Vivakor proposes $40 million acquisition of Direct Midstream
Key Facts
Vivakor signed a nonbinding letter of intent on October 9 to acquire all of Direct Midstream, at a proposed total price of $40 million, according to a company statement published via GlobeNewswire. This review could not verify a claim in an earlier draft that due diligence was complete, so the confirmed news remains the signing of the letter of intent and the proposed deal terms. The company tied the price to four times Direct Midstream's targeted free cash flow of $10 million in 2027. The deal aims to expand Vivakor's assets in the Permian Basin and add produced-water, disposal and oilfield-waste operations. Company Chairman James Ballengee said Direct's capabilities “will significantly expand our infrastructure in the Permian Basin” and complement existing operations and its reclamation processing hub strategy.
The business Vivakor is seeking to acquire includes 17 saltwater disposal facilities and nine freshwater and brine stations, with permitted disposal capacity of about 11.5 million barrels per month, according to the company's October 6 statement. These assets would add water-management and disposal services to Vivakor's platform, alongside capabilities related to oil reclamation and oilfield waste. The expansion reflects the proposed deal's broader operating scope, from logistics infrastructure to water treatment and disposal facilities. Ballengee had described these capabilities as complementary to existing operations and the reclamation processing hub strategy. The assets remain part of a proposed deal that, under the announced terms, has not reached a definitive purchase agreement.
Under the announced structure, Vivakor intended to invest $10 million in Direct Midstream at closing, with that investment reducing the consideration owed to the seller dollar for dollar. Assuming no adjustments related to debt or net working capital, the proposed remaining consideration includes about $29 million in Series B preferred stock and $1 million in common stock. The $40 million amount is also not fixed in the letter of intent; it is subject to adjustment based on actual free cash flow in 2027, within a range of $30 million to $50 million. The final consideration is therefore linked to the target's future financial performance, as well as its proposed cash and stock mix. Final settlement terms remain subject to completion of negotiations and the conditions set out in the letter.
The deal comes as Vivakor's results for the second quarter of 2026 showed revenue rising 10% to $32.1 million, compared with $29.1 million in the same period, and operating income turning positive at about $0.2 million from an operating loss of about $6.8 million. But revenue for the six months ended June 30 fell to $51.6 million from $66.4 million a year earlier. The company attributed the decline mainly to lower revenue from transportation, logistics, storage and terminals, including the impact of the July 2025 sale of Meridian Equipment Leasing and Equipment Transport. In a registration statement filed with the Securities and Exchange Commission, the company disclosed a working capital deficit of about $54 million as of March 31, 2026, and debt obligations of about $10.8 million due within one year of the interim financial statements' issuance. Vivakor said these conditions raise substantial doubt about its ability to continue as a going concern.
Closing remains conditional on completing or waiving the required audited financial statements, Vivakor funding the planned capital investment, and obtaining an acceptable fairness opinion for the independent members of the board. The parties must also negotiate and sign a definitive purchase agreement, a step that has not been verified as completed under the available terms. In the market, Vivakor shares closed at $1.25 on October 21 and $1.63 on October 22, according to EL7 data. The available data do not include the session highs and lows cited in the first draft. The deal's next step remains tied to satisfying or waiving the conditions and reaching a definitive agreement.