Speedway: FTC Says Yes to Hess
Concludes review of acquisition expected to bring "long-term value" to MPC
Published in CSP Daily News
FINDLAY, Ohio -- Marathon Petroleum Corp. has received notice from the Federal Trade Commission (FTC) that it concluded its review of the acquisition of Hess Retail Holdings LLC gas station and convenience store network by its Speedway subsidiary, MPC president and CEO Gary R. Heminger said during the company's second-quarter 2014 earnings call on July 31.
"We continue to believe that there is significant opportunity to leverage the best of both businesses--Hess fuel sales volume with Speedway's industry-leading merchandise sales per store," he continued. "We believe this acquisition will be a source of long-term value to MPC and provides for enhanced strategic opportunity for the business over time."
MPC and Speedway are preparing to close the Hess deal later this year.
The $2.874-billion acquisition, announced in May, will result in Speedway growing to more than 2,700 stores in 23 states, Heminger said.
For the quarter, MPC reported earnings of $855 million, compared with $593 million for second-quarter 2013.
"We had an outstanding quarter, with our focus on top-tier operational performance across the MPC refining, marketing and transportation system continuing to yield excellent results," said Heminger. "Our integrated system operated very well, enabling us to efficiently meet consumers' needs and capture higher product price realizations in the markets where we do business."
The Refining & Marketing segment income from operations was $1.26 billion in second-quarter 2014, compared with $903 million in second-quarter 2013.
Speedway segment income from operations was $94 million in second-quarter 2014, compared with $123 million in second-quarter 2013.
Speedway's merchandise sales, as well as the margin percentage realized on those sales, were higher in second-quarter 2014 compared to second-quarter 2013. It experienced a lower gasoline and distillate gross margin and higher operating expenses associated with an increase in the number of Speedway stores compared to 2013. The gasoline and distillate gross margin per gallon decreased 4.56 cents, from 17.38 cents in second-quarter 2013 to 12.82 cents in second-quarter of 2014.
In other company news, Speedway will invest $9.1 million in its Enon, Ohio, headquarters and create 350 new jobs over the next three years, reported The Toledo Blade. The $9.1 million investment will include renovations to the Enon site, as well as the purchase of a building in Springfield, Ohio.
MPC is the nation's fourth-largest refiner, with a crude oil refining capacity of approximately 1.7 million barrels per calendar day in its seven-refinery system. Marathon brand gasoline is sold through approximately 5,300 independently owned retail outlets across 19 states. In addition, Speedway owns and operates the nation's fourth-largest convenience store chain, with approximately 1,490 stores in nine states. MPC also owns, leases or has ownership interests in approximately 8,300 miles of pipeline. Through subsidiaries, MPC owns the general partner of MPLX LP, a midstream master limited partnership (MLP). MPC's fully integrated system provides operational flexibility to move crude oil, feedstocks and petroleum-related products efficiently through the company's distribution network in the Midwest, Southeast and Gulf Coast regions.