Continental Refining Buys Somerset Oil Refinery
CEO Haseotes owner, past director of Cumberland Group of Cos.
SOMERSET, Ky. -- Continental Refining Co. has purchased the currently idled Somerset Oil Refinery. The purchase includes the acquisition of 93 acres in Somerset, Ky., along with 15 modern tanker trailers for regional transportation. Continental Refinery CEO Demetrios Haseotes also is an owner and past director of the Cumberland Group of Cos., which include Framingham, Mass.-based Cumberland Farms and Gulf Oil LP.
Haseotes' family started Cumberland Farms in the 1930s, expanding it to include nearly 600 convenience stores in 11 states.
Terms of the transaction were not disclosed. According to deeds filed December 9 in the Pulaski County clerk's office, the refinery property sold for a total of $1,177,500, reported the Commonwealth Journal.
The sale did not involve former Somerset Oil service stations that were sold by previous owners, it added.
The refinery, operating as Somerset Oil, had produced gasoline and other products since the 1930s before it ran into financial trouble in 2006, said a report by the Herald-Leader. The company declared bankruptcy in 2007, touching off a bitter fight over control and finances, the report said.
A judge decided the refinery should be sold at auction. New York real-estate executive Michael Grunberg bought the business in September 2008 for about $2.4 million.
The refinery had long provided a market for small crude-oil producers in the region but was not able to keep a sufficient supply of crude and shut down in early 2010.
Officials said some suppliers hadn't been paid under the previous ownership, making them reluctant to deal with the refinery after it emerged from bankruptcy. Also, suppliers had started hauling their crude elsewhere.
The facility will be operational by early summer 2012, increasing productivity from the current "warm idle" status to 61% of capacity by the end of 2012 and 100% by mid 2013.
"A proven turnaround management team will work to remedy past mismanagement while maximizing the significant discount to market value that helped to make this purchase compelling," the company said in a press announcement.
Continental Refining said all current positions will remain in place, and it will add 40 jobs, with an estimated 200 indirect jobs created by this expansion.
"This successful sale is the culmination of months of due diligence and energy market analysis that clearly shows why it makes sense to increase refining operations in southern Kentucky--for the refinery, regional producers and the community," said Haseotes. "We provide a dramatic decrease in transportation costs along with favorable crude rates and faster payments to producers. At the same time we are keeping and adding 40 jobs in Somerset plus spending $10 million in upgrades over the next three years."
The capacity at the Somerset plant is 5,500 barrels a day.
To ensure ample supply, Continental Refinery will be receiving crude oil by truck, rail, pipeline and barge.
Haseotes has experience in worldwide petroleum refining, marketing, transportation, real estate and agribusinesses, the Commonwealth Journal said.
He has served as president and COO of Hemisphere Management Corp. since 1993. This entity started with a single gas station in Marshfield, Mass., and grew into more than 33 gasoline, convenience and truckstop locations between New England and Florida.
Additionally, Haseotes negotiated and managed procurement of supply contracts for approximately 30 million gallons of gasoline per year.
In 2002, Haseotes founded Midland Farms Inc., Menands, New York. In fewer than three years, he grew sales of the company's private-label juice and dairy brands to $25 million. The company now has its own distribution fleet and serves 950 customers in nine states. It is expected sales in 2011 will top $50 million.
He is an owner and past director of the Cumberland Group of Cos., which include Cumberland Farms and Gulf.
Through various ventures, he has been involved with all levels of the petroleum business since 1980. During that time, Haseotes has had experience with retail site selection and planning, facility construction, as well as retail and warehouse operations. Additionally, he has experience in the field of energy logistics and transportation.