BP To Sell Stations In Colorado
ChevronTexaco to Acquire Unocal
Hawaii Station Rent Cap Law Is Upheld
Mini-Mart Chain To Become Loaf 'N Jug
Holly/Frontier Suit Ends with $1 Damages
EPA Quits Answering UST Calls

BP TO SELL STATIONS IN COLORADO

DENVER, CO. — After spending millions of dollars in the territory to upgrade its stations, BP has announced that it will be leaving the Colorado marketplace.

British Petroleum said that it will be placing 100 of its service stations in the Rocky Mountain state up for sale. The stations involved in the sale include dealer and jobber-run stations as well as company-operated sites.

If BP is unable to find buyers, it is expected the remaining businesses will be closed.

Approximately 1,000 employees will be affected by the decision, primarily those staffing the company's stations and c-stores.

Many of the stations had been operating under the Amoco brand as recently as 2002 and had just been converted to the BP image. The company spent over $2 million per station within the last few years to upgrade the stations and, in some cases, adding solar panels to the canopies to make them state-of-the-art.

Leading candidates for purchasing the stations include ConocoPhilllips and Diamond Shamrock, both of whom have a strong presence in the Rocky Mountain states. However, as BP Dealer Michael Berrigan predicted, "The future is uncertain for many of us. I suspect they'll have a difficult time finding buyers for all of the stations."

BP says it is leaving Colorado in order to focus its marketing on the West Coast, Southeast, and Midwest where it currently operates refineries.

CHEVRONTEXACO TO ACQUIRE UNOCAL

SAN RAMON, CA. — ChevronTexaco Corporation has announced that it will acquire Unocal Corporation. The price for the purchase is valued at approximately $18 billion, including stock, cash, and an assumption of debt.

There had been rumors of Unocal's sale over the last several months with many of the suitors mentioned representing Asian and European-based companies, most notably China National Offshore Oil Corp. Operating as an exploration and production company, the assets of Los Angeles-based Unocal have been very attractive to major oil companies looking to strengthen their reserves.

Rumors of CNOOC's interest in Unocal continue to circulate. In fact, and there are some who believe that the Chinese will come in with an alternative offer for Unocal just prior to the stockholder's meeting to approve the purchase.

Included in the sale are all of Unocal's assets including its oil and gas rights in North America and Asia. Approximately 6,000 employees currently work for Unocal.

Unocal sold its refining and marketing assets to Tosco in the 1990s.

"Unocal is a unique independent with supermajor assets that are an excellent fit with our existing portfolio and our long-term strategies -- to grow profitably in core upstream areas, build new legacy positions and commercialize our large undeveloped natural gas resource base," said ChevronTexaco CEO Dave O'Reilly, announcing the deal.

"ChevronTexaco and Unocal share common roots in the oil fields of California and we believe we have highly compatible business cultures and values," O'Reilly continued. "A very attractive element of this combination is the opportunity to integrate two highly capable groups of employees to continue to drive world-class performance."

The Federal Trade Commission has already allowed that the merger may take place without having to sell any of the assets of either company.

Following final regulatory and stockholder approval, the merger of the assets is expected to be completed within six months.

HAWAII STATION RENT CAP LAW IS UPHELD

HONOLULU, HI. — The U.S. Supreme Court has ruled that the state of Hawaii had the right to impose rent caps on service stations operating in the state.

The case had been filed against Hawaii by Chevron Corporation which was arguing that the rent caps were an unconstitutional "taking" of private property.

The state of Hawaii passed the rent cap law in 1997. Legislators said they were passing the law to protect independent dealers and to help promote competition in Hawaii. The law also barred major oil companies from taking over dealer-owned stations in the state.

Major oil companies argued that setting rent caps which could be below the market value of the property and banning them from taking over the property from a dealer was, in essence, the state taking away their land.

Two lower courts had sided with Chevron, deciding that the law was unconstitutional because it took away the "economic use" of the land. The 5th Amendment requires that private property must not be taken for public use without just compensation.

The 9th U.S. Circuit Court of Appeals concurred with the decision because it concluded the regulation would take away property without a compelling public benefit.

The Supreme Court decision focused not on the 5th Amendment side of the case but on state's rights. The Court concluded that states have the right to set their own economic regulations on a local level and, therefore, the action was constitutional.

Writing for the Court, Justice Sandra Day O'Connor stated that ruling against the Hawaiian government would "require courts to scrutinize the efficacy of a vast array of state and federal regulations — a task for which courts are not well suited."

The unanimous decision was handed down in May.

MINI-MART CHAIN TO BECOME LOAF 'N JUG

PUEBLO, CO. — The Mini-Mart chain of convenience stores is being rebranded to Loaf 'N Jug by its parent company, Loaf 'N Jug Mini Mart, a division of grocery store giant Kroger Company.

Seventy-nine Mini-Mart stores in Montana, Wyoming, Nebraska, and North Dakota will be involved in the re-imaging project. When the rebrand is complete the total number of Loaf 'N Jug stores will be 176 in the four-state Mini-Mart territory as well as Colorado, New Mexico, and Oklahoma.

The rebranding will include the name change, new logos, color schemes, and graphics within the c-stores. In addition, the new Loaf 'N Jug stores will introduce a consumer credit card plan to their customers as part of the changeover.

The rebranding project was scheduled to be complete by the end of June.

HOLLY/FRONTIER SUIT ENDS WITH $1 DAMAGES

DOVER, DE. — An ongoing dispute between Frontier Oil and Holly Corporation has ended in the courts — with a $1.00 award for damages.

The dispute began in 2003 when Holly and Frontier announced that they would be merging their operations. However, Holly said it wanted to quit the merger, arguing that a pending lawsuit against Frontier would hurt their profits.

Frontier is currently facing "toxic tort lawsuits" in California court on behalf of over 400 plaintiffs, mostly former Beverly Hills High School students, who allege they were exposed to toxic chemicals from Frontier's operations.

When Holly broke away, Frontier filed suit against Holly for breach of contract. Holly countersued against Frontier.

In a decision handed down by the Delaware Chancery Court, Vice Chancellor John Noble ruled that Frontier had not proved that Holly had repudiated the merger agreement. Without that proof, Noble ruled that it was Frontier who broke apart the merger agreement by filing suit against Holly.

Noble also found that Holly had suffered no damages because of this breach of contract and, therefore, awarded them only $1.00 in "nominal damages."

"We are very disappointed by the decision, and are currently evaluating our alternatives with respect to an appeal," said Frontier's Chairman, President and CEO James Gibbs. "We continue to believe that the combination of Frontier and Holly would have created a terrific company, so we are disappointed that our shareholders were not able to benefit from our efforts to retain the benefits of the merger."

EPA QUITS ANSWERING UST CALLS

WASHINGTON, D.C. — Looking for information on the U.S. Environmental Protection Agency's Underground Storage Tank program? Don't call the EPA.

The Federal agency has quit supporting its UST program through the EPA call center. Marketers and other tank owners now must access the EPA's website — www.epa.gov/oust — or order publications from the EPA to answer any questions they might have about UST issues.

Originally published in the June 2005 issue of O&A Marketing News.
Copyright 2005 by KAL Publications Inc.