looks like we are waiting on a buyer here Hunt is not going to produce biofuels partly due to the enviromental restrictions impose by our lovely administration - the job killers
2011 to present:
In late 2011, the founders and the Company understood that the past pursuits of “new opportunities” left Hunt Global Resources with several valuable assets but a severe lack of the capital and management resources to pursue all of them. Also the regulatory environment for the biofuels space had changed for the worse, and the opportunity in the oilfield frac sand arena continued to grow more promising, especially in the high end “Jordan” Northern White Sand segment. The founders and management, recognizing they had too much on their hands and a chronic problem raising capital, in part associated with a fragmented sense of strategic direction, engaged strategic consultants to evaluate the best course of action going forward.
2012, A NEW, FOCUSED AND REALISTIC STRATEGY IN THE FRAC SAND BUSINESS:
Following several months of study, evaluation of the capital and resources necessary for each of the three areas of past investment and the opportunities to use each of the assets to provide meaningful initial capital to pursue the others, the Company decided to focus solely on the development of a frac sand operating company. As a result of this important decision, the Company has:
I.Made the decision to exit all biofuels activities. Given the regulatory changes in this space in the US, these assets are not valuable and the Company has simply closed those activities. At the present there are no assets or personnel on the books of the Company and the operations have been classified as “discontinued”.
II.Made the decision to sell the Carbon Green assets in a cash transaction. The Carbon Green business was acquired in early 2011 so the decision to exit this business has been made relatively soon and was quickened by the stress of the Company’s liquidity.
III.Made the decision recruit additional management resources with the specific industry experience to raise a significant amount of capital, complete the process of building one of the largest single location frac sand plants in the world and handle the logistic and marketing necessary to become an important supplier to the various outlets in the oil and gas business. Some of these management resources are in place and more are joining. By the end of 2012 the Company expects to recruit additional resources to its management team and Board of Directors.
IV.Made the decision to engage in an operating strategy that is quite DIFFERENTIATED for competing suppliers of frac sand. The rational for this strategy is very solid and flows from years of experience of our new managers in the energy industry:
a.Large scale and one location: The average size frac sand processing plant in the industry is less than 500,000 tons per year capacity. The cornerstone of our plan is initially 2.4 million tons per year of capacity at one location. We strongly believe this will enable economies of scale in terms of many operating costs, logistic management and recruitment of key management personnel. It also keeps capital costs lower than alternative operations.
b.Low overhead costs: The majority of our largest frac sand competitors are old companies. Sand for other applications in glass, metal casting, refractories, chemical and ceramics production has been produced and sold for over a century. As a result, none of our largest competitors have yet to reach the point of 50% of output being sold to the oil and gas industry. Manufacturing and selling a multitude of special products has resulted of necessity in large staffs, traditional methods of cost incurrence, and far lower profit margins. Hunt has the advantage of being new or what is commonly referred to as a “zero based’ approach to cost incurrence. If we don’t absolutely need the cost to service the relatively small number of oil and gas customers, we don’t spend the money.
c.Variable/outsourced cost structure: This aspect of our strategy is both lower costs (especially in a cyclical industry) and a necessity. We intend to develop the Minnesota asset on an expedited basis, carefully but pretty fast. In order to have available the best solutions for logistic management (rail and trucking) and distribution (spot selling, field stocking, etc), we expect to outsource these capabilities. We are realistic enough to understand that customers expect from each supplier the services of the best suppliers in the industry. To expect to development these capabilities over time is simply not realistic. By outsourcing, we recruit with competitively priced contracts the best available and the costs are by definition variable with volume.
2012: A NEW STRATEGY BUILT AROUND AND VERY UNIQUE FRAC MINING ASSETS:
Simply stated we believe we have one of the most important Northern White Sand deposits in the industry. It is very large…..it is in one location…. it also has an exception concentration of what is classified as “coarse” material. All white sand is not created equal.
The vast majority of premium ‘white frac sand’ is produced in Northern Illinois, Minnesota and Wisconsin. White sands produced today are from the Ordovician and Cambrian periods. The St. Peter formation – sands from Ottawa and all of Illinois as well as parts of Wisconsin and all of OK, AR, MO – is Ordovician. Most Minnesota sand and sand from parts of Wisconsin are Cambrian, which is the older period, and consequently preferable. These Cambrian sands are called Jordan Sands. Older, better, higher priced, more valuable technical properties.
One of the inherent weaknesses of the northern deposits is the tendency for many of the materials to have a diminishing percentage of coarse-grained material. Some deposits, for example, contain none to perhaps only 20 percent of less of recoverable plus 40 mesh. As a result, high-cut 20/40 products with 60+ % of the material retained between the 20 and 30 mesh sieves command a premium price. The Minnesota deposit has a much higher than average percentage of "plus 40" mesh.
blah blah blah
I may buy another chunk and just sit on it till this plant goes back up - maybe after the election -
If the shoe fits--Wear it !!!
