Company bids farewell as direct-store operator, sets new phase for oil giant
HOUSTON -- In less than two months a series of acquisitions could alter the retail landscape in the Rockies, parts of the Midwest and California. ConocoPhillips, the nation's third largest integrated oil company and, but two years ago, one of the largest direct operators of c-stores, expects to sell by end of July more than 500 sites, including some 350 company-owned, company-run locations. The selloff will represent ConocoPhillips' farewell as a direct-store operator.
"Those are being offered both as individual packages and both as entity sales," Clayton Reasor, ConocoPhillips' president [image-nocss] of U.S. marketing, told CSP Daily News in an exclusive interview. "We're in the process of evaluating initial bids.… Final bids are due in July."
While the company is open to selling the retail assets in as many as 15 individual regional packages, speculation is simmering that both 7-Eleven and Alimentation Couche-Tard could be active bidders, especially in the West Coast where both field strong holdings.
"Couche-Tard and 7-Eleven are the prime candidates to buy many of the stores," said one analyst speaking on condition of anonymity. "But 7-Eleven has more synergies for the California stores. Couche-Tard will definitely bid; they just may not be the highest bidder."
The move comes after ConocoPhillips recently completed a strategically critical conference that attracted approximately 1,200 jobbers and dealers about its future plans. The event held at the Venetian Resort Hotel in Las Vegas was the first since the company announced in 2006 plans to divest its entire company-run retail network and to pull out of a number of markets.
Since 2006, ConocoPhillips, which operates under the 76, Conoco and Phillips 66 flags, has rationalized its portfolio, pulling its branded gasoline and diesel out of Minnesota, North and South Carolina and parts of Arizona, North and South Dakota, Wisconsin and Nevada.
During second-quarter 2007, ConocoPhillips launched what it called Phase One—a voluntary offering to 428 dealers to purchase their respective stores. According to Reasor, better than half have closed or are in the process of closing on their particular sites.
The remaining outlets have been packaged with the last of the company-owned stores. "We started this with 830 sites," company spokesperson Kelvin Covington told CSP Daily News. "We have about 350 company-owned, company-operated sites, and 480 company-owned, dealer-operated sites. We're now in Phase Two and have opened the bidding process to nondealers as well." The company expects to conclude the bidding process by June 30, with all the transaction to include long-term supply agreements in excess of 10 years with ConocoPhillips.Company Commitment
It would be a mistake to construe the company's move as a reflection that it is no longer interested in the retail platform. Underscoring ConocoPhillips' restructuring is its strategy to maximize markets closest to its one-dozen U.S. refineries and to support what will be a jobber- and dealer-driven retail network in the West Coast, Rockies and portions of the Midwest.
In the interview both Reasor and Mike Morrison, the company's general manager of planning and operations, outlined a dramatically beefed up effort to bolster retailers carrying the ConocoPhillips' banners, including a stronger, stronger proprietary credit-card program, fuel-supply assurances, increased store-performance support and significant increase in the availability of supplies of E10 and E85.
"We want to put our branded markets in the best position to compete," Morrison said. "What can [we] do to help those guys operate their stores? Well, get the credit-card fees down to the extent you can. Take a leading position to give them the best possible position to compete."