During this years first quarter, the company began producing and selling rerefined base oil at its recently completed rerefinery in Indianapolis. The rerefinery is expected to eventually recycle up to 50 million gallons of used oil and produce up to 30 million gallons of API Group II base oil, or about 2,000 barrels per day.

CFO Mark DeVita noted that, with the startup of the hydrotreater and initial base oil sales from the rerefinery, we anticipate that in the coming quarters we will begin to realize the potential of our oil business. The market reception to our base oil products has been excellent, and we view the current pricing conditions for base oil as favorable.

We were able to show steady progress in the operation of the rerefinery throughout the quarter, said Joe Chalhoub, Heritage-Crystal Cleans founder, president and CEO. During the first quarter, we fed 8.2 million gallons of used oil into the refinery, which allowed us to produce and sell intermediate and base oil products as planned.

Chalhoub said the company has added customers for its used oil collection services at a strong pace. At the end of the first quarter, the company was providing service to more than 65,000 customer locations, he said. Our growing customer base enabled us to collect 6.4 million gallons of used oil during the quarter. At the end of the first quarter we were collecting used oil at an annual run rate of approximately 31 million gallons. The company opened four new used oil collection branches, bringing its total to 71.

In addition to use oil collection and refining, Heritage provides parts cleaning and waste services.