Pacific Oil Conference Board Meeting
Western Pump Open House in San Diego, CA.
Western Petroleum Marketers Association Convention and Tradeshow
Want to see the photos that didn't make the issue? Check out the Cutting Room Floor.
Berry-Hinckley Sells Off Nevada Operations to Terrible Herbst
Tesoro Makes Major Purchases to Expand In Western Marketplace
United Fuel and Energy To Acquire Reamax Oil
Pilot Settle Pricing Dispute with Oregon
Ethanol Plants Under Construction in Washington
Thirsty Officer Catches Thief at Quik Trip
RENO, NV. — A little more than a year after expanding their operations, Berry-Hinckley Industries, based here, has sold off a large percentage of the company's operations.
In January, Berry-Hinckley Industries, led by Paul Morabito, sold off its wholesale, cardlock, lubricants, and transportation assets to Nella Oil Company of Auburn, CA.
This divestiture was followed in February by the sale of Berry-Hinckley's remaining Nevada businesses to Jerry Herbst and his company, Terrible Herbst. Included in the deal were 33 Winner's Corner convenience stores and Chevron gas stations, three carwashes, and the rights to develop seven additional convenience store/gas station sites in Northern Nevada.
In addition, Terrible Herbst acquired Winners Gaming, Inc., a slot route operator in Northern Nevada which had been affiliated with Berry-Hinckley. The Winners Gaming division operates over 800 slot machines at the company's Corner Chevron stations as well as in bars, restaurants, and other businesses in northern Nevada.
Terrible Herbst also received an option to acquire the Chevron Gasoline Distribution Terminal in Sparks, NV. The terminal had been acquired by Nella Oil Company as part of the earlier sale of company assets.
The prices for both transactions were not disclosed.
"For more than 50 years, my family has been committed to growing our business in Nevada," said Jerry Herbst. "With the acquisition of Berry-Hinckley Industries, we now have the opportunity to bring the Terrible Herbst brand back to Northern Nevada. With the acquisition of The Sands Regent by Herbst Gaming, Inc., and now this acquisition, our family has a significant investment in Northern Nevada and has tremendous confidence in the region's future."
In 2005, Paul Morabito and a group of partners acquired Berry-Hinckley Industries from the Berry and Hinckley families. Morabito says the company will continue to operate its remaining service stations, quick lubes, and truckstops in Nevada, California, and Arizona.
"After the sale to Herbst is completed, our investor group plans to seek the necessary permits and Nevada Gaming Control Board approval in order to build a new truckstop and casino at exit 48 in Fernley," [30 miles east of Sparks, NV.] stated Morabito, "and we will continue to operate our thirty Jiffy Lube franchises in Nevada and California, as well as eleven Superpumper Shell gas stations in Scottsdale, Arizona."
The acquisition of Winners Gaming, Inc. will require approval from Nevada Gaming Authorities and is expected to close in late 2007 or early 2008.
SAN ANTONIO, TX. — With two major purchases, Tesoro Corporation is poised to substantially increase its marketing operations in the the Western United States.
In the first deal, Tesoro agreed to purchase Shell's Los Angeles refinery and terminal as well as approximately 250 service stations in Southern California. The purchase prices for the assets is approximately $1.6 billion plus an additional $200 million in inventory.
In the second deal, Tesoro agreed to purchase 140 service stations from USA Petroleum in California, as well as two sites and a terminal in New Mexico, plus six sites in the Pacific Northwest. The price tag for this purchase is approximately $277 million plus an addition $10-15 million in inventory.
"These assets are a tremendous complement to our existing operations on the West Coast," said Bruce Smith, chairman, president and CEO of Tesoro, announcing the deal. "The refinery fits perfectly with our system, and we expect to quickly integrate the facility into our network."
Smith added, "With the unique focus we have as an independent refiner/marketer in the region, we expect to realize synergies immediately through crude purchasing and shipping logistics, as well as by optimizing the output of our refineries to maximize the production of clean fuel products for the California market."
Shell's Los Angeles refinery, located in Wilmington, CA., produces approximately 100,000 barrels per day of gasoline and diesel, primarily for the California market. The refinery will be Tesoro's seventh in the Western United States and its second in California along with the company's Golden Eagle Refinery in the San Francisco Bay area. Tesoro officials say they expect "to generate significant system synergies through integrating the supply of heavy, sour crudes with our Golden Eagle refinery and by utilizing our unique West Coast shipping logistics capabilities."
The company also says that they plan to make investments at Wilmington to "improve reliability, upgrade environmental performance, and increase the production of clean products at the plant over the next several years."
The Shell service stations are all high-volume sites, averaging approximately 225,000 gallons per month per station. In addition to acquiring the service stations and, in many cases, the real estate of the station, Tesoro also signed a long-term agreement allowing the company to continue operating the retail sites under the Shell brand.
In addition, Tesoro also agreed to continue to supply the 250 Southern California Shell-branded service stations that were not included in the purchase for the next two years.
The USA Petroleum sites are also high volume sites, averaging 185,000 gallons per month, and most of the service stations acquired include the underlying real estate.
Tesoro also acquired the rights to the USA Petroleum brand and will maintain the brand on the stations currently flying it. Of the 140 service stations acquired from USA Petroleum, 125 are branded USA and 15 carry other major brands.
Tesoro officials have been meeting with Shell and USA Petroleum station dealers, operators, and employees to invite them to continue in their present positions under new ownership.
With the addition of the 390 Shell and USA Petroleum stations, Tesoro almost doubled its service station population within a month. The company had been marketing its fuel through 450 branded retail stations prior to the acquisitions; 200 of the sites were company owned and operated under the Tesoro and Mirastar brands.
"We are excited about adding this talent and intellectual capital to Tesoro," said Smith. "We have grown through acquisitions, and each time we have added people to our organization who have been able to take our company to a new level of performance."
Both the Shell and the USA Petroleum transactions will require regulatory approval and are expected to be completed in the second quarter.
MIDLAND, TX. — United Fuel and Energy Corp., based here, has signed a deal to acquire Reamax Oil Company of Camp Verde, AZ. The price of the sale was not disclosed; Reamax's revenues for 2006 were approximately $40 million.
With the acquisition, United Fuel will be adding Reamax's bulk plant and five cardlocks in Arizona to its marketing operations of gasoline, diesel, propane and lubricants in the states of Texas, New Mexico, and Oklahoma.
"This acquisition provides us a first-rate entrance into Arizona as we continue to expand our footprint into new geographic areas," said Chuck McArthur, United Fuel and Energy's president and chief executive officer, announcing the deal. "Central Arizona has proven to be a highly profitable market for Reamax Oil, which has been serving the region for the last 17 years under the leadership of Wayne Monasmith, who has 26 years of experience in this industry." He continued, "He has done an excellent job of cultivating a diverse and loyal client base of commercial, agricultural and mining companies, as well as individual accounts."
Monasmith will be joining United Energy following the completion of the acquisition to continue leading the company's Arizona operations.
The acquisition is expected to be completed in April.
SALEM, OR. — Pilot Travel Centers has settled a dispute with the state of Oregon over gasoline pricing rules.
The dispute between the state and the truckstop chain is centered on price posting policies. Oregon officials had issued an official warning to Pilot for using signs in three locations that only displayed a cash price for regular unleaded and #2 diesel grades, not all grades sold at the stations. State law requires that all price signage list all grades of fuel offered at stations.
In addition, the state noted in its warning that the price listed on the sign did not match the price on one of the pumps of #2 diesel.
Pilot officials argued that the prices did not match because of the tax issues involved in commercial and non-commercial diesel available at the site.
Pilot was issued another warning from the state as the result of a complaint from an Oregon recreational vehicle owner. As practiced by many RV owners, this consumer checked gasoline prices online before traveling and planned where to fill up with gas based on posted prices on the Internet. Pilot posted its gasoline prices online with a disclaimer that "prices are not guaranteed" but posted its PUC diesel price.
"One would think that a national company would take advantage of being warned about changing its misleading advertising of gasoline in its Oregon stations and change its ways," said Oregon Attorney General Hardy Myers. "Unfortunately, it didn't and we had to take a stronger law enforcement approach."
Under the terms of the settlement agreement, Pilot agreed to pay $20,000 to the Department of Justice Consumer Protection and Education Fund while admitting no violation of the law.
In addition, Pilot agreed to come into compliance with Oregon law including displaying the lowest cash price on all grades of gasoline sold at the station and clearly posting all conditions relating to those cash prices. Pilot also agreed to charge no more than the amount registered on the dispensing device and to display a sign on the pump face stating the cash price when there is a discount for cash program so consumers can see both the cash price and the displayed credit price.
"Gasoline stations have no excuse for failure to comply with Oregon's long-standing gas pricing rules," Myers stated. "Station owners know that consumers depend on the accuracy of signage in order to determine where to find the best gas prices for their needs. If it isn't truthful, consumers and competitors will make sure we know about it."
Pilot operates truckstops in Brooks, Central Point, Chemult, Oakland, Ontario, Stanfield and Wasco in Oregon.
VANCOUVER, WA. — The state of Washington is about to become a hotbed of ethanol production.
Vancouver, WA.-based Northwest Renewable, LLC, a division of US Ethanol, broke ground in December on a new ethanol production facility in Longview, WA. The $100 million plant is expected to employ 200 to 350 people during construction and 41 full-time employees when it is operational.
The Northwest Renewable plant is expected to produce 55 million gallons of undenatured ethanol annually from a stock of 19 million bushels of corn. Approximately six million bushels will come from local Washington and Oregon farmers, and the remaining 13 million bushels will be sourced from Midwestern states.
The 31.8-acre plant, located in the Mint Farm Industrial Park, is expected to begin production in June 2008.
"We are excited to break ground on this facility, as this is a major step forward in bringing an alternative fuel source to the Pacific Northwest," said Elie Makad, chairman of US Ethanol. "Our integrated approach to ethanol production and distribution will ultimately bring locally produced US Ethanol-branded products, including E85 fuel, direct to consumers along the Interstate 5 corridor."
In January, Earth Ethanol Inc., announced plans to construct and operate an ethanol production facility located near Moses Lake, WA.
The Earth Ethanol project is a renovation and expansion of an existing ethanol plant built in 1992 with an original capacity of approximately six million gallons per year. The facility will be upgraded and will be able to process both corn and barley as feedstock for the ethanol production.
With the upgrades, Earth Ethanol projects initial production of 12 million gallons per year by June of 2007 expanding to 36 million gallons per year by November 2007.
"With the strong ethanol market on the west coast and specifically in Seattle, we believe this is a great opportunity for Earth Ethanol," said Earth Biofuels' Executive Vice President Kit Chambers.
Earth Ethanol is a division of Dallas, TX-based Earth Biofuels.
MESA, AZ. — A suspected robber of a Subway sandwich shop was caught when a police officer stopped for a soda at a local Qwik Trip station.
According to local reports, a Mesa police officer was dispatched to investigate the robbery of the Subway. At the scene, the officer received descriptions of the thief and the stolen burgundy Ford Taurus in which he made his escape.
After finishing the investigation, the officer stopped at the Quik Trip station at Power Road and University here to pick up a soda. As he left the convenience store, he spotted a burgundy Ford Taurus with the license plate of the stolen vehicle fueling at the station's dispenser.
The officer ordered the driver fueling the car, Jacob Mendoza Berrera, to stop fueling; he was ordered to the ground and then arrested. Police discovered a "wad" of money in his pocket as well as a BB gun allegedly used to rob the restaurant.
Berrera, 18, was booked on suspicion of three counts of armed robbery.
Originally published in the April 2007 issue of O&A Marketing News.
Copyright 2007 by KAL Publications Inc.
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