Mergers & Acquisitions

Western Refining, Northern Tier Talk Retail Split

Mulling spinoff for combined gas station, convenience store networks

EL PASO, Texas & RIDGEFIELD, Conn. -- During their first joint earnings call following Western Refining Inc.'s recent acquisition of the general partnership interest of Northern Tier Energy LP, executives from both companies discussed the possibility of combining and spinning off their respective gas station and convenience store networks into a standalone company.

Giant Howdy's SuperAmerica Western Refining Northern Tier

Gary Dalke, Western Refining's CFO said Western Refining has 229 gas stations and c-stores in Arizona, Colorado, New Mexico, and Texas under the under the Giant, Mustang, Sundial and Howdy's brands, while Northern Tier Energy has 163 c-stores and 74 franchised c-stores primarily in Minnesota and Wisconsin, under the SuperAmerica brand.

Northern Tier's "retail segment achieved a record year, and we continue to opportunistically grow that business," he said.

Click here for details on Western Refining's and Northern Tier's fourth-quarter and full-year 2013 financial results.

In response to analysts' questions, president and CEO Jeff Stevens said, "Certainly since the acquisition, potentially combining the [Northern Tier] and the [Western Refining retail networks] … changes our thought process relative to size. If there was an opportunity out there that made sense as a standalone, that's certainly something that we'll look at. … It's approaching that number now … based just by combining the two together."

But he added, "The retail business is important to us as it provides a secure outlet for our refinery production and helps with our RIN compliance." (The U.S. Environmental Protection Agency created the Renewable Identification Number (RIN) system was to facilitate compliance with the Renewable Fuel Standard [RFS]).

"We're very fortunate to be in the locations we are, and it's going to be our job to make sure that we capitalize on this, because there is plenty to do and plenty of opportunity out there. So we're going to stay focused and really concentrate on that," Stevens said.

Western Refining is an independent refining and marketing company based in El Paso, Texas. Along with the retail segment, the refining segment operates refineries in El Paso, and Gallup, N.M., and the wholesale segment includes a fleet of crude oil and finished product truck transports and wholesale petroleum products operations in Arizona, California, Colorado, Georgia, Maryland, Nevada, New Mexico, Texas and Virginia. Western Refining owns the general partner and approximately 65% of the limited partnership interest of Western Refining Logistics LP. It also owns the general partner and approximately 39% of the limited partnership interest in Northern Tier Energy.

Ridgefield, Conn.-based Northern Tier Energy is an independent downstream energy company with refining, retail and pipeline operations that serves the PADD II region of the United States. Northern Tier Energy operates refinery in St. Paul Park, Minn.

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