American Electric Technologies, Inc. (AETI) has executed a definitive share exchange agreement with privately-held Stabilis Energy, LLC (Stabilis) and its subsidiaries to create one of the leading public small-scale liquefied natural gas (LNG) production and distribution companies in North America.
The combined business will include Stabilis’ small-scale LNG production and distribution businesses as well as AETI’s existing international businesses (the “Combined Company”).
At the closing, Stabilis and its subsidiaries will become wholly-owned subsidiaries of AETI and the existing AETI shareholders will own 11% of the Combined Company. The former owners of Stabilis will own 89% of the Combined Company.
“AETI is pleased to announce this combination with Stabilis,” said Peter Menikoff, Chairman and Chief Executive Officer of AETI. “We believe the transaction will give the Company a substantial North American LNG business to complement its international operations.”
Stabilis is a leader in the small-scale production and distribution of LNG in North America and has expertise in marine, mining, over-the-road and rail applications for LNG as a fuel for transportation. Additionally, demand for natural gas for power generation and heating applications is increasing across multiple end markets, but many customers are not directly connected to a pipeline.
LNG can be used to supplement existing natural gas fuel sources or to displace other fuel sources, including diesel fuel, fuel oil, and propane. North America’s abundant supply of natural gas can provide LNG customers lower costs and greater pricing stability when compared to other fuels. Customers utilizing natural gas fuel can also realize significant environmental benefits from reduced emissions of carbon dioxide, particulate matter and sulfur emissions, among others.
Stabilis operates its LNG production business under the “Stabilis Energy” brand name and its LNG distribution business under the “Prometheus Energy” brand name, which we believe is one of the oldest and most recognized brand names in the small-scale LNG business.
Stabilis delivered 26.5 million LNG gallons to its customers during the nine months ending September 30, 2018, a 75% increase over comparable 2017 deliveries. Stabilis’ operating assets include a 120,000 LNG-gallon per day production plant in George West, Texas, a 30,000 LNG-gallon per day production plant that is being relocated to the West Texas region, and a fleet of cryogenic rolling stock equipment that is capable of servicing customers throughout North America.
“We believe the combination of Stabilis and AETI will create a leading platform for growth and consolidation in the North American small-scale LNG industry,” said James Reddinger, President and Chief Executive Officer of Stabilis.
Upon completion of the transaction, the Combined Company will be renamed “Stabilis Energy, Inc.” and will apply to continue trading on the NASDAQ Stock Market under the symbol SLNG.
Stabilis Transportation Applications
MARINE: Stabilis can help marine companies incorporate LNG into their operations in a variety of ways: LNG bunkering from fuel that is stored onsite, bunkering directly from LNG transport trailers, or storing LNG ISO containers on a vessel. The tightening of emissions regulations is stimulating demand for LNG as a lower-emission marine fuel.
MINING: Stabilis has successfully supplied and dispensed thousands of gallons of LNG fuel for mine haul trucks, designing special built-for-purpose equipment to meet site challenges. Both mobile and stationary LNG fueling options are available for rapid refueling regardless of location.
OVER THE ROAD: Stabilis provides LNG fuel for one of the largest natural gas trucking fleets in the United States. It has successfully delivered thousands of gallons of LNG for multiple customers in the over the road market and has the technical ability to ensure the transition to LNG is seamless. As for mining, mobile and stationary fueling options provide refueling flexibility.
RAIL: Stabilis has provided fuel, equipment, staff and services for LNG pilot projects being conducted by two of the seven Class 1 railroads, gaining real world experience assisting with the rail industries transition to LNG fuel.