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Dear PEI Member: Baby boomers preparing for retirement
are driving a surge in the sales of petroleum equipment businesses, as they
find more and more buyers confident enough in the industry and the economy
to quickly expand their own businesses through strategic acquisition.
One of the reasons companies in our industry are
attractive to would-be buyers is that the wholesale/distribution industry in
general is very predictable in terms of sales and return on investment.
While profitability varies from company to company in our industry—as it
does in all industries—the wholesale/distribution industry in general offers
buyers reliable cash flow, visibility, market-power benefits and the ability
to serve multi-geographic, multi-facility accounts.
Compare that situation with companies currently
involved in oil and gas exploration and production. According to speakers at
a corporate law seminar we attended last week, the merger and acquisition
activity for those types of companies currently is nonexistent. One speaker
reviewed the Form 10-K filed with the United States Securities and Exchange
Commission by WPX Energy, Inc., an independent natural gas and oil
exploration and production company. One of the risk factors identified by
WPX was that “prices for natural gas, oil and NGLs are volatile, and this
volatility could adversely affect our financial results, cash flows, access
to capital and ability to maintain our existing business.” WPX then went on
to cite other factors—all beyond the control of the company—that could
affect their markets, including:
- Weather conditions;
- The level of consumer demand;
- The overall economic environment;
- Worldwide and domestic supplies of and demand for natural gas,
oil and NGLs;
- Turmoil in the Middle East and other producing regions;
- The activities of the Organization of Petroleum Exporting
Countries;
- Terrorist attacks on production or transportation assets;
- Variations in local market conditions;
- The price and availability of other types of fuels;
- The availability of pipeline capacity;
- Supply disruptions, including plant outages and transportation
disruptions;
- The price and quantity of foreign imports of natural gas and
oil;
- Domestic and foreign governmental regulations and taxes;
- The credit of participants in the markets where products are
bought and sold; and
- The adoption of regulations or legislation relating to climate
change.
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Member Companies Changing Ownership
State Tank Regulations
NATSO & SIGMA Make Personnel Changes
NTSB Weighs In On Dot-111 Replacement/Upgrade
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Wholesale distribution in general—and the downstream
petroleum equipment industry in particular—is neither glamorous nor sexy.
But it is dependable and not affected by a long list of outside variables,
and that puts it high on the list of possible acquirers and gives hope to
owners wishing to sell their companies and retire from the industry.
STATE TANK LAWS
New Hampshire. Underground storage tank owners in the state have until
December 22, 2015, to replace their single-walled UST systems with
double-walled equipment to comply with a Department of Environmental
Services (DES) rule passed nearly two decades ago. According to a story in
The Union Leader, DES reports that 148 single-walled USTs remain in
operation while another 597 systems either need to install under-dispenser
containment or double-walled piping, or be closed. Another 134 heating oil
tank systems either need to be upgraded or removed by December 22, 2015, as
well.
West Virginia. West Virginia Governor Earl Ray Tomblin (D) signed
legislation March 27 that amended the state’s 2014 Aboveground Storage Tank
Act by cutting the number of storage tanks subject to oversight by 75
percent. Under the new law, only tanks within 1,000 feet of a public surface
water supply or containing more than 50,000 gallons will be subject to the
inspection requirements. Under the revised rule roughly 12,000 tanks will
continue to be held to inspection and integrity standards put in place in
2014, while 36,000 other tanks registered with the state will not. The law,
which takes effect June 12, requires that regulated aboveground storage
tanks be inspected every three years. The 2014 measure was triggered by an
aboveground tank release of about 10,000 gallons of 4-methylcyclohexane
methanol into the Elk River upstream from a public water intake portal,
prompting a “do not use tap water” order for nine West Virginia counties.
INDUSTRY TRADE ASSOCIATIONS MAKE STAFFING CHANGES
NATSO has promoted Brad Stotler to vice president of government affairs.
Stotler succeeds Holly Alfano, who recently resigned her position with NATSO
to become the executive director of the International Lubricants
Manufacturers Association. Stotler has served as NATSO’s director of
government affairs since 2010. In his new role, Stotler will lead the
association’s legislative policy and lobbying efforts on behalf of the
truckstop and travel plaza industry.
SIGMA, the national association of fuel marketers and convenience
store chain retailers in the United States and Canada, has selected Ryan
McNutt as its chief executive officer. McNutt spent ten years with Midwest
Petroleum, a St. Louis-based convenience store operator, as vice president
of operations. He most recently served as a senior director in national
retail sales for Anheuser-Busch in the convenience store channel. McNutt
will assume his role April 20.
OIL COMPANY NOTES
“CITGO is providing limited coverage for fraud once the October 1,
2015, deadline to comply with Europay MasterCard Visa (EMV) standards for
chip card technology takes effect. The company points out that because POS
manufacturers are expected to release EMV-compliant software after the
deadline, it will indemnify locations with upgraded POS systems from payment
card fraud involving chip cards until the necessary software is released.”—Oil
Express, April 6, 2015.
Global Partners LP, Waltham, Massachusetts, announced April 14 that
it has entered into an agreement with Capitol Petroleum Group to
purchase a portfolio of 97 Mobil- and Exxon-branded retail gas stations and
seven dealer supply contracts in New York City and Prince George’s County,
Maryland. The total consideration is approximately $156 million, subject to
closing adjustments.
NTSB CALLS FOR REPLACING OIL TRAIN CARS MORE QUICKLY
The National Transportation Safety Board (NTSB) on April 6 issued a set
of “urgent” recommendations for replacing controversial oil train cars more
quickly than federal regulators planned. The Department of Transportation’s
Pipeline and Hazardous Materials Safety Administration (PHMSA) and Federal
Railroad Administration (FRA) had previously proposed new standards for
trains containing crude oil tanks that call for DOT-111 tank cars to be
retrofitted or replaced within 10 years. NTSB chairman Christopher Hart said
April 6 that DOT-111s are too dangerous to leave on the rails that long. The
cars, which make up the majority of the crude oil tanks currently used on
U.S. railways, have not been upgraded for decades.
The DOT-111 rail cars have been at the center of
controversy after a recent series of oil train accidents in North America.
The July 2013 fiery derailment of a Bakken crude-carrying Montreal Maine and
Atlantic Railway Ltd. freight train in Lac-Megantic, Quebec, killed 47
people and destroyed a large portion of the town. The tanker cars that
derailed in Quebec and spilled more than 1 million gallons of Bakken crude
were equivalent to DOT-111 tank cars.
MEMBERSHIP APPLICATIONS
Lighting manufacturer. LED Power, 1731 Kaiser Avenue, Irvine, California
92614, has applied for manufacturer division membership. Cary Aberg is
co-founder of the company, which was established in 1994. The company
designs and manufactures light emitting diodes (LED), which are sold through
distributors. Sponsored for PEI membership by William J. Mascott, MascottEqp,
Portland, OR.
www.ledpower.com
Illinois architectural engineering firm. Corporate Design and
Development Group, 2675 Pratum Avenue, Hoffman Estates, Illinois 60192, has
applied for affiliate division membership. Christian Kalischefski is
president of the firm, which was established in 2004. The company is an
architectural engineering firm that specializes in the retail petroleum
market. Sponsored for PEI membership by Chris Long, WalshLong, Naperville,
IL.
www.cdg-llc.com
Illinois gas and oil resistant cable provider. Windy City Wire, 386
International Drive, Suite H, Bolingbrook, Illinois 60440, has applied for
affiliate division membership. Kimberly DePaola is in sales for the company,
which was established in 1994. The company is dedicated to developing
solutions that generate cost savings for their customers. Sponsored for PEI
membership by Steve Trabilsy, Accurate, North Aurora, IL.
www.smartwire.com
Massachusetts inspection firm. Mass Tech Inspection, 2 North Hunt
Road, Amesbury, Massachusetts 01913, has applied for affiliate division
membership. James Michael Hill is project engineer for the firm, which was
established in 1945. The company provides consulting services and inspects
tanks. Sponsored for PEI membership by Ben Thomas, USTTrainWA, Clinton, WA.
Argentina service and construction firm. Pastorino Global Services
S.A., Julio A. Roca 435, Cordoba, X5000CQB, Argentina, has applied for
service and construction division membership. Daniel Tomas Pastorino is
president of the firm, which was established in 1960. The company
specializes in equipment used for fueling. The company also installs and
maintains dispensers, pumps and flow meters. Sponsored for PEI membership by
Shaun Gravistin, LqdCntrols, Lake Bluff, IL.
www.pgsargentina.com
Massachusetts testing firm. Advanced Tank Testing Services, P. O. Box
385, South Deerfield, Massachusetts 01373, has applied for service and
construction division membership. Richard Bradford is president of the firm,
which was established in 1994. The company tests underground and aboveground
storage tanks, Stage II vapor recovery equipment, piping and leak detection
systems. Advanced Tank Testing also decommissions Stage II equipment.
Sponsored for PEI membership by Dan Ripley, QualityNzl, Bethel, CT.
www.advancedtanktesting.com
Missouri installation and repair company. Springfield Petroleum
Service, 2979H East Chestnut Expressway, Springfield, Missouri 65802, has
applied for service and construction division membership. Linda Kongker is
office manager for the firm, which was established in 2012. Springfield
Petroleum Services installs and repairs petroleum equipment at convenience
stores and bulk plants. Sponsored for PEI membership by Susan Burkhardt,
Neumayer, St. Louis, MO.
Tennessee testing and certification program. Leak Detection
Technologies, LLC, 2000 Mallory Lane, Suite 130-605, Franklin, Tennessee
37067, has applied for service and construction division membership. David
Rabb is vice president of the firm, which was established in 2007. The
company tests pipelines, and tests and certifies aboveground and underground
storage tanks. Sponsored for PEI membership by Ryan Rethmeier, WesternPmp,
San Diego, CA.
www.leakdetect.net
ADMITTED TO PEI
- Superior Performance Petroleum Equipment Sales LLC, Opelika,
AL (dis)
- Fuel Management Technologies, Broughton, Huntingdon,
Cambridgeshire, UK (mfr)
- Comet Signs, San Antonio, TX (aff)
- FMG-LLC/SFICO, Maitland, FL (aff)
- Petrosoft, Pittsburgh, PA (aff)
- PNE Construction, Longview, WA (S&C)
- Rajesh Patel, Heri Inc., Martinsville, MO (O&E)
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