Could Alon Be Interested in CITGO's Assets?

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Could Alon Be Interested in CITGO's Assets?

By Samantha Negraval, Convenience Store News - 08/08/2014

DALLAS – During Alon USA Partners LP's second-quarter financial earnings call, CEO Paul Eisman fielded an investor's question about possibly acquiring CITGO Petroleum Corp. assets.

"We look at M&A (merger and acquisition) opportunities. I can’t really talk about anything specific but as I said, it's nice to have [the limited partnership] and we do look at the opportunities," said Eisman.

Venezuelan state oil company Petróleos de Venezuela S.A. (PDVSA) will sell its CITGO Petroleum Corp. division if it receives the right price, Petroleum Minister Rafael Ramirez told news reporters on Tuesday, as CSNews Online previously reported.

CITGO operates three U.S. refineries in Lemont, Ill.; Lake Charles, La.; and Corpus Christi, Texas, capable of handling 749,000 gallons of fuel per day. CITGO also sells motor fuels via nearly 6,000 U.S. gas stations.

The Alon Partners LP call preceded Alon USA Energy Inc.'s Q2 financial earnings call. Alon Partners is a Delaware limited partnership formed in August 2012 by Alon USA Energy, which is a Dallas-based operator of 296 convenience stores and the largest 7-Eleven licensee in the United States.

Alon USA Energy's call began with some good news for investors. Its Board of Directors approved an increase in its regular quarterly cash dividend of 6 cents per share to 10 cents per share, or from 24 cents per share to 40 cents per annum. The 10-cent-per-share dividend will be payable on Sept. 22 to stockholders of record at the close of business on Sept. 8.

The company might not have had a lot to report about its retail division, but the results it did share were generally positive.

For the second quarter ended June 30, net sales at company-operated stores increased approximately $8 million to $253 million compared to the year-ago period. Retail fuel sales volume increased by 2.7 percent to 48.8 million gallons in Q2 from 47.5 million gallons in the second quarter of last year.

Fules sales increased 2.7 percent vs. the year-ago period. Retail fuel margins were at 19.4 cents per gallon, similar to the 20.2 cents per gallon recorded in Q2 2013.

Similarly, merchandise sales remained flat in Q2 at $83 million, as did merchandise margins at 30.7 percent.