Andeavor Continues Buying With Flyers Energy Deal

SAN ANTONIO — Andeavor Corp. is on a buying spree lately, closing out July with deals in California and Mexico.

"In July we closed the acquisition of 39 high-quality convenience stores, primarily in Northern California," said Greg Goff, chairman and CEO of Andeavor. "We expect the sites to contribute $10 million of annual net earnings and about $25 million of annual EBITDA."

His comments came during the company's second-quarter earnings call on Aug. 9.

"This will further strengthen our integrated business by expanding our retail presence in Northern California by adding approximately 6,000 barrels per day of branded sales," he added.

Under the deal with Auburn, Calif.-based Flyers Energy, the 39 c-store and gas stations sites changed hands on July 28. According to the Auburn Journal, Andeavor will rebrand some of the locations to Mobil, Exxon, ARCO and Shell. 

The agreement allows the buyer up to 12 months to rename the newly acquired stations. All of the sites except two will remain on the Flyers Energy-owned commercial fueling network.

The sale signals Flyers Energy's exit from the retail business. 

"Refiners are looking for strategies to distribute their products, so the business climate was right for us to sell our retail stores," Flyers managing partner Walt Dwelle said. "We continue to grow in commercial products, including renewable energy, and are still acquiring other companies when the deal is right."

Those future acquisitions may include companies with retail stores, Dwelle said.

As for Mexico, Andeavor looked to the country as its newest growth initiative for the marketing business. In July, the company signed a terminal and transportation agreement with Petróleos Mexicanos (Pemex) which allows for the potential for Andeavor to supply 30,000 to 40,000 barrels per day of transportation fuels in Sonora and Baja California, Mexico, Goff explained. 

Andeavor also signed a wholesale supply agreement to begin marketing operations under the ARCO brand. "We expect the first stores to open within the next 60 days," he added.

"We believe these agreements support the company's integrated value chain by extending the marketing presence into the growing market in Mexico," Goff said. "We will continue to grow our integrated footprint. The company expects to increase its marketing presence across the entire northern part of Mexico over the next few years."

The two moves come on the heels of Andeavor's — then known as Tesoro Corp. — $5.8-billion acquisition of Western Refining Inc. The initial integration efforts "have been very successful and we are rapidly moving forward to fully integrate the business," according to the chief executive.

"After a little more than 60 days we remain confident in delivering an expected $350 million to $425 million in annual run-rate synergies by June 2019," he said, adding as of Aug. 8 the company estimates it has achieved approximately $80 million in annual run-rate synergies from corporate efficiencies, value-chain optimization and operational improvements.

"Andeavor is committed to growth and improvements in its marketing business by focusing on high-value, branded distribution channels, adding new retail sites to the network, and implementing store improvements to enhance the company's convenience store position," Goff said.

Formerly Tesoro, San Antonio-based Andeavor's retail-marketing system includes more than 3,100 stores marketed under multiple fuel brands, including ARCO, SuperAmerica, Shell, Exxon, Mobil, Tesoro, USA Gasoline, and Giant. It also has ownership in two logistics businesses, which include Andeavor Logistics LP and Western Refining Logistics LP, and ownership of their general partners. Andeavor operates 10 refineries with a combined capacity of approximately 1.2 million barrels per day in the mid-continent and western United States.

"On Aug. 1, we formally changed our name to Andeavor and our logistics company to Andeavor Logistics. We believe the name Andeavor and Andeavor Logistics are part of a distinct identity that supports our creation of a premier, highly integrated marketing, logistics and refining company," Goff explained. "We believed we reached a tipping point in our journey to grow and develop the company that created an opportunity to make the change. We are excited about our future and the opportunity to create a special identity."