American International Industries has signed a non-binding agreement to acquire a 51% equity interest in a refinery from International TransOil Corporation in Houston, Texas, in exchange for cash and a $6 million revolving credit facility.
The refinery is located on 57 acres near Nixon, Texas. It was built to provide military jet fuel to the US military and reached its maximum output of 18,000 bbl/d during the Gulf War in 1991. The plant has 130,000bbls of crude oil storage capacity and 260,000 bbls of refined product storage capacity.
A cash and credit line provided by American International Industries will be used to upgrade and improve the facility, which will result in increased refinery capacity.
Following the upgrade and improvement, it is expected that the refinery will commence production at approximately 10,000 bbls per day. American International Industries estimates annual revenues of around $150 million from the plant commencing in 2006, based upon current market prices.