Tesoro to Expand Presence in Salt Lake City
SAN ANTONIO -- Tesoro Corp.’s retail division is focusing on brand-building in the Salt Lake City area and plans to close on the acquisition of 15 convenience stores in this market next month in an effort to enhance growth margins, President and CEO Greg Goff said yesterday during the company's 2014 fiscal first-quarter earnings call.
"We also recently expanded our rights to use the Exxon and Mobil brands to include the states of Utah, Arizona and Nevada, and plan on rebranding these stations under this new agreement," he said.
During the question-and-answer session with investors, Goff was asked about the possibility of Tesoro making a move similar to that of Susser Holdings Corp. and Susser Petroleum Partners LP, the master limited partnership (MLP) it formed in 2012 that operates its wholesale fuel distribution business. Earlier this week, it was announced that Energy Transfer Partners LP, owner of Sunoco Inc., will be acquiring Susser Holdings and Susser Petroleum in a deal valued at $1.8 billion.
In response, Goff said Tesoro's focus continues to be on building its retail presence within existing markets, as evidenced by its "small, little acquisition" in Utah.
"[Forming an MLP is] something that we continue to look at, but have not arrived at any decisions on how we would do that at this point in time," the chief executive said.
San-Antonio based Tesoro, an independent refiner and marketer of petroleum products, currently maintains a retail marketing system that includes more than 2,200 retail stations under the Tesoro, Shell, ARCO, Exxon, Mobil and USA Gasoline brands.
Companywide, Tesoro reported a net income of $78 million for its fiscal 2014 first quarter, compared to net income of $93 million for the first quarter of 2013.
Same-store fuel sales were higher by almost 0.5 percent vs. the first quarter of last year, but retail fuel margins were down relative to the year-ago period. Still, the retail division brought in $19 million compared to $15 million in the year-ago period.
Additionally, Tesoro's retail fuel sales volumes increased more than 128 percent year over year. Retail marketing margins were down relative to the same period last year, "reflecting the addition of the higher-volume, lower-margin ARCO retail stations as part of the Los Angeles acquisition," the company stated.
As CSNews Online reported last year, BP plc sold its Southwest retail assets, as well as its Carson City, Calif., refinery to Tesoro for $2.4 billion.
"Despite a challenging margin environment, we are making solid progress on delivering the earnings improvements we gave targeted for this year. That progress is reflected in these results and our strong first-quarter margin capture rate," Goff concluded.