Speedway Sale to 7-Eleven On Track for Q1 Completion
FINDLAY, Ohio — As businesses, and the country as a whole, grapple with the COVID-19 pandemic, Marathon Petroleum Corp. (MPC) is staying focused on the things it can control.
"The unprecedented challenges this year created by the COVID pandemic accelerated the need for us to act swiftly and decisively to change how we conduct our business," Michael J. Hennigan, president and CEO, explained during the company's fourth-quarter 2020 earnings call, held Feb. 2.
While the pandemic is beyond MPC's control, Hennigan said, the company is focused on three key initiatives around aspects of the business within its control:
- Strengthening the competitive position of its assets;
- Improving commercial performance; and
- Lowering MPC's cost structure.
"During the year, we've been faced with many tough decisions, but our team continues to make tangible progress on all three initiatives in ways we believe will drive stronger through-cycle earnings and position the company for long-term success," he said.
Some of the actions MPC took during the fourth quarter included:
- Progressing the sale of its retail subsidiary — Enon, Ohio-based Speedway LLC — to Irving, Texas-based 7-Eleven Inc.;
- Advancing its investments in renewables, including ramping up production at its Dickinson, N.D., renewable fuels facility and progressing plans to convert its Martinez, Calif., refinery into a renewable fuels facility;
- Expanding its commercial focus; and
- Exercising strict discipline on how capital and expense dollars are spent.
"No matter what lies ahead, we are setting the company on a path to drive stronger through-cycle earnings and position the company for longer-term success," Hennigan said.
In August, MPC reached an agreement to sell the Speedway chain to 7-Eleven for $21 billion. The deal for the approximately 3,900 Speedway convenience stores also includes a 15-year fuel supply agreement for approximately 7.7 billion gallons per year associated with the Speedway business, as Convenience Store News previously reported.
"We remain committed to use the sale proceeds to strengthen the balance sheet and return capital to MPC shareholders," Hennigan said, adding that an important priority for MPC "is to defend a solid investment-grade credit profile."
The $21-billion purchase price is broken into approximately $4.5 billion in taxes and approximately $16.5 billion in net proceeds, according to the company.
At the time the sale was announced, MPC said it was eyeing a first-quarter 2021 closing date. While the timing of the deal's closing is dependent on the Federal Trade Commission (FTC) process, MPC continues to target the closing for the end of the first quarter of 2021, the chief executive reported during the Feb. 2 earnings call.
"During the quarter, we responded to the second request from the FTC, and continue to support 7-Eleven in its efforts to secure anti-trust clearance," Hennigan said. "Our interactions with 7-Eleven and our interactions with the FTC have gone well.
"Within the scope of what we can control, we are finalizing transition service agreements with 7-Eleven and we expect to have them completed by the end of February," he added.
Based in Findlay, MPC is an integrated downstream energy company that operates the nation's largest refining system. MPC's marketing system includes branded locations across the United States, including Marathon-brand retail outlets. Speedway LLC, an MPC subsidiary, owns and operates retail convenience stores across the U.S. MPC also owns the general partner and majority limited partner interest in MPLX LP, a midstream company.