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Parkland acquires U.S.-based Kellerstrass Oil

Parkland Fuel Corporation, through its wholly owned U.S. subsidiaries, it has entered into an agreement to acquire the entities and assets of Kellerstrass Oil Company.

UnknownBased in Salt Lake City, Kellerstrass is a regional retail dealer and commercial fuel business with branches in Utah, Idaho and Wyoming.

Calgary-based Parkland is an independent supplier and marketer of fuel and petroleum products and a convenience store operator servicing customers across Canada, the United States, the Caribbean region and the Americas through its retail, commercial and wholesale divisions.

In a release Parkland stated: “In addition to highly efficient trucking, routing and distribution practices, Kellerstrass brings a strategic 17-car rail spur and storage assets, commercial card locks and an 84-location dealer business. Kellerstrass will complement and strengthen Parkland’s existing Rockies Regional Operating Centre.”

The acquisition is part of Parkland’s efforts to expand its U.S. footprint, says Doug Haugh, president of Parkland USA. “We expect this acquisition will support the growth of our North America diesel platform, create supply efficiencies and deliver logistical benefits. We are delighted to enter the Idaho market and expand our presence in Wyoming and look forward to welcoming the Kellerstrass team to Parkland.”

The transaction is subject to customary closing conditions and is expected to close in the first quarter of 2020.


Parkland completes Mort Distributing acquisition

Parkland Fuel Corporation, through its wholly owned U.S. subsidiaries, has completed the previously announced acquisition of the assets of Mort Distributing, Inc.

Mort is a marketer and distributor of fuels and lubricants serving retail, commercial and wholesale customers across Montana. Parkland is an independent supplier and marketer of fuel and petroleum products and a leading convenience store operator.


Parkland acquires U.S.-based Mort Distributing

Parkland Fuel Corporation, through its wholly owned U.S. subsidiaries, is entering into an agreement to acquire the assets of Montana-based Mort Distributing, Inc. and its affiliates.

Founded in 1958, Mort is a family-owned marketer and distributor of fuels and lubricants serving retail, commercial and wholesale customers. Mort’s operations are focused in Montana, which will enable Parkland to “further capture distribution efficiencies and enhance customer service across its Northern Tier Regional Operating Centre (ROC).”

“This acquisition is consistent with our U.S. growth strategy and will complement and strengthen our existing Northern Tier ROC,” Doug Haugh, president of Parkland USA said in a statement. “We look forward to welcoming the Mort team into Parkland and to continuing to deliver high-quality products and excellent service to Mort’s broad customer base.”

The acquisition will primarily be funded from cash from operations. The transaction is expected to close by the end of 2019 and is subject to customary closing conditions.

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Parkland announces interim CFO

Screen Shot 2019-11-13 at 9.53.33 AMDarren Smart is taking on the role of interim chief financial officer, in addition to his current role as Parkland’s senior vice-president, strategy and corporate development.

Mike McMillan, who has served as the company’s CFO since 2015 is leaving the company, but will support Smart’s transition until December 31, 2019.

“We are pleased that Darren has assumed the Interim CFO role in addition to his existing accountabilities,” Bob Espey, Parkland’s president and CEO, said in a release. “During the past five-years, Darren has played a significant commercial and financial leadership role in the company. I am confident he will do an excellent job and provide strong continuity as we search for a permanent chief financial officer.”

Smart joined Parkland in 2014 and leads the company’s enterprise wide strategy and corporate development activity.  He has been a member of the company’s senior leadership team since 2015. Prior to joining Parkland, he was a portfolio manager at Teachers’ Private Capital, the private equity arm of the Ontario Teachers’ Pension Plan, where he was responsible for sourcing, evaluating and managing energy-related investments. Smart has a Master of Business Administration from Harvard Business School and a Bachelor of Business Administration with distinction from Wilfrid Laurier University.

Screen Shot 2019-11-13 at 9.54.21 AMIn May, Parkland announced that McMillan has decided to move back to Ontario to spend more time with his family. The company immediately begin a search to replace McMillan, who agreed to support us until a successor has been named and an appropriate transition period is completed.

“Mike has made exceptional contributions during his ten-years with Parkland,” adds Espey. “On behalf of the Parkland team, I thank him for his commitment to our growth and success and offer my best wishes.”


Parkland Fuel plans refinery maintenance

The refinery that is the sole local supplier of motor fuel in the B.C. Lower Mainland is being scheduled for an eight-week maintenance shutdown early next year but owner Parkland Fuel Corp. says it is taking measures to keep prices at the pump in check.

The 55,000-barrel-per-day Burnaby refinery is putting fuel in storage to be drawn upon during the outage but that won’t be enough to last for the entire duration, said Dirk Lever, vice-president for refining, on a conference call to discuss Parkland’s third-quarter results last week.

“We have a fair amount of planning to do dealing with other refineries in order to source supply as we’re down,” he said.

“More material to pump prices on the West Coast are unplanned outages, rather than planned outages. So the fact this is a planned outage and has been orchestrated ahead of time, it should not have a material impact at the pump.”

Gasoline and diesel prices have been a hot topic in British Columbia.

A public inquiry concluded in August that there’s an unexplained difference of 13 cents per litre between Metro Vancouver and Seattle that is costing drivers on the Canadian side of the border nearly $500 million a year.

But it also found no evidence of collusion among the companies – including Parkland – that supply and market fuel.

Premier John Horgan called the public inquiry last May as gasoline prices reached a record-breaking $1.70 per litre in the Vancouver region.

Parkland’s down time shouldn’t result in higher prices because there has been sufficient preparation time, said market watcher Michael Ervin, senior vice-president with consulting firm Kent Group, on Tuesday.

He said prices are generally higher in the Vancouver area because of supply and demand.

B.C.’s other fuel refinery, the 12,000-bpd facility in Prince George, was recently sold by Husky Energy Inc. to Tidewater Midstream and Infrastructure Ltd.

Shares in Calgary-based Parkland, Canada’s largest independent fuel marketer, jumped by nearly five per cent early Tuesday after it increased its 2019 guidance on the back of third-quarter adjusted earnings that beat analyst expectations.

“Our business is performing well and the increase reflects our strong third quarter and confidence for Q4,” said CEO Bob Espey on the conference call.

The company, which sells gasoline and diesel under brands including Fas Gas, Chevron, Esso, Ultramar and Pioneer, and operates On The Run convenience stores in Canada, said it now expects its adjusted earnings in 2019 before interest, taxation, depreciation and amortization will be $1.24 billion, up $75 million from the previous forecast.

During the quarter, Parkland began the rollout of its national Journie Rewards customer loyalty program in partnership with CIBC in Canada and bought Florida-based fuel marketer Tropic Oil.

The company reported third-quarter net earnings of $26 million, down from $49 million in the year-earlier period, with the slip mainly attributed to an increase in interest on long-term debt relating to its purchase early this year of Caribbean fuel retailer Sol.

It reported adjusted EBITDA of $302 million in the three months ended Sept. 30, up from $200 million in the same period of 2018, as revenue jumped to $4.6 billion from $3.8 billion.


Parkland Fuel shares up on adjusted earnings beat, increased guidance for 2019

Shares in Parkland Fuel Corp., Canada’s largest independent fuel marketer, rose Nov. 5 after it increased its 2019 guidance on the back of third-quarter adjusted earnings that beat analyst expectations.

The Calgary-based company says it now expects its adjusted earnings in 2019 before interest, taxation, depreciation and amortization will be $1.24 billion, up $75 million from the previous forecast.

The company, which sells gasoline and diesel under brands including Fas Gas, Chevron, Esso, Ultramar and Pioneer, and operates On The Run convenience stores in Canada, reported third-quarter net earnings of $26 million, down from $49 million in the year-earlier period, mainly due to an increase in interest on long-term debt relating to its purchase early this year of Caribbean fuel retailer Sol.

It reported adjusted EBITDA of $302 million in the three months ended Sept. 30, up from $200 million in the same period of 2018, as revenue jumped to $4.6 billion from $3.8 billion.

Analysts had expected $55.9 million in net income and $154.6 million in adjusted EBITDA on revenue of $4.64 billion, according to financial markets data firm Refinitiv.

During the quarter, Parkland began the rollout of its Journie Rewards customer loyalty program in partnership with CIBC in Canada and bought Florida-based fuel marketer Tropic Oil.

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Parkland partners with CIBC for new rewards program


Parkland Fuel Corporation is launching Journie, a nationwide rewards and customer loyalty program with CIBC as its strategic banking partner.

Journie is designed to offer Canadians compelling fuel savings and merchandise offers and will launch in select Ontario, British Columbia and Quebec markets this fall with a full national rollout in early 2020.

Journie members that link their personal CIBC credit and debit cards will enjoy fuel savings of three cents per litre at participating locations when paying with their CIBC card. Following its full national rollout, Journie Rewards and the CIBC fuel savings will be available across Parkland’s coast-to-coast network of approximately 1,300 Chevron, Ultramar, Pioneer and Fas Gas sites. In addition to instant fuel savings, customers can simultaneously collect Journie Rewards as well as rewards they already earn with their CIBC credit card.

“The launch of our Journie Rewards program and CIBC’s participation is a major milestone for Parkland,” Ian White, SVP of strategic marketing and innovation, said in a release. “By connecting our national network of fuel retail sites and On the Run and Marché Express convenience stores under a single proprietary rewards program with compelling fuel and merchandise offers, we are creating a powerful customer loyalty offer with nationwide scale.”

“This is an exciting loyalty program bringing together two innovative and customer focused companies that have an extensive nationwide retail presence and broad consumer reach,” added White. “In addition to enhancing our Journie value proposition, our partnership with CIBC supports our strategy to grow our fuel sales volumes and increase foot traffic in our Canadian convenience stores.”

“This partnership builds on our exceptional credit card benefits, such as our four per cent cashback on fuel purchases with our CIBC Dividend Visa Infinite* Card,” said Jeff Smith, VP, client loyalty solutions and partnerships, personal banking products, CIBC.  “We’re making it radically simple for our clients to receive discounts at the pump, while helping them achieve their reward ambitions sooner.”

Parkland’s Journie Rewards program is supported by a newly developed mobile app available for anyone to download on iOS and Android platforms from October 23, 2019.


Parkland Acquires Tropic Oil Company

Through its U.S.-based subsidiaries, Parkland Fuel Corporation in Calgary has entered into an agreement to acquire all of the issued and outstanding equity interests of Tropic Oil Company, Inc., as well as equity interests and the assets of certain of its affiliates.

Tropic Oil is headquartered in Miami, Florida, and transports, distributes and markets a full range of fuels and lubricants across the central and south Florida region. It supplies and operates nine cardlock facilities and four bulk storage plants and warehouses.

“The Tropic Oil acquisition continues on our U.S. growth strategy by adding quality regional operators in regions where we can bring a distinct supply advantage,” Bob Espey, president and CEO of Parkland, said in a release. “This initial toehold in Florida also complements our Caribbean business by providing significant supply and distribution synergy potential. We welcome Steve Gorey from Tropic Oil’s leadership team and the rest of their employees into Parkland.”

“Through Tropic Oil, Parkland is adding its third Regional Operating Center (ROC) and expanding its presence into the southeastern states for the first time,” said Doug Haugh, president of Parkland USA. “This new Southeast ROC will be the operating platform that drives organic growth and enables further acquisitions across the region, while leveraging our business with Sol.”

The transaction is expected to close on Oct. 1, 2019.

Gas price inquiry questions Trans Mountain capacity, company denies collusion

One of the largest fuel companies in British Columbia says there’s no retail market more competitive than gasoline in Canada and an executive denies any price setting between competitors.

Ian White, senior vice-president of marketing and innovation for Parkland Fuel Corp., told a three-member panel leading a public inquiry into the province’s gas prices on Wednesday that a price difference of one-tenth of a cent per litre can be enough to lose customers.

Parkland Fuel operates gas stations under Chevron and other banners, supplies fuel to airlines and BC Ferries, and owns and operates a refinery in Burnaby.

White said while factors like clean washrooms and convenience stores can influence consumers, they simply won’t visit your gas station if you don’t have a competitive price for fuel.

Economist Henry Kahwaty, who was hired by Parkland, told the panel that the competitive environment leads retailers into a race to the bottom until they reach unprofitable prices, at which point there is typically a price jump and the process repeats itself.

But he said controlling that process would require a significant level of co-ordination considering almost half of the gas stations in B.C. are run by independent dealers rather than companies.

“This is not evidence of collusion,” Kahwaty said.

Representatives from Shell also told the panel the market is competitive, adding the company sets wholesale prices independently from other firms.

Premier John Horgan called the public inquiry in May as prices at the pump reached a record-breaking $1.70 per litre.

At the time, the B.C. Liberals and Alberta government bought advertising blaming Horgan and linking his government’s resistance to the Trans Mountain pipeline expansion and taxes to the surging costs.

Jean-Denis Charlebois, chief economist for the National Energy Board, told the inquiry panel he can’t account for an independent report that contradicts the board’s claim that the Trans Mountain pipeline is operating at capacity.

Charlebois told the three-member panel that in the first quarter of 2019, the Trans Mountain pipeline was operating at 98 per cent capacity.

The panel asked if he could shed light on a report by economists Robyn Allan and Marc Eliesen, the former president of the Insurance Corporation of B.C. and chief executive of BC Hydro, respectively.

Allan and Eliesen’s analysis found the Trans Mountain capacity is 400,000 barrels a day, falling to 300,000 barrels a day only if 20 per cent of the capacity is taken up by heavy oil. But it rarely reaches that threshold of heavy oil and Allan and Eliesen claim there were 97,000 barrels a day of capacity in the first quarter of 2019 that were not used.

Allan and Eliesen are scheduled to appear before the panel on Thursday.

The inquiry is tasked with exploring factors that may be influencing gas and diesel prices in B.C. since 2015 and the mechanisms the province could use to moderate price fluctuations.

Kahwaty warned that regulating wholesale prices by setting them artificially low would have the effect of actually raising retail prices because supply would be pulled out of the market as a correction.

“Wholesale regulation would have the impact of actually increasing the retail margin because we’re not allowing the market to fully clear,” he said.

“At first blush, its a counterintuitive point to make.”

Such regulation in the Atlantic provinces has targeted volatility, rather than high prices, he said.

Earlier Wednesday, Liberal Leader Andrew Wilkinson issued a statement criticizing the government for the inquiry’s short timeline and terms of reference that limit it from investigating government activity that affects gas prices.

“It is outrageous that an investigation into fuel costs would be barred from considering the impacts of fuel taxes, transit taxes, and the government’s opposition to increasing pipeline capacity,” Wilkinson said.

The panel could hear up to four days of oral submissions in Vancouver this week.

The inquiry will conclude with a final report by the panel due Aug. 30.


Parkland performs

Acquisitions and initiatives driving big gains

Screen Shot 2019-05-24 at 4.00.12 PMCalgary-based Parkland Fuel Corporation has become one of North America’s fastest growing independent marketers of fuel and petroleum products by focusing on enhancing the customer experience and expanding internationally.

Parkland has an honest Alberta pedigree and a firm foothold in Canada’s oil patch. The company started out as a cattle operation in Red Deer before morphing into a fuel leviathan with some 1,850 retail sites that include brands such as FasGas, UltraMar, Pioneer, and Chevron as well as RaceTrac in the U.S. The company’s current format was launched in 2010 when it moved its headquarters to Calgary and renamed itself Parkland Fuel Corporation.

Today, Parkland delivers gasoline, diesel, propane, lubricants, heating oil and other high-quality petroleum products to motorists, businesses, households and wholesale customers in Canada and the United States. It is also a leading operator of convenience stores with banners such as On The Run.

“Parkland continues to deliver strong performance across the enterprise,” says company president and chief executive officer Bob Espey, reporting a standout fourth quarter with the company reporting net earnings of $77 million up from $49 million in Q4 of 2017. Net earnings grew from $82 million in 2017 to $206 million in 2018. On a full-year basis, fuel and petroleum product volume was 17.0 billion litres, up 27 per cent year over year, driven primarily by incremental business from acquisitions.


Coming to customers with greater choice

Ian White, vice-president of strategic marketing & innovation

Ian White, vice-president of strategic marketing & innovation

According to Ian White, Parkland’s vice president of strategic marketing & innovation, their growth and increased scale allow for improved capabilities. “However, local brands will continue to play an important role and we will remain connected to the communities with local leadership and retail operators. Building new sites and retrofitting existing sites is a core part of our strategy. On The Run (OTR) will be associated with all Parkland forecourt brands with the goal of 1,000 OTR locations across Canada,” he says.

“Over the years, meaningful, exclusive local fuel brands such as Ultramar, Pioneer and Chevron have been added to the Parkland family,” he adds. “This past November, we partnered with mobile fueling company Filld and launched this service in Vancouver to offer even greater choice to customers where they can come to our stations or we can come to them at their business or homes. We intend to extend this service across major markets in Canada.”

Parkland reports the collaboration and official launch of Filld’s service in Vancouver came on the heels of Parkland’s co-leading a $15 million investment into Filld’s Series B preferred shares. As part of its investment in Filld, Parkland will be the exclusive supplier of fuel to Filld in Canada, and a preferred supplier of fuel to Filld in the United States.

Filld was founded in 2015 as a flexible, safe, scalable last mile infrastructure company that delivered fuel to customers’ vehicles in the San Francisco Area and Washington, D.C. Under the Parkland partnership, Filld will expand its mobile fuelling services to  Canadian communities throughout 2019 beginning with fleet services, then expanding to offer consumer service once operational efficiency and sufficient density are achieved.

The Filld program is an example of the proprietary enterprise loyalty program that is currently in pilot, which will include the Parkland ecosystem of brands, products and services working together. “We see this as an important competitive differentiator for (Parkland Fuel) as we move toward a relevant, personalized experience for our customers. Parkland is committed to offering customers choice when interacting with our market-leading brands across the country. As the operator of the Chevron stations in British Columbia, this innovative fuel delivery solution allows customers the opportunity to have quality fuel delivered to them in a safe and reliable manner in addition to filling up at one of our locations,” says White.


Expansion, meaningful acquisition and development initiatives driving gains

Last year Parkland retrofitted 78 existing On the Run/Marché Express locations and constructed 12 flagship sites.

With an eye to capturing three to five per cent annual retail growth, Parkland will invest in new locations, new dealer growth, private label, their loyalty program, and enhancing the customer experience through the On The Run rollout. On the commercial side, the company said it will leverage the Pipeline brand to create a national cardlock network and invest in trucking and routing optimization technologies.

“Our development initiatives will see the brand rolled out across our Canadian network in the coming years,” adds White. “In 2018, we expanded our private label brand, ‘59th Street Food Co.,’ and are now offering 20 products at select Parkland locations. We are planning to launch an additional 20 private label products in 2019. In addition, we are currently testing our ‘Journie’ loyalty program in two Canadian markets, and expect to expand the program across our network in 2019.

“Ongoing optimization of our commercial brand portfolio in various geographies has seen certain legacy operations, particularly in Eastern Canada, successfully rebranded to Ultramar. This enables Parkland to drive future growth and sustained profitability under one aligned customer value proposition.

“Parkland has a track record of successful acquisition and is always assessing new opportunities,” said White, mentioning their latest acquisition that Parkland hopes will broaden its import and export capabilities and expand distribution and supply points.

In January, Parkland announced the closing of its purchase of 75 per cent of the shares of Sol Investments Limited, which is the largest independent marketer and supplier of petroleum products in the Caribbean, operating in 23 jurisdictions.

“The opportunity to expand to a new geography and market through a strong business platform like Sol is an exciting time for Parkland. The assets and infrastructure we have acquired are proven, well known, and will enable Parkland to extend its supply advantage into a new region,” concludes CEO Espey, who is upbeat about Parkland’s opportunities for continued growth and market gains.

Originally published in the May/June issue of Octane.