Super Jobber Global Petroleum Formed Through Mergers the Southwest
Sinclair to Sell Older Stations
Franklin Fueling Acquires Healy
Travel Centers of America Sold
Flying J Buys Longhorn Pipeline
Ethanol Coalition Promotes Arvada Station

SUPER-JOBBER GLOBAL PETROLEUM FORMED THROUGH MERGERS IN THE SOUTHWEST

STAMFORD, CT. — Western jobbers have followed the lead of major oil companies, merging their operations to create a new super-jobber in the Southwest.

The new company will be operating under the name of Global Petroleum, a holding company based in Stamford, CT., and created by private equity firms Waud Capital Partners, LLC, Northwest Capital Appreciation, Inc., RBC Capital Partners and Cadent Energy Partners, LLC.

The coalition that created Global Petroleum had purchased a number of jobberships over the past 2 1/2 years including SPI Petroleum, Hartney Fuel Oil Co., Trevco, Inc. and McLain Truck Service, Inc.

However, the company's latest move has attracted great attention as it has added two of the largest fuel and lubricant marketers in the nation to the fold.

Global Petroleum has acquired Pecos, Inc., based in Rancho Dominguez, CA., and Canyon State Oil Company, Inc., based in Phoenix, AZ. The price tag was not disclosed but sales of the newly combined company are estimated at over $2 billion annually.

Global Petroleum has stated their goal is "to consolidate the fragmented commercial fuel and lubricant distribution industry."

Pecos is one of the largest suppliers of fuels, lubricants and petroleum-related services to the automotive, marine, commercial and railroad sectors on the West Coast, extending down to the Panama Canal. The company operates from facilities in the greater Los Angeles area, Ventura/Port Hueneme, the greater San Francisco Bay area, Seattle, and the Panama Canal zone and includes the General Petroleum and Rainier Petroleum jobberships. Pecos was the biggest Chevron lubricants distributor in the United States and reported annual sales of over $800 million.

Canyon State was founded in 1976 by the Arndt family and supplies lubricants and fuels to the commercial, industrial and automotive markets in the Southwest with annual sales of over $225 million. Prior to the acquisition, Canyon State was the largest Shell jobber in the United States.

"We are thrilled to welcome Pecos and Canyon State to our family of companies as they each have long proven track records for quality and customer service that are second to none." said Perot Bissell , CEO of Global Petroleum, in an official statement. "Each of these businesses has been recognized as the premier provider of customer satisfaction and quality assurance by their respective supply partners."

Pecos and Canyon State now will operate as wholly-owned subsidiaries of Global Petroleum and will continue to market under their existing General Petroleum, Rainier Petroleum, GP Atlantic, Marine Oil Service, and Canyon State names. In addition, the management teams of both Pecos and Canyon State will stay on board to lead their companies.

"I will continue to operate Canyon State," explained Tom Arndt, president of Canyon State, "I'm still president of the company. Our whole management team is staying on board. The only change you would see is in upper management; I am now an investor along with John [Zar] and Roger Simons."

Arndt continued, "Part of the reason this works so much better than a traditional merger is we will each keep our own distribution area — and we are not overlapping areas. But together we will have great distribution in the western half of the United States. We have created a big and powerful distribution network."

"We are excited about the possibilities for our customers and employees and being part of a larger enterprise that shares our goals and values", stated John Zar, the president of Pecos. "The scale of the combined operations and financial backing of three private equity groups will allow us to better serve both our supply partners and our customers, and allow Pecos to share best practices and cross marketing opportunities with our new sister companies."

With the addition of Pecos and Canyon State, Global Petroleum will be one of the largest independent marketers of petroleum products to commercial customers in the United States.

"Just think about it," said Arndt. "Pecos is the biggest Chevron lubricants jobber in the country, we're the biggest Shell lubricants jobber in the country. Plus when you add in the fuel procurement Simons has, it's good for the future. We weren't struggling companies put together to lower costs or create efficiencies. We were put together to increase our marketing. Now we are all part of a bigger and better organization with a great marketing team."

Arndt added, "By joining forces with our new partners we will be able to continue our growth plans throughout the Southwest and into the Rockies."

SINCLAIR TO SELL OLDER STATIONS

SALT LAKE CITY, UT. — Sinclair Oil Corp. has announced that it will sell 118 of its company-owned service stations.

The company is taking the action to divest itself of smaller, older, and less profitable locations. Most of the locations being offered for sale are service station sites dating from the 1950s and 1960s and on smaller parcels.

Among those sites targeted for sale are all nine of the company-owned stores in Montana, and four in Idaho as well as locations in Colorado, Utah, and Wyoming. Outside the west, Sinclair has also put stations in Missouri, Minnesota, Nebraska, Iowa, Kansas and South Dakota on the block.

Sinclair says there was concern that it was leaving the Montana market outright. However, the oil company will continue to supply its dealer stations that are marketing fuel under the Sinclair brand in the territory. Five of the affected service stations are located in Great Falls, MT, but only one of those sites is currently open for business. Two of the others in the city are closed and the remaining two are leased to other businesses.

The other affected Montana stations are in Lewistown, Helena, Kalispell and Bozeman.

"We still have a lot of distributors who are operating under the Sinclair brand, including the Noon's stations," said Mark London, retail real estate manger for Sinclair. "They will still be there."

Describing Sinclair's decision to sell the sites, "I know there are a lot of factors there," London told the Great Falls Tribune. "In our locations, we never put in casinos, like Town Pump has. That's obviously a factor in the revenue situation."

London said that following the sale, "Sinclair has looked at some of the properties and decided they are going to reinvest in larger-sized properties."

FRANKLIN FUELING ACQUIRES HEALY

MADISON, WI. — Petroleum equipment manufacturer Franklin Fueling Systems has acquired Stage II equipment manufacturer Healy Systems Inc. of Hudson, NH., effective as of mid-September.

The purchase price was $35 million plus a percentage of Healy Systems product sales over the next five years.

In an official announcement, Franklin Fueling President Donald Kenney stated that "This strategic step further broadens our system offering to include Stage II vapor recovery products with technology that has been proven for over 25 years."

The Healy product line is seen as extremely valuable as it holds the only California Air Resources Board certification for an EVR Phase II system. Franklin officials stated that despite the purchase price, the company "expects the transaction to be accretive to its earnings per share in the first year of ownership."

James Healy, president of Healy Systems, noted that "The combination of Healy's gasoline vapor recovery equipment line with Franklin Electric's existing fuel management products should have a strong positive effect on sales. I am looking forward to working within Franklin Electric to achieve that goal."

TRAVELCENTERS OF AMERICA SOLD

WESTLAKE, OH. — Hospitality Properties Trust has signed a deal to purchase TravelCenters of America for approximately $1.9 billion. Included in the deal are the company's 162 truckstop locations across the United States and Canada.

Hospitality Properties Trust is a real estate investment trust headquartered in Newton, MA., which currently owns hotels located in the United States, Puerto Rico and Ontario, Canada.

It is expected that "business will continue as usual" at the TravelCenters of America truckstops.

Tim Doane, president and CEO of TravelCenters, stated, "We are very pleased to announce this latest step in the evolution of our company. We anticipate a bright future for TravelCenters of America and are excited about the opportunities these changes will bring to us and our customers."

Doane said TravelCenters would continue with its plans to expand to new locations as well as add new services to serve its customer base.

The purchase is expected to close in early 2007.

FLYING J BUYS LONGHORN PIPELINE

OGDEN, UT. — Flying J has purchased the Longhorn pipeline, a 700 mile pipeline which carries refined products from the Gulf Coast near Houston,Texas to El Paso on the New Mexico border. The price for the purchase was not disclosed.

"The pipeline is strategically positioned to move Gulf Coast products to the Southwest markets of the United States on a very competitive long-term basis," said Ashlee Adams of Flying J. "We are very excited about the opportunities it will provide."

The deal included the pipeline as well as over 1 million barrels of storage at the El Paso terminal of the pipeline.

The Longhorn Pipeline has an installed capacity of over 70,000 barrels per day and Flying J estimates an ultimate capacity of 225,000 barrels per day.

ETHANOL COALITION PROMOTES ARVADA STATION

ARVADA, CO. — Two new dedicated alternative fuel pumps have been opened at the Hill Petroleum Sinclair Oil Station here. The station will carry E85 and biodiesel.

The cost to modify the existing fuel station with both E85 and biodiesel was approximately $100,000.

"We are eligible for state and federal tax credits and the E85 Coalition also provided support," said Troy Hill, vice president of Hill Petroleum and a member of the E85 Coalition's Steering Committee. "Our family business, open since 1982, is excited to offer alternative fuels at the retail pump for the first time. We are now able to meet the market demand for these fuels."

"Coloradans are getting more choices at the pump, and many citizens are purchasing vehicles that can use E85," said Governor Bill Owens who promoted the station through the Governor's Ethanol Coalition. "These cleaner burning fuels stimulate economic development for our rural communities and help promote energy independence."

The Sinclair Oil Station is located at 6301 West 58th Avenue in Arvada.

Originally published in the October 2006 issue of O&A Marketing News.
Copyright 2006 by KAL Publications Inc.