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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.

Parkland expands U.S. footprint with KB Oil acquisition

Parkland Fuel KB Oil_Sm_051519Parkland USA is adding nine convenience stores to its portfolio through its acquisition of Ken Bettridge Distributing Inc. (KB Oil).

Parkland USA is a subsidiary of Parkland Fuel Corp. KB Oil is a bulk fuel and lubricants distributor and operator of fleet fueling, KB Express convenience stores and cardlock services in Southwest Utah and Southeast Nevada.

“KB Oil has long been a respected and admired provider of bulk fuels and lubricants in the region and is an expert in the trucking industry. Parkland will be able to leverage its resources to better serve customers throughout Utah and Nevada,” said John Jardine, vice president of Parkland USA and general manager of the Rockies ROC. “The acquisition of KB Oil follows on our U.S. growth strategy by establishing scale through the addition of strong local operators.”

KB Oil will incorporate into Parkland’s Rockies Regional Operating Center (ROC) headquartered in American Fork, Utah, with Rhinehart Oil serving as the operating entity.

“We’ve been a family-owned business for more than 40 years, and the professional business model and culture of Parkland appealed to us as we looked to sell,” said Stacey Bettridge, co-president of KB Oil.

Under the terms of the agreement, Parkland will acquire substantially all of the assets, including real estate, used in the operation of KB Oil’s business. The transaction is expected to close in the second quarter.

KB Oil will operate under Parkland USA, a division of Parkland comprising several of Parkland’s wholly owned subsidiaries.

“Our customers will benefit from the increased resources Parkland can provide, and this in turn will contribute to Parkland’s continued organic growth efforts,” added Rand Bettridge, co-president of KB Oil.

Parkland USA is a division of Parkland, comprising several of Parkland wholly owned subsidiaries specializing in the retail, commercial and supply fuel operations. Parkland USA operates 45 convenience stores, 220 dealers and 300 trucks, with 1,000 employees in 11 states. At the core of its strategy are its people, as well as its values of safety, integrity, community and respect.

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