HIALEAH, Fla. -- Capital Oil & Gas Inc. said that it has entered "serious negotiations" to acquire or lease 11 gasoline and convenience store stations in Florida from an unnamed seller to add to its portfolio of retail petroleum outlets. The company said it believes that if a deal is completed, these additional 11 stations would add additional revenues of approximately $55 million to $60 million per year in gross revenues to its ongoing operations and revenue stream.
Capital Oil & Gas would pay for these acquisitions or leases from existing cash flow and bank financing and cash [image-nocss] flow from the new properties and will not alter the capital structure of the company because management views any use of its equities to finance these acquisitions as being totally against the company's overall growth strategy.
Upon the successful acquisition of these 11 properties and the pending closing of three other previously announced properties, the company said that it would control 15 properties with projected annual gross revenues of $85 million to $92 million per year.
"It is the intent of executive management to control either by acquisitions or leases enough stations to generate a minimum of $100 million per year in revenue, with a potential pretax profit margin of 8% to 12% per year overall. The company believes that it would then be in a position to become a fully reporting company and leverage its buying power from its suppliers," Ariel Rodriguez, president and COO of Hialeah, Fla.-based Capital Oil & gas and its parent company, Podium Venture Group Inc. It recently officially changed its corporate name to Capital Oil & Gas Inc. to better reflect the company's current business model.
In late July, Capital Oil & Gas reported second-quarter revenues from operations of $6.84 million with net results of $684,000. The company said it believes the increase in revenues is due to the switch in brand names from Valero to Chevron and its lower-than-the-competition pricing policies.
"We are very pleased the revenue numbers are much better then expected and believe with the additional outlets being added we should exceed all projected revenues for this year," said Rodriguez.The company recently said that it plans to add franchised or corporate express pizza and sandwich operations to all of its locations. Capital Oil & Gas estimated that revenue to the company will increase by $950,000 to $1.1 million per year per location with revenue generated by the foodservice operations and other cross-marketing revenues.
"Capital Oil & Gas said at first I was reluctant to add these products, and then when my staff provided me with the numbers I told them to run with it," Rodriguez said. "I am an oil and gas man, but if other retail operations add to the bottom line, we go for it."
Capital Oil & Gas did not respond to CSP Daily News inquiries by presstime.
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