The announcement comes on the heels of the Salt Lake City-based company putting the $1 billion expansion of its refinery in Tulsa, Okla., on hold due to current economic conditions and rumors that the refinery may be put up for sale, as well.
One letter announcing the sale of the retail sites notes that the owners [image-nocss] of Sinclair Oil have "faced tough economic challenges for the past year in nearly all of the business units.bCrLf It also notes that 2007 and 2008 were "two of our most-profitable years.bCrLf
But struggles with refining and retail gasoline margins have pinched the company tight enough to where they decided to sell the retail division.
"Their intent is to sell it to their jobbers or distributors," said one Sinclair employee who requested anonymity.
Larry Rogers, general manager of retail marketing, acknowledged to CSP Daily News that the company intends to sell the 90 stores, but chose not to offer details, pending approval by upper management and the ownership.
John Hill, executive director of the Utah Petroleum Marketers and Retailers Association, hadn't heard about the sale yesterday morning but chalked it up to another oil company realizing retail isn't the place to make money in this industry.
"The major-oil companies, and I would include Sinclair in that list, know that the profit is better upstream," he said. "So refining and production is always more profitable than retail. Major-oil companies own less than 2.6% of all retail locations. They've already left the market for the most part because it's not as profitable [as refining]. It's a continuing trend of major-oil companies getting out of the retail side."
Hill isn't worried, however, that the Sinclair sale will leave vacant c-stores in its wake. "A marketer is going to pick those stores up," he said. "We still need convenience stores. The refiners, ultimately, they are setting the tone in the market."
In addition to the c-stores, Sinclair operates three refineries in the West, supplying customers with Sinclair gasolines, diesel fuel and jet fuel. It also operates more than 1,000 miles of pipeline in the Rocky Mountains, moving crude oil to Sinclair refineries and finished product to its marketing terminals.
In mid-July, Sinclair announced that it was putting a $1 billion expansion of its Tulsa refinery on hold due to current economic conditions, according to a Reuter's report. The project would have expanded the capacity of the refinery from 65,000 barrels per day to 115,000 bpd and added a delayed coking unit, a spokesperson said. The company is still going forward with $35 million in environmental upgrades, he added.
Since then, Oil Express, a newsletter from the Oil Price Information Service has reported that Sinclair retained J.P. Morgan earlier this summer to start the sale process for the refinery.
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