MOBILE, Ala. -- As Valero Energy Corp. reported that its retail segment saw its "most profitable year ever," five gas stations in Mobile County, Ala., are being rebranded with the company's name and teal-and-yellow color scheme, it announced.
The rebranding is part of a 10-year distribution deal Valero has reached with Mobile-based GB Southern Oil LLC, which gives the company the first and only Valero-branded stores in the state, according to a report by the Press-Register.
GB Southern Oil owns and operates the five stations, located in west Mobile, Grand Bay and McIntosh.
"We think going branded offers a lot," Dennis Braswell, co-owner of Mobile's GB Southern Oil, told the newspaper.
He said the two entities started talks at an Gulf Coast Food & Fuel Expo in Biloxi, Miss., last year, which developed into a distribution deal over the summer and fall.
The deal has benefits for both companies, the report said. Braswell said his company's biggest boon is working with a large company that advertises nationally and carries the potential for high brand recognition in local markets. More concretely, carrying the Valero brand will result in lower credit-card fees, more state-of-the art electrical systems and the opportunity to distribute to other independent stations in the area.
Valero spokesperson Bill Day said the deal with GB Southern Oil marks new territorial expansion of his company's brand, as part of a greater expansion that has moved through the Mid-Atlantic states and now into the Southeast.
Day said Valero has identified rapid growth with independently owned, branded stores. He said southern Alabama was chosen due to its steady urban population growth. The deal represents Valero's overall plan to expand its brand in the area, and the state as a whole, said the report.
"Companies like GB Southern are good companies to work with," Day told the Press-Register. "They're established, they have a presence, they know what they're doing [and] they have good locations. That's why we choose to partner with them."
Braswell told the paper that the rebranding efforts are "pretty much done," and that his company will be getting Valero's gasoline from the Chevron refinery in Pascagoula, Miss.
"I'm originally from Texas where Valero signs are a familiar sight at hundreds of locations throughout the state," Braswell, co-owner with Ferrill Gibbs of GB Southern Oil, said in the press statement. "I always admired the distinctive store image and was even more impressed by Valero's credentials as one of America’s largest refiners and marketers. Add to that their aggressive plans for growth in the Southeast and nationwide, and we’re very excited to be the first petroleum distributor to represent the Valero brand in Southern Alabama."
Last week, Valero reported income from continuing operations of $45 million for fourth-quarter of 2011, versus $180 million for fourth-quarter 2010. For the year ended December 31, 2011, income from continuing operations was $2.1 billion, versus $923 million for the year ended December 31, 2010. Fourth-quarter 2011 operating income was $167 million versus fourth quarter 2010 operating income of $378 million.
The decrease in operating income was mainly due to a decrease of $1.84 per barrel in the refining throughput margin, particularly in the Gulf Coast region where the throughput margin decreased by $4.21 per barrel. The decrease was due to lower margins for gasoline and petrochemical feedstocks plus reduced discounts for medium and heavy sour feedstocks.
"Although the fourth quarter clearly showed the volatility of the refining business, 2011 was a great year for Valero," said Valero chairman and CEO Bill Klesse. "We had the highest annual earnings since 2008, acquired the Pembroke and Meraux refineries and related assets, completed several of our major capital projects and paid off over $775 million in debt."
He added, "So far in 2012, product margins have improved versus the fourth quarter of 2011. The macro view for refining in 2012 looks promising given the combination of positive economic trends in the U.S., expectations of global demand growth and continuing capacity rationalization in the industry, particularly in Europe, the U.S. East Coast and the Caribbean."
During the company's fourth-quarter earnings call, CFO, principal accounting officer and executive vice president Michael Ciskowski, said, "Our retail segment reported fourth-quarter operating income of $83 million, consisting of $48 million in U.S. and $35 million in Canada. For the full year 2011, our retail segment reported [its] most profitable year ever, with $381 million in operating income, which includes a record high from our Canadian retail, with $168 million in operating income."
He added, "Our ethanol segment reported its best quarter on record with $181 million of operating income, which was up $111 million from the fourth quarter of 2010 and up $74 million from the third quarter of 2011, mainly due to much higher gross margins. For the full year of 2011, our ethanol segment reported operating income of $396 million, its best year ever."
San Antonio-based Valero, through its subsidiaries, is an international manufacturer and marketer of transportation fuels, other petrochemical products and power. Its assets include 16 petroleum refineries with a combined throughput capacity of approximately three million barrels per day, 10 ethanol plants with a combined production capacity of 1.2 billion gallons per year and a 50-megawatt wind farm. Approximately 6,800 retail and branded wholesale outlets carry the Valero, Diamond Shamrock, Shamrock and Beacon brands in the United States and the Caribbean; Ultramar in Canada; and Texaco in the United Kingdom and Ireland.
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