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RE: COP to Sell Gasoline Stations to PetroSun – Stupid Move

Home Forums Refining Community Refinery News COP to Sell Gasoline Stations to PetroSun – Stupid Move RE: COP to Sell Gasoline Stations to PetroSun – Stupid Move

#6631

Charles Randall
Participant

Here is update on COP following thru on Dec 2006 decision to sell ~830 stations – no indication yet on how many went for the $800 Million but it was bad move in my opinion given how really expensive & hard station real estate is to come by in downtown California cities like LA & San Fran!
 
This type thought (or lack thereof) process often hits large Integrated Oil companies during short term spikes in Crude prices, especially when the management becomes over-run with Upstream rock stars that become drunk on their own hype that they are really the profit centers for the energy company.
 
Everyone seems to forget that the profits are taken there because transfer prices are set to capture of all the tax benefit for exploration & production operations. And if the integrated oil company had to sell all of its crude on the open market or wholesale all of its product fuels to stations then a huge portion of the profits would evaporate overnight. It is ok to shovel manure…… just dont start eating it (can be small shift for management types with their heads up their butts already)!
 
A good counter comparison exist when Citgo sold its retail stations & Valero jumped on them, enabling them to move out of their role as wholesaler & into retail sales thru their own stations …….. keep checking on the BIG change in SEC reports on earnings for both companies afterwards.
 
Also COP has been lucky on some of its past shifts in station sales/operations by going with very compatible partner like Flying-J who has been both creative (Upscale Truck stops) and appearance/quality focused similar to Conoco’s.  Some other sales of COP fuel marts have taken noticeable downturn in both appearance and service as they have become a 7-Eleven / Stop-Go clones.
Regards

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