MMEX Resources Corp (MMEX)

[misterf]

MISTERF'S RESPONSE TO YOUR REQUEST

When building a project of this size, you have four things you need to worry about from a 1000 foot view.

(1) Financing
a. Not my expertise but I know of at least $200+ billion worth of projects planned just in the greater Houston area. This isn’t the same economy that was around during the 2008 financial crisis, people have been lining up left to invest in all these projects. Exxon’s $20 billion investment is just the tip of the iceberg. You’ve got Marathon, Valero, Energy Transfer, Enterprise, Celanese, Lyondell, INEOS, P66, Kinder Morgan, Tellurian, Cheinerie, Air Liquide, NRG, Air Products, and there are just so much mooooooore. Every single one of these projects area like $1-$3 billion each. Easy.

b. Seriously – just google all of these companies with the phrase “Houston projects” and you’ll just see tons of them. I mean just tons of them. There’s money to be found, if you can figure out the other three points. BUT THE MOST IMPORTANT THING FROM A FINANCING PERSPECTIVE IS ONE SINGLE QUESTION. Have you successfully built a project like this before? That takes a huge burden off the shoulders of someone who’s about to write a check for $450M. WHICH IN THIS CASE IS A HUGE YES.

c. Plus, whoever is going to lend them the money will absolutely have hard-checkin points so that if there’s an issue they know ASAP and can pull funding if they want. Every week they’ll be demanding reports on scope, schedule, and budget every week. They’ll probably just write a check for $5M or so up front with a bunch of requirements they have to meet to “unlock” the rest of the funding. Which will again be given out in tranches.

d. So it’s really like can Jack Hanks get enough money to take the first steps? If so this stock will be at 0.1 in a heartbeat. That’s what we’re banking on folks. Plain and simple.

(2) Technical
a. Can you produce the goods you’re saying that you can? THE ANSWER IS YES ABSOLUTELY.

b. You’re using the same engineering concepts that have been around for 200+ years. They are as follows: crude washing (dissolving salts from crude into water), distillation, absorption, adsorption, stripping, sulfur recovery via hydrotreating, heat exchange, etc.

c. Permian Crude quality is a little bit of a godsend to tell you the truth. It’s in that sweet sweet spot of light crude between crude and condensate. It’s light, clean, and just an overall pleasure to work with compared to stuff like Mexican Maya, Canadian Tar Sands, High-Sulfur Middle East Crude, Heavy Crude from Venezuela.

d. This refinery will literally be a desalter to remove all the impurities like salts, metals, dissolved CO2, etc., a distillation tower that will separate the crude into natural gas/light ends, gasoline, diesel, naphta, jet fuel, and residue. All the combustion equipment will most likely run on the natural gas you produced off the top of the distillation tower, but the extra will be compressed and liquefied into an LPG. The liquids will then be treated in the hydrotreater to again remove any impurities and will then be piped to a storage tank which will then be piped to a railcar loading rack. You’ll probably need an air separation unit as well cause Nitrogen is an inert gas that makes dealing with combustible and volatile hydrocarbons a lot easier. The residue will most like be used in the surrounding area as asphalt or be sold to someone who already has a vacuum distillation tower, hydrocracking, or coking operations.

e. This is where KP Engineering and Intertreat/RAMA Fabrication make our lives so much easier. KP Engineering is an EPC Company. What does EPC stand for? Engineering, Procurement, and Construction. KP Engineering will honestly design, build, procure, and construct the equipment. They will handle the pipewelders, the delivery of equipment to the site, al subcontractors including RAMA who will actually fabricate the equipment down to the specifications that KP Engineering provides (ex. no of tray is the distillation column, or number of tubes in the shell/tube heat exchanger, sizing specification.

f. But the overall concept of the refinery (feed rates, how much you want to produce of each product, etc.) rests solely on the supply/demand fundamentals, and without that you can’t really optimize/design your facility. So that leads us to the next point.

(3) Supply & Demand Fundamentals
a. Supply Contracts
i. Because you’re dealing with 50k barrels of crude a day you need to make sure that 50k barrels of crude shows up to your refinery every single day of the year as well as having a contingency plan in case something happens.

ii. You have two options – drop in a 20inch pipeline from the nearest terminal and set up delivery contracts with them. Or you can basically build a terminal at the site itself. 50k barrels a day is like 250 tanker trucks a day. And since it’s a Permian, you can probably lock up 50k or crude from the production fields within a 5 – 10 mile radius – I’m not sure if they do go down this route as it is much more of a hassle than say a pipeline from the nearest terminal.

b. Demand Contracts
i. Leap of faith here – I can’t really speak to lining up take or pay contracts with terminals south of the border or if there are even terminals along the railway. But there is an absolutely, verifiable shortage of refined fuels in Western Mexico. Google it.

ii. And honestly, if you remember from one of the original press releases he said his master plan was to build a LPG/LNG export facility on the Western coast of Mexico. This gets me even more excited than the refinery to tell you the truth. I think there are 20 or so LPG/LNG export facilities planned for the United States but California wants no part of them. So I’m pretty sure there isn’t an LPG/LNG export facility south of Alaska or Washington on the ENTIRE WEST COAST OF THE AMERICAS. I’m not talking the United States here guys. I’m talking south of Washington all the way to the tip of Chile. It’s a long way away for sure and we’ll have to build some pipelines to get there as rail won’t be as economical when you’re dealing with volumes that large. BUT if Jack Hanks can build this refinery, I’ll probably never sell 25k or so of my shares because if they build that facility this stock is $5-$10 easy my friends.

(4) General Business
a. Land
i. I don’t know why everyone here gets into a pissing match about whether or not they own the land. Buying 500 acres of land without securing financing is dumb. But what he did do is set up an option contract to close on the 500 acres anytime he wants in the next 120 days or so. So once funding is secured, he executes the contract. If not, no harm done, pay the man his option fee that’s an extremely tiny percentage and go about your ways.

b. Railroad
i. Somebody has to set up the right to transport 150-200 tanker trucks on the railway. Not a real concern as that’s what business railways are in!
ii. A silver lining here is that a lot of rail companies built petroleum product rail cars to take advantage of the void left by the lack of infrastructure and pipelines in the Bakken up in North Dakota. With Dakota Access and so costs here should be reasonable.

c. Permits
i. Air (New Source Review and/or Title V), Water (National Pollutant Discharge NPDES Permit), Waste (RCRA Permit)
ii. The best thing I can tell people on this front, is leave it up to the experts. What about if there are not enough experts?
1. Look at this list.
2. https://www.tceq.texas.gov/permitting/air/conslst.html
3. Just look at it. That’s 150+ companies in Texas alone that can get all of this done for probably $250k - $500k.

d. Tax
i. Arranging tax benefits with local/state/federal
ii. Judge/Mayor/City Council/School District approval

A plan of action for Tasks 2, 3, and 4 are completed – with the exception of the permits. I’m also pretty sure he has financing options completed, but he’s just weighing the pros and cons of each.

I’m a pretty educated dude on this subject and if I had $451 Million – I’d invest $450 Million on this TEXAS TEA project.

I'm not saying this is a done deal, if it was a done deal - it wouldn't be a penny stock. It's a literal logical fallacy for anyone to question that. What I am saying is that IF Jack Hanks can pull off the financing, the project will be completed on budget and on time because everyone involved knows what they're doing.

Now if he isn't I hope you Ihubbers make sure the SEC takes him, Jennifer Zimmons, and even his daughter all down too!!!

If these guys can't pull off getting financing, I can confidently say the American Dream is dead. I've got personal aspirations to build a refinery/chemical facility/LPG export so I'm invested in this not only from a financial perspective, but a personal perspective too.


THAT BEING SAID, I'M LONG MMEX AND YOU SHOULD BE TOO!