and chemical dynamics to extract impurities from used oil, which increases the value of the feedstock. The company intends to continue to develop its TCEP technology and design with the goal of producing additional re-refined products, which may include lubricating base oil. Products and Services The company generates substantially all of its revenue from the sale of eight categories of products and certain services discussed below. All of these products are commodities that are subject to various degrees of product quality and performance specifications. Distillates: Distillates are finished fuel products, such as gasoline, jet fuel and diesel fuels. Base Oil: Base oil is an oil to which other oils or substances are added to produce a lubricant. Typically, the main substance in lubricants, base oils, are refined from crude oil. Pygas: Pygas, or pyrolysis gasoline, is a product that can be blended with gasoline as an octane booster or that can be distilled and separated into its components, including benzene and other hydrocarbons. Industrial Fuel: Industrial fuel is a distillate fuel oil, which is typically a blend of lower quality fuel oils. It can include diesel fuels and fuel oils, such as No. 1, No. 2 and No. 4 diesel fuels that are historically used for space heating and power generation. Industrial fuel is typically a fuel with low viscosity, as well as low sulfur, ash, and heavy metal content, making it an ideal blending agent. Oil Collection Services Oil collection services include the collection, handling, treatment and sales of used motor oil and products, which include used motor oil (such as oil filters), which are collected from the company’s customers. Metals Metals consist of recoverable ferrous and non-ferrous recyclable metals from manufacturing and consumption. Scrap metal can be recovered from pipes, barges, boats, building supplies, surplus equipment, tanks, and other items consisting of metal composition. These materials are segregated, processed, cut-up and sent back to a steel mill for re-purposing. Other re-refinery products Other re-refinery products include the sales of asphalt, condensate, recovered products, and other petroleum products. VGO/Marine fuel sales VGO/Marine fuel sales relate to the sale of low sulfur fuel meeting the criteria for IMO 2020 compliant marine fuels. Suppliers In the company’s Refining and Marketing segment, the company purchases crude oil from third party suppliers and compete for these products in the open market. In the company’s Black Oil segment, the company conducts business with a number of used oil generators, as well as a large network of suppliers that collect used oil from used oil generators. In the company’s capacity as a collector of used oil, the company purchases feedstock from approximately 4,500 businesses, such as oil change service stations, automotive repair shops, manufacturing facilities, petroleum refineries, and petrochemical manufacturing operations, which generate used oil through their operations. Customers The Black Oil segment sells used oil, VGO, base oil and other petroleum feedstocks to numerous customers in the Gulf Coast and Midwest regions of the United States. The primary customers of its products are packagers, distributers, blenders and industrial burners, as described above as well as re-refiners of the feedstock. The Black Oil segment is party to various feedstock sale agreements whereby the company sells used oil feedstock to third parties. Seasonality In the company’s markets, road paving typically occurs from late spring to early fall. Therefore, it is somewhat easier to procure certain waste streams during winter months when competition for used motor oil feedstock is historically not as strong. The company is seeing increased demand for used motor oil feedstocks throughout the year (year ended December 2022) due to the addition of re-refining technologies in the marketplace. Governmental Regulation, Including Environmental Regulation and Climate Change The U.S. Departments of Transportation, Coast Guard and Homeland Security, as well as various federal, state, local and foreign agencies exercise broad powers over the company’s transportation operations, generally governing such activities as authorization to engage in motor carrier operations, safety and permits to conduct transportation business. The company also generates solid wastes that are subject to the requirements of the United States Resource Conservation and Recovery Act, as amended, or ‘RCRA,’ and comparable state statutes. The company operates facilities that are subject to requirements of the United States Clean Water Act, as amended, or ‘CWA,’ and analogous state laws for regulating discharges of pollutants into the waters of the United States and regulating quality standards for surface waters. The company generates RINs through the blending of biofuels and plan to generate additional RINs through the company’s renewal biodiesel operations at the Mobile Refinery. Specifically, in Texas, the company is subject to rules and regulations promulgated by the Texas Railroad Commission and the Texas Commission on Environmental Quality, including those designed to protect the environment and monitor compliance with water quality. In Louisiana, the company is subject to rules and regulations promulgated by the Louisiana Department of Environmental Quality and the Louisiana Department of Natural Resources as to environmental and water quality issues, and the Louisiana Public Service Commission as to allocation of intrastate routes and territories for waste water transportation. The company is subject to the requirements of the United States Occupational Safety and Health Act, as amended, or ‘OSHA,’ and comparable state laws that regulate the protection of employee health and safety. OSHA’s hazard communication standard requires that information about hazardous materials used or produced in the company’s operations be maintained and provided to employees, state and local government authorities and citizens. Intellectual Property The company has developed a website and has registered www.vertexenergy.com as its domain name. History Vertex Energy, Inc., a Nevada corporation, was founded in 2001.