'Speedway Has a Long Way to Run'
Marathon Petroleum set on growing its branded locations
FINDLAY, Ohio -- Marathon Petroleum Corp. (MPC) is growing its Speedway convenience store brand--and it intends to keep it, rather than spinning it off. It is also expanding its Marathon retail brand through its acquisition of BP Plc's Texas City, Texas, refinery and related assets--now called Galveston Bay--Gary R. Heminger, president and CEO said during MPC's fourth-quarter 2013 earnings call on Wednesday.
"We are moving aggressively toward expanding our retail footprint through investments in Speedway and continued efforts to convert the branded contract assignments we acquired as part of the Galveston Bay acquisition to the Marathon brand. As we highlighted in December, we have almost tripled the amount of capital invested per year and rebuilt in new locations in our Speedway business over the previous five-year period," he said.
"This includes expansion into attractive contiguous markets in Western Pennsylvania and Tennessee, where we opened our first Speedway locations in 2013 and are planning to expand further," said Heminger.
In Feb. 2013, MPC purchased BP's Texas City refinery, related pipelines, four terminals and retail marketing contract assignments for approximately 1,200 branded sites for a base price of $598 million, plus inventories estimated at $1.2 billion.
The refinery provides products throughout the U.S. Gulf Coast, Midwest and Southeast, as well as into export markets. The light product terminals are in Jacksonville, Fla., Charlotte and Selma, N.C., and Nashville, Tenn.
The integrated acquisition also included the assignment of branded-jobber contracts supplying the 1,200 BP locations, representing approximately 64,000 barrels per day of gasoline sales, in the southeastern United States. The retail locations are primarily in Florida, Mississippi, Tennessee and Alabama. The stations have been branded BP during the transition process.
During the call, when asked whether MPC would consider spinning off Speedway as other companies have done with their retail networks, Donald C. Templin, CFO and senior vice president of MPC, said, "Speedway is an integral part of our business. We measure something that's called controlled volume, where we know every day because it improves our efficiency and the way we move products through pipelines, through terminals, through trucks, finally, to the consumer. We think that's the most efficient way to move your product. And it gives us the opportunity to capture margin across that entire supply chain. And that's what Speedway does for us. We think Speedway is one of the best operators in the business, and that's seen in their new record this year in income and cash flow."