Vivakor enters LOI to acquire Direct Midstream for $40 million

Dallas - Vivakor, Inc., a NASDAQ-listed company (VIVK), has entered into a non-binding Letter of Intent (LOI) to acquire Direct Midstream, LLC, a water midstream company located in the Permian Basin, according to a press release. The acquisition, valued at $40 million, is based on four times Direct Midstream's targeted 2027 free cash flow of $10 million, contingent upon Vivakor making a contemplated capital investment.

Vivakor's proposed capital investment of $10 million at closing would offset a corresponding amount of the purchase price. The remaining consideration would amount to approximately $29 million in Vivakor Series B Preferred Stock and $1 million in Vivakor common stock, barring any adjustments for debt or net working capital. The gross purchase price is subject to amendment based on Direct Midstream's actual 2027 free cash flow, which could vary between $30 million and $50 million at the lowest and highest adjustment limits.

The transaction, which involves producing water infrastructure and oilfield waste management services throughout the Permian Basin, remains contingent on customary due diligence, completion or waiver of required audited financial statements, the fulfillment of Vivakor's funding of the contemplated capital investment, receipt of a fairness opinion acceptable to Vivakor's independent Board members, negotiation and execution of a definitive purchase agreement, and other typical closing requirements.

The company emphasized that there are no guarantees regarding the execution of a definitive agreement or the completion of the transaction on the stipulated terms.