Evercore Investment Banking Pitch Book
SIRE Situation Analysis
Transportation Overview
Overview
SIRE's production is transported from Wyoming via
Union Pacific Railroad ("UP") pursuant to a master
contract amendment executed October 27, 2021 (the
"UP Agreement”)
The UP Agreement began on January 1, 2022 and
expires on December 31, 2025
Beginning on January 1, 2023, rates are adjusted
annually based on the prior four quarterly indices of
the All Inclusive Index Less Fuel with Forecast Error
Adjustment ("AIILF"), as published by the Association
of American Railroads
In the event the average price of Retail On-Highway
Diesel Fuel calculated monthly based on prices
reported on the U.S. Department of Energy Website
equals or exceeds $2.30 per gallon, UP will add a
mileage-based fuel surcharge to the freight charges
Shortfall payment is required to be made to UP if
SIRE does not ship 85% of its production on UP
In 2021, SIRE shipped over 90% of production on
UP
Production for export is transported on UP to Kansas City
Southern Railroad ("KCS") for transportation to Mexico
and to terminals in the U.S. Northwest for transport via
Handysize vessels to Asia and Latin America
A Handysize vessel holds 40,000 to 50,000 tons of
dry bulk
Source: SIRE management, Association of American Railroads, FactSet, Bloomberg
EVERCORE
15
Dayrate
10.0%
8.0%
6.0%
4.0%
2.0%
0.0%
(2.0%)
(4.0%)
$40,000
$30,000
$20,000
$10,000
Historical AIILF
2012-2022E Average Annual Change
Core CPI: 2.2%
All-LF: 2.5%
2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022
Core CPI Inflation
All-LF with Forecast Error Adj.
Historical Handysize Dry Bulk Costs (Asia)
Nov-2017 Nov-2018 Nov-2019 Dec-2020 Dec-2021 Jan-2023
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