David Cohen, president and CEO of Palm Beach Gardens, Fla.-based Petroleum Consolidators, said, "This financing is a critical milestone in our company's history. It sends a clear and positive message to our industry that we will have the resources to continue moving forward with our business plan to build a regional presence of gasoline stations with convenience stores, wholesale fuel supply contracts and an infrastructure of producing oil wells."
Sunderland Capital is a West Palm Beach, Fla.-based private equity firm engaged in supporting growth companies in all facets of their long-term strategy by providing capital through private investments in public equities (PIPEs), reverse mergers and assisting with progressive business solutions.
Petroleum Consolidators sais earlier this month that it has made several positive developments regarding its roll-up strategy, continued progress into the wholesale fuel supply segment and potential entrance within the oil and gas industry.
Overall, each development serves as a vertical integration within its business model, it said.
The three major revenue streams targeted by the company include retail gas stations with supported convenience stores, wholesale fuel supply contracts from company-owned stores and outside operators and oil production from existing producing wells.
Petroleum Consolidators announced in 2007 that, as part of its roll-up strategy, it expected to acquire at least six retail gasoline facilities. These six acquisitions were expected to generate $22 million in revenue and $2.3 million in income, it said.
"Although we did not acquire six retail sites, we successfully integrated two major acquisitions during the first two quarters of 2007, concurrently, seeking additional opportunities within the retail gasoline channel," said Cohen. "Furthermore, we chose to reduce our exposure in calendar 2007 and 2008 with additional stores because of federal government mandates requiring UST [underground storage tank] replacement. The cost is extremely prohibitive, running into the hundreds of thousands of dollars, thus, creating an unnecessary financial burden on the company."
After taking the time to streamline operations, locate key facilities at bargain prices and clearly define the hurdles that plagued the retail gasoline/c-store business in 2007 and 2008, the acquisition strategy will now resume, the company said. Management said it believes that the company could "easily" see an increase in numbers over the short- and long-term periods through the implementation its business model.
As stated in 2007, the company is focused on reaching its objective to acquire 50 to 60 stations over the next three years starting in 2009. Unlike other industries, the distressed economy has increased the number of targeted revenue-producing locations which, in turn, leads to an opportunistic market, Petroleum Consolidators said.
"The falling price in gasoline is actually helping owners of gas stations because of lower credit-card fees that operators are obligated to pay with their merchant accounts," said Cohen. "When gas comes down, you can make better margins. On a credit purchase, you have to pay a percentage, and when the total price is lower, you pay a smaller fee."
Regarding Petroleum Consolidators' migration into the wholesale fuel supply field, the company has an advantage since it has already owned stations, it said. "We will continue to use a major oil company as a supplier, such as Valero, ExxonMobil, BP, etc. Now, we could use our own supply which will enhance our bottom line and provide cost efficiencies by delivering fuel to other related stations and stations within close proximity of ours," said Cohen.
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