Information on the Target

In April 2021, the Company successfully acquired two operational liquid storage terminals located in the Port of Brownsville, Texas. These terminals boast a combined storage capacity of 525,000 barrels and were purchased for a total of USD 63 million. This strategic acquisition positions the Company to play a significant role in the management and distribution of fuel, primarily targeting the Mexican market.

The two terminals have a robust useful life extending up to 30 years, ensuring a long-term operational presence in the region. With the increased demand for cleaner fuels, these facilities are expected to serve as key points for transferring and refining fuels to improve environmental standards.

Industry Overview in Mexico

The fuel industry in Mexico has faced increasing scrutiny due to the use of high sulfur content fuels, which contribute significantly to PM2.5 air pollution. This pollution poses serious health risks, particularly in densely populated urban areas such as Mexico City. Both transportation and power generation sectors are implicated in this environmental challenge, relying heavily on high sulfur fuels that exacerbate air quality issues.

Efforts to combat these environmental challenges are being bolstered by new regulations aimed at reducing sulfur emissions. These initiatives underscore the urgency for a transition towards cleaner fuel alternatives, prompting a growing interest from businesses and investors to innovate in this space. Consequently, there is a pressing need for efficient liquid storage and distribution points that can facilitate this transition.

The United States, on the other hand, is seeing a shift in its refining capabilities, driven by increased demand for cleaner fuels. As a result, the terminals in Brownsville can capitalize on this dynamic, providing a strategic link between excess high sulfur fuel supplies in Mexico and the advanced refining capacities available across the border.

This evolving landscape presents a significant opportunity for stakeholders aiming to improve fuel quality while addressing environmental health concerns across both countries. The infrastructure investment in liquid storage terminals not only enhances operational efficiency but also aligns with broader sustainability goals.

The Rationale Behind the Deal

This acquisition was primarily motivated by the need to reduce the ecological impact of high sulfur fuels in Mexico. By facilitating the transfer of these fuels to U.S. refineries, the Company aims to diminish the availability of less environmentally friendly products in the Mexican market. The expected outcome is a substantial reduction in PM2.5, SO2, and NO2 emissions, contributing to enhanced air quality for surrounding populations.

Moreover, the introduction of cleaner, less pollutive fuel alternatives will reflect positively on the Company’s commitment to environmental responsibility while also opening up additional revenue opportunities through refined product sales. This dual focus on sustainability and profitability underscores the strategic foresight behind this deal.

Information about the Investor

The investor in this acquisition is a well-established entity with a proven track record in the fuel distribution and management sector. Leveraging decades of expertise, the Company is dedicated to advancing energy solutions that meet modern environmental standards. It has demonstrated the capability to integrate into existing operations, enhance efficiencies, and pursue innovative revenue channels.

Partnering with Motus Energy LLC, an experienced operating partner with a solid background in cross-border fuel exports and terminal operations, further strengthens the investor's position. This alliance allows for a seamless transition and operational enhancement post-acquisition, ensuring that the facilities are optimized to meet both current demands and future growth opportunities.

View of Dealert

The expert assessment of this acquisition suggests that it could represent a highly strategic investment for the Company. By positioning the terminals to process and distribute cleaner fuels, the Company stands to benefit both environmentally and financially in an industry facing mounting regulatory pressures to improve fuel quality.

The operational improvements following the acquisition, such as transitioning to a 24/7 operational model and optimizing existing contracts, indicate a proactive management approach that bodes well for long-term success. These enhancements not only lead to increased volumes handled but also bolster ancillary revenue streams.

Furthermore, the alignment of the investment with broader environmental trends strengthens its viability. As consumers and regulatory bodies increasingly favor cleaner fuels, the demand for such infrastructure investments is expected to grow, making this acquisition both timely and relevant.

In summary, this acquisition of liquid storage terminals is projected to yield a combination of economic and environmental benefits, affirming its potential as a commendable investment within the evolving fuel industry landscape.

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