Adams Resources & Energy, Inc. primarily engages in crude oil marketing, truck and pipeline transportation of crude oil, and terminalling and storage in various crude oil and natural gas basins in the lower 48 states of the United States (U.S). In addition, the company conducts tank truck transportation of liquid chemicals, pressurized gases, asphalt and dry bulk primarily in the lower 48 states of the U.S. with deliveries into Canada and Mexico, and with seventeen terminals across the U.S. The...
Adams Resources & Energy, Inc. primarily engages in crude oil marketing, truck and pipeline transportation of crude oil, and terminalling and storage in various crude oil and natural gas basins in the lower 48 states of the United States (U.S). In addition, the company conducts tank truck transportation of liquid chemicals, pressurized gases, asphalt and dry bulk primarily in the lower 48 states of the U.S. with deliveries into Canada and Mexico, and with seventeen terminals across the U.S. The company also recycles and repurposes off-specification fuels, lubricants, crude oil and other chemicals from producers in the U.S.
Business Segments
The company operates and reports in four business segments: crude oil marketing, transportation and storage; tank truck transportation of liquid chemicals, pressurized gases, asphalt and dry bulk; pipeline transportation, terminalling and storage of crude oil; and interstate bulk transportation logistics of crude oil, condensate, fuels, oils and other petroleum products and recycling and repurposing of off-specification fuels, lubricants, crude oil and other chemicals.
Crude Oil Marketing
This segment consists of the operations of its wholly owned subsidiary, GulfMark Energy, Inc. (GulfMark). The company's crude oil marketing activities generate revenue from the sale and delivery of crude oil purchased either directly from producers or from others on the open market. The company also derives revenue from third party transportation contracts. The company purchases crude oil and arrange sales and deliveries to refiners and other customers, primarily onshore in Texas, North Dakota, Michigan, Wyoming, Colorado and Louisiana.
The company's crude oil marketing activities includes a fleet of 163 tractor-trailer rigs, the majority of which it owns and operates, used to transport crude oil. The company also maintains approximately 180 pipeline inventory locations or injection stations. The company has the ability to barge crude oil from six crude oil storage facilities along the Intracoastal Waterway of Texas and Louisiana, and it has access to approximately 889,000 barrels of storage capacity at the dock facilities in order to access waterborne markets for its products.
The company purchases crude oil at the field (wellhead) level.
The company delivers physical supplies to refinery customers or enter into commodity exchange transactions from time to time to protect from a decline in inventory valuation. During the year ended December 31, 2023, the company had sales to two customers that comprised approximately 11.4 percent and 11.1 percent, respectively, of total consolidated revenues.
Operating results for the company's crude oil marketing segment are sensitive to a number of factors. These factors include commodity location, grades of product, individual customer demand for grades or location of product, localized market price structures, availability of transportation facilities, actual delivery volumes that vary from expected quantities, and the timing and costs to deliver the commodity to the customer.
Transportation
This segment consists of the operations of the company's wholly owned subsidiary, Service Transport Company (STC). STC transports liquid chemicals, pressurized gases, asphalt and dry bulk on a for hire basis throughout the continental U.S., and into Canada and Mexico. For deliveries into Mexico, the company's drivers meet a third party carrier at the border, and the third party contractor delivers the products to the customer within Mexico. The company also uses contracted independent owner operators to provide transportation services. The company's customers include major oil and chemical companies and large and mid-sized industrial companies.
STC operates seventeen terminals in ten states: Texas, with terminals in Houston, Corpus Christi, Nederland and Freeport; Louisiana, with terminals in Baton Rouge (St. Gabriel), St. Rose and Sterlington; Florida, with terminals in Jacksonville and Tampa; Augusta, Georgia; Mobile, Alabama; Charlotte, North Carolina; Cincinnati, Ohio; South Charleston, West Virginia; Memphis, Tennessee; and Illinois, with terminals in East St. Louis and Joliet. The St. Gabriel, Louisiana and the Corpus Christi, Texas terminals are situated on 11.5 acres and 3.5 acres, respectively, that the company owns, and both include an office building, maintenance bays and tank cleaning facilities.
Transportation operations are headquartered at a terminal facility situated on 26.5 acres that the company owns in Houston, Texas. This property includes maintenance facilities, administrative offices and terminal facility, tank wash rack facilities and a water treatment system. Pursuant to regulatory requirements, STC holds a Hazardous Materials Certificate of Registration issued by the U.S. Department of Transportation (DOT).
All company and independent contractor tractors are equipped with in-cab communication technology, enabling two-way communications between the company's dispatch office and its drivers, through both standardized and free-form messaging, including electronic logging. The company has also installed electronic logging devices (ELDs) on 100 percent of its tractor fleet. This technology enables the company to dispatch drivers efficiently in response to customers' requests and to provide real-time information to customers about the status of their shipments. The company has also equipped its tractor fleet with forward-facing and inward facing event recorders. These cameras are constantly recording the movements of the vehicles, and the company's management team is alerted via email in the event the unit triggers a G-force event. A snapshot of this recording is then sent to the company's management team for review.
STC holds the American Chemistry Council's certification as a Responsible Care Management System (RCMS) company. The scope of this RCMS certification covers the carriage of bulk liquids throughout STC's area of operations, as well as the tank trailer cleaning facilities and equipment maintenance. Certification was granted based on STC's conformance to the RCMS's comprehensive environmental health, safety and security requirements. STC's quality management process is one of its major assets.
STC is a Partner in the U.S. Environmental Protection Agency's (EPA) SmartWay Transport Partnership, a national voluntary program developed by the EPA and freight industry representatives to reduce greenhouse gases and air pollution and promote cleaner, more efficient ground freight transportation.
During 2020, STC applied for and received its first bronze star rating from EcoVadis, a global leader in monitoring, benchmarking and enabling sustainability in global supply chains.
STC is a member of Texas TRANSCAER, a non-profit organization with membership from the chemical, transportation and emergency response industries. The mission of Texas TRANSCAER is to promote safe transportation and handling of hazardous materials, educate about the safety and security of hazardous materials that are transported through communities, and provide education and training for emergency responders along transportation routes. As members of Texas TRANSCAER, STC Safety Personnel assist with training events for first responders all over Texas.
The company's strategy is to build long-term relationships with its customers based upon the highest level of customer service, safety and reliability.
Pipeline and Storage
This segment consists of the operations of two of the company's wholly-owned subsidiaries, which constitute the VEX Pipeline System: Victoria Express Pipeline, L.L.C. (VEX), which owns the VEX pipeline, and GulfMark Terminals, LLC (GMT), which was formed to hold the related terminal facility assets it acquired with the VEX Pipeline System. The VEX Pipeline System complements the company's existing storage terminal and dock at the Port of Victoria, where with its crude oil marketing segment, it controls approximately 450,000 barrels of storage with three docks.
Through 2021, pipeline and storage segment revenues were earned from a third-party shipper under a contract that had been in place at the time of the acquisition, and revenues were also earned from GulfMark, an affiliated shipper. The third-party contract ended in 2021, and all pipeline and storage segment revenues through mid-2023 were earned from GulfMark. In mid-2023, the company began receiving revenue from an unaffiliated shipper. The company is constructing a new pipeline connection between the VEX Pipeline System and the Max Midstream pipeline system, and it expects to complete construction and place the assets into commercial service during the second half of 2024. In addition, the company is exploring new connections with several other pipeline systems, for new crude oil supply opportunities both upstream and downstream of the pipeline, to enhance the crude oil supply and take-away capability of the system.
The VEX Pipeline System, with truck and storage terminals at both Cuero and the Port of Victoria, Texas, is a crude oil and condensate pipeline system, which connects the heart of the Eagle Ford Basin to the Gulf Coast waterborne market. The VEX Pipeline System includes 56 miles of 12-inch pipeline, which spans DeWitt County to Port of Victoria in Victoria County, Texas, with approximately 400,000 barrels of above ground storage at its two terminals. The pipeline system has a capacity of 90,000 barrels per day and is regulated by the Federal Energy Regulatory Commission (FERC) and the Texas Railroad Commission. The VEX Pipeline System can receive crude oil by pipeline and truck, and has downstream pipeline connections to two terminals today, with potential for additional downstream connection opportunities in the future.
The Cuero terminal has 40,000 barrels per day of offload capacity via eight truck unloading stations, with two 100,000-barrel storage tanks and one 16,000-barrel storage tank. The Port of Victoria terminal has 30,000 barrels per day of truck offload capacity via six truck unloading stations and water access via two barge docks, which have been leased from the Port Authority in Victoria. The Port of Victoria has four 50,000-barrel storage tanks and one 10,000-barrel storage tank.
The VEX Pipeline System supports GulfMark's Gulf Coast region crude oil supply and marketing business and integrates into GulfMark's value chain, serving as the link between producers/operators and the company's end-user markets it supplies directly along the Gulf Coast waterborne market.
Logistics and Repurposing
The company's logistics and repurposing segment consists of the operations of two of its wholly-owned subsidiaries, Firebird and Phoenix, which the company acquired on August 12, 2022. Firebird operates seven terminal locations throughout Texas. Firebird transports crude oil, condensate, fuels, oils and other petroleum products on a for hire basis largely in the Eagle Ford basin. The company's customers include major oil and chemical companies and large and mid-sized industrial companies. Firebird provides transportation services to Phoenix, and crude oil transportation services to GulfMark, when additional trucking capacity is required.
Phoenix repurposes and finds beneficial uses for off-specification fuels, lubricants, crude oil and other chemicals from producers in the U.S. With an advanced laboratory, sophisticated technology, and access to an expansive fleet of trucks, Phoenix can provide a solution for customers needing help managing off-specification fuels or oils. In addition to the removal from the customer site, Phoenix markets these refinery and plant co-products into the fuels or feedstock markets. Phoenix markets on approximately six different levels, ranging from heavy fuel oils to light-end naphthas. Phoenix utilizes Firebird's fleet to assist in the transportation of these products, and has begun to utilize STC to also assist in the transportation of these products.
On May 4, 2023, the company acquired approximately 10.6 acres of land in the Gulf Inland Industrial Park, located in Dayton, Texas, to build a new processing facility for Phoenix with rail spur and siding, product storage, and truck rack. Phoenix intends to build new infrastructure to service its existing customers and to create opportunities for growing the business. Phoenix also plans to relocate its headquarters from Humble, Texas to this new location. The company expects to break ground on the Dayton facility during the second quarter of 2024. When completed, this facility will allow it to operate the company's rail and trucking business more efficiently, as well as open up opportunities to process a wider variety of products.
All company and independent tractors in this segment are equipped with similar in-cab communication technology and event recorders as the company's STC tractors. All tractors are also equipped with electronic logs.
Investment in Unconsolidated Affiliate
The company owns an approximate 15 percent equity interest (less than 3 percent voting interest) in VestaCare, Inc., a California corporation (VestaCare), through Adams Resources Medical Management, Inc. (ARMM), a wholly owned subsidiary. VestaCare provides an array of software as a service (SaaS) electronic payment technologies to medical providers, payers and patients including VestaCare's product offering, VestaPay. VestaPay allows medical care providers to structure fully automated and dynamically updating electronic payment plans for their patients.
Strategy
The company's strategy is to build long-term partnerships with its customers based upon the safety of its operations, reliability and superior customer service.
Seasonality
Although the company's crude oil marketing segment and its logistics and repurposing segment are not materially affected by seasonality, certain aspects of its operations are impacted by seasonal changes, such as tropical weather conditions, energy demand in connection with heating and cooling requirements and the summer driving season.
Regulatory Matters
The following are non-exclusive listing of the environmental laws that potentially impact the company's business, such as the Solid Waste Disposal Act, as amended by the Resource Conservation and Recovery Act of 1976, as amended; the Clean Water Act of 1972, as amended; the Clean Air Act of 1970, as amended; the Toxic Substances Control Act of 1976, as amended; the Emergency Planning and Community Right-to-Know Act; the Occupational Safety and Health Act of 1970, as amended; Texas Clean Air Act; Texas Solid Waste Disposal Act; Texas Water Code; and Texas Oil Spill Prevention and Response Act of 1991.
The RRC regulates, among other things, the drilling and operation of crude oil and natural gas wells, the operation of crude oil and natural gas pipelines, the disposal of crude oil and natural gas production wastes, and certain storage of crude oil and natural gas in Texas. RRC regulations govern the generation, management and disposal of waste from these crude oil and natural gas operations and provide for the cleanup of contamination from crude oil and natural gas operations. These regulations primarily affect the company's crude oil marketing segment, the company's pipeline and storage segment and the company's logistics and repurposing segment.
The company's crude oil marketing, transportation and logistics and repurposing businesses operate truck fleets pursuant to the authority of the DOT and various state authorities.
The company's crude oil marketing and transportation businesses are Partners in the EPA's SmartWay Transport Partnership, a national voluntary program developed by the EPA and freight industry representatives to reduce greenhouse gases and air pollution and promote cleaner, more efficient ground freight transportation.
The transportation rates charged by the company's interstate liquids pipeline is in accordance with the ICA and applicable FERC regulations.
The company is subject to regulation by the DOT as authorized under various provisions of Title 49 of the United States Code and comparable state statutes relating to the design, installation, testing, construction, operation, replacement and management of the company's pipeline facilities. Among other things, these statutes also require companies that own or operate pipelines to permit access to and copying of pertinent records, file certain reports and provide other information as required by the U.S. Secretary of Transportation. The DOT regulates natural gas and hazardous liquids pipelines through its Pipeline and Hazardous Materials Safety Administration ('PHMSA').
As of December 31, 2023, the company had 100 independent contractor operated tractors in the company's transportation segment, which comprised approximately 17 percent of the company's professional truck driving fleet. The company also partners with the Women in Trucking Association to support the company's efforts to advance the careers of women and gender diversity.
The company works with Truckers Against Trafficking ('TAT') to train all over-the-road drivers on how to spot and report signs of human trafficking. The company's drivers receive training from TAT and become registered as TAT trained and certified.
History
Adams Resources & Energy, Inc., a Delaware corporation, was founded in 1947. The company was incorporated in 1973.
The Analyst Price Target shows the analysts’ low, high, and average target at a glance.
