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COP to Sell Gasoline Stations to PetroSun – Stupid Move

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This topic contains 1 reply, has 1 voice, and was last updated by  Charles Randall 12 years, 3 months ago.

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  • #3457

    Charles Randall
    Participant

    ConocoPhillips to Sell Gasoline Stations to PetroSun (Update1)
    By Dan Lonkevich

         Aug. 27, 2008 (Bloomberg)ConocoPhillips, the third-largest
    U.S. oil company, agreed to sell its U.S. gasoline stations to
    PetroSun Fuel for $800 million to focus on the more profitable
    businesses of producing and processing petroleum.
         The sale includes stations in 10 states with annual sales
    exceeding 1 billion gallons of fuel, PetroSun said today in a
    statement. Terry Hunt, a spokeswoman for Houston-based
    ConocoPhillips, confirmed the transaction. Neither she nor
    PetroSun said how many stations are being sold.
         ConocoPhillips joins its larger U.S. rivals, Exxon Mobil
    Corp. and Chevron Corp., in selling retail operations to devote
    more resources to exploration, production and refining.
    The
    latest sale marks the completion of a plan by ConocoPhillips,
    announced in December 2006, to sell 830 stations.
         “They had offloaded a bunch of stations a while ago, so
    they had relatively few left,” said James Halloran, who helps
    manage $34 billion in assets, including 1.7 million
    ConocoPhillips shares, at National City Private Client Group in
    Cleveland. “The question for Conoco was, do we want to do an
    upgrade of the filling stations to make them more profitable?”
         Closely held PetroSun said it’s making the purchase through
    a newly formed affiliate called Pacific Convenience & Fuel LLC.
    The stations will continue to operate under the Conoco, Phillips
    66 and 76 brands, and ConocoPhillips and Tower Energy Group will
    supply fuel, PetroSun said.
    The buyer said it’s getting prime
    sites in downtown Los Angeles and San Francisco that couldn’t
    easily be replicated.

                            Shares Rise

         ConocoPhillips rose $1.50, or 1.8 percent, to $83.88 at
    11:20 a.m. in New York Stock Exchange composite trading. Before
    today, the stock had dropped 6.7 percent this year.
         The Wall Street Journal reported the sale earlier today.
    Rodman & Renshaw was financial adviser to PetroSun and its
    affiliates,
    according to the statement, and Goodwin Procter LLP
    was legal counsel.
         PetroSun Fuel isn’t affiliated with PetroSun Inc., an
    Arizona oil and natural-gas explorer that also sells oilfield
    equipment and makes algae-derived fuels.

     

  • #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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