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Landmark Shell Deal

Divestment the motive for sale that will transition 162 Houston-area sites

HOUSTON -- Shell's retail divestment is continuing with a deal in the Houston metropolitan market. Texas Petroleum Group LLC (TPG) has signed a purchase and sale agreement for Motiva Enterprises LLC's interest in 162 Shell-branded retail gas stations there. TPG is a 50-50 joint venture between Landmark Industries Holdings Ltd. and Shell Oil Products US. Shell confirmed the deal for CSP Daily News on Friday, as reported in news flash.

The 162 locations will continue to sell Shell-branded gasoline. The transaction is expected to close in the fall, and details of the contract are still in [image-nocss] the process of being finalized, Shell spokesperson Karyn Leonardi-Cattolica told CSP Daily News. All of the companies involved in the transaction are based in Houston.

The sale is part of Shell Oil Products strategy to sell off all of its retail holdings by 2010. The company is continuing its plan to dissolve its multisite-operator (MSO) partnerships and to grow through the wholesale class of trade, including wholesaler joint ventures, transitioning more markets from direct-supplied to wholesale- or wholesale/joint-venture-supplied markets.

In 2005 and 2006, Shell and brand partner Motiva have transitioned its direct markets in Cincinnati; Columbus, Ohio; Denver; Indianapolis; Atlanta; Austin, Texas; Baton Rouge, La.; Birmingham, Ala.; Orlando, Tampa and Southwest Florida; Memphis, Tenn.; and some individual sites in Connecticut. In 2007, Shell completed the transition of sites in Southern California to Tesoro as part of the sale of its refining and terminal assets. It also transitioned direct markets in Kansas City and Hartford/New Haven. Also in 2007, the companies' transitioned sites in Chicago, Boston, New York, southeast Florida, Seattle, San Francisco, Washington, D.C., and the remaining sites in Los Angeles.

Last month, Nakash Enterprises LLC, an affiliate of Vintners Distributors Inc., acquired Shell Oil Products US's interest in 20 stations in the Sacramento, Calif., area.

In April, Motiva sold 22 stations in Fairfield, Conn., to Connecticut Dealer Stations LLC, an affiliate of Briarcliff Manor, N.Y.-based Wholesale Fuel Distributors CT LLC. A second party named in the deal was 372 Wilton Associates LLC, a Connecticut-based real-estate investment company.

The strategy allows Shell and Motiva the opportunity to participate in the market and site income streams with a more efficient operating structure, the company told CSP Daily News in 2007. These relationships allow Shell and Motiva to mitigate risk while continuing to influence long-term branding decisions, capital structure, growth, dividend streams and real-estate presence. Additionally, the entrepreneurial culture of a joint venture fosters growth, facilitates swift decision-making and enables quick execution of projects.

Strategic advantages, according to the company, include participation in a broader set of income streams than just the wholesale fuel margin (direct fuel margin, convenience retailing and real estate), greater certainty around future supply commitment and additional options to transition sites to other classes of trade in the event of dissolution of the joint venture.

Landmark Industries owns and operates 80 Timewise Food convenience stores under various major fuel brands. Landmark also is a major wholesale petroleum distributor of Shell, Chevron, Exxon, Texaco and Valero branded products to independent c-store and grocery store operators in the Texas marketplace.

Shell Oil Products US, a subsidiary of Shell Oil Co., has a network of approximately 6,100 branded gas stations in the western United States. Motiva—which operates the eastern and southeastern (including East Texas) U.S. refining and marketing businesses for Shell and Saudi Refining Inc. (SRI)—possesses a marketing network that supports approximately 7,700 Shell-branded stations.

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