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Thread-Topic: Equitable True Oil RESPONSE: Offtake agreement question & Feedstock Agreement. 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Our Lead Lender and the USDA Guarantor both require a longer-term off-take = agreement, and longer-term feedstock sourcing in order to be comfortable wi= th our business model and security of the loan. We understand this concern= and are attempting to meet the requirement several ways, including obtaini= ng off-take agreements with airlines and other commercial users. Our ideal= customer, however is the Federal Government. With Defense Logistics Agenc= y as our primary customer we will be able to price and sell our product wit= h all of the advantages of Native American owned, Minority owned small busi= ness. These pricing and priority incentives make a huge difference in our = potential returns. The problem with this target customer is that the Federal Government does n= ot sign long term fuel purchase contracts. They issue solicitations for on= e year contracts with extension options on good performance. These contrac= ts, while attractive, do not meet the Lender requirements, nor can they be = signed in advance of our being able to deliver product. Our ideal, then would be to work with True Oil Companies, as an existing su= pplier of petroleum products, to market our product (blended as required wi= th petroleum jet fuel provided by True Oil) to the Federal Government with = very attractive pricing for both the Renewable Jet we produce and the Petro= Jet you supply to the blended final Sustainable Aviation Fuel. This arran= gement would also allow for substantial sales of non-SAF jet fuel with the = Native American incentives as well. If we formalize this arrangement with: a long term (10-20 year) off-take ag= reement for our Renewable Jet, and; a long term feedstock agreement for the= Petro Jet component, we can market together to the DLA and meet our Lender= expectations. On top of this proposition for teaming, we recognize your corporate experti= se in operating refinery operations. It would be a wonderful relationship = to have Keitu Engineers and True Oil Companies become our initial start-up,= commissioning, and training consultants to get us well into stable operati= on. This relationship package would offer True Oil an excellent opportunit= y to have a strong level of input into successful return on the agreements = mentioned above. I am forwarding this to Kathye Spillman at Keitu with an invitation to expa= nd if she chooses. Thoughts, Sir? * Roger Grimes, PE --_000_BYAPR06MB517640E28BEB0D0BF219AA1BAA869BYAPR06MB5176namp_ Content-Type: text/html; charset="us-ascii" Content-Transfer-Encoding: quoted-printable

Matt:

 

Please let me take a shot at answering these questio= ns to help explain what we are thinking?

 

Our Lead Lender and the USDA Guarantor both require = a longer-term off-take agreement, and longer-term feedstock sourcing in ord= er to be comfortable with our business model and security of the loan. = ; We understand this concern and are attempting to meet the requirement several ways, including obtaining off-take agreeme= nts with airlines and other commercial users.  Our ideal customer, how= ever is the Federal Government.  With Defense Logistics Agency as our = primary customer we will be able to price and sell our product with all of the advantages of Native American owned, = Minority owned small business.  These pricing and priority incentives = make a huge difference in our potential returns. 

 

The problem with this target customer is that the Fe= deral Government does not sign long term fuel purchase contracts.  The= y issue solicitations for one year contracts with extension options on good= performance.  These contracts, while attractive, do not meet the Lender requirements, nor can they be signed in advance of = our being able to deliver product.

 

Our ideal, then would be to work with True Oil Compa= nies, as an existing supplier of petroleum products, to market our product = (blended as required with petroleum jet fuel provided by True Oil) to the F= ederal Government with very attractive pricing for both the Renewable Jet we produce and the Petro Jet you supply= to the blended final Sustainable Aviation Fuel.  This arrangement wou= ld also allow for substantial sales of non-SAF jet fuel with the Native Ame= rican incentives as well.

 

If we formalize this arrangement with: a long term (= 10-20 year) off-take agreement for our Renewable Jet, and; a long term feed= stock agreement for the Petro Jet component, we can market together to the = DLA and meet our Lender expectations.

 

On top of this proposition for teaming, we recognize= your corporate expertise in operating refinery operations.  It would = be a wonderful relationship to have Keitu Engineers and True Oil Companies = become our initial start-up, commissioning, and training consultants to get us well into stable operation.  This = relationship package would offer True Oil an excellent opportunity to have = a strong level of input into successful return on the agreements mentioned = above.

 

I am forwarding this to Kathye Spillman at Keitu wit= h an invitation to expand if she chooses.

 

Thoughts, Sir?

 

  • Roger Grimes, PE
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