I recently wrote an article on those companies that are composed of oil refining operations, pipelines and logistics, and retail. Many of those companies are now creating subsidiaries to expand their pipeline and logistics divisions to support other areas of oil transport beyond their own retail outlets. All of these companies continue to pay high dividends and are worth more than they were when the original article was written on 18 December 2014 (Refining and Retail). Today I want to present a current snapshot of these companies.
Who wouldn't love a company that operates primarily in one region of the country while most of its competition operates a similar business in another region of the country? Who wouldn't love a company whose costs are falling while controlling both the wholesale as well as the retail end of the business?
Below are seven companies in this business of "Refining and Retail". These companies tend to be regional in nature because most of these companies own only a few refineries and it's financially and logistically advantageous to concentrate their stores close to the refineries. At some distance the transportation costs associated with delivering petroleum products becomes prohibitive and the only alternative is to build a new refinery in a new location, which is very expensive. This is also the reason that these companies are setting up subsidiaries to handle their pipelines and logistics operations. The one possible exception is Valero Energy Corporation which can be found throughout a major portion of the United States.
These companies also have the advantage of not being completely dependent on the sale of their main refined product - gasoline. These retail stores also have the ability to provide a variety of convenience products in one single location to the typical traveling customer. And this variety is constantly expanding as these companies begin to move into competitive areas traditionally serviced by the local grocery and variety stores.
Data as of the close on 10 March 2015
| 1. Valero Energy Corporation (VLO) operates as an independent petroleum refining and marketing company in the United States, Canada, the Caribbean, the United Kingdom, and Ireland. It operates through two segments, Refining and Ethanol. The Refining segment is involved in refining, wholesale marketing, product supply and distribution, and transportation operations. This segment produces conventional and premium gasoline, gasoline meeting the specifications of the California Air Resources Board (CARB), reformulated gasoline blendstock for oxygenate blending, diesel fuels, low-sulfur and ultra-low-sulfur diesel fuels, CARB diesel fuel, distillates, jet fuels, asphalts, petrochemicals, lubricants, and other refined products. The Ethanol segment produces ethanol and distillers grains. The company markets its refined products through bulk and rack marketing network; and through approximately 7,400 outlets under the Valero, Diamond Shamrock, Shamrock, Ultramar, Beacon, and Texaco names. As of December 31, 2013, it owned 16 petroleum refineries with a combined throughput capacity of approximately 3.1 million barrels per day. Valero Energy Corporation also owns and operates 10 ethanol plants with a combined ethanol production capacity of approximately 1.2 billion gallons per year. The company was formerly known as Valero Refining and Marketing Company and changed its name to Valero Energy Corporation in August 1997. Valero Energy Corporation was founded in 1955 and is based in San Antonio, Texas. (Daily Chart) | Price $57.77 1yr Target $69.15 Analysts 13 1yr Cap Gain 19.69% Dividend $1.60 Yield 2.76% 1yr Est Tot Return 22.45% Market Cap $30.17 Bil Beta 1.91 EPS (ttm) $6.98 Payout Ratio 22,92% EPS next yr $6.06 EPS next 5 yrs 4.83% P/E 8.40 PEG 1.74 Forward P/E 9.68 Debt/Equity 0.31 ROA 7.70% ROE 17.80% ROI 15.20% Sales $130.84 Bil Income $3.69 Bil Profit Margin 2.82% |
| 2. Marathon Petroleum Corporation (MPC), together with its subsidiaries, is engaged in refining, transporting, and marketing petroleum products primarily in the United States. It operates through three segments: Refining & Marketing, Speedway, and Pipeline Transportation. The company refines crude oil and other feed stocks at its seven refineries in the Gulf Coast and Midwest regions of the United States; and purchases ethanol and refined products for resale. Its refined products include gasoline, distillates, propane, feed stocks and special products, heavy fuel oil, and asphalt. The company also sells transportation fuels and convenience products in the retail market through Speedway convenience stores; and transports crude oil and other feedstocks to its refineries and other locations. Marathon Petroleum Corporation markets its refined products to resellers, consumers, independent retailers, wholesale customers, marathon-branded jobbers, its Speedway convenience stores, airlines, transportation companies, and utility companies, as well as exports its refined products. As of February 4, 2014, it owned, leased, and had ownership interests in approximately 8,300 miles of pipeline, as well as owned and operated 1,480 convenience stores in 9 states of the United States; and operated 5,200 independently owned retail outlets in the 18 states of the United States. The company is headquartered in Findlay, Ohio. (Daily Chart) | Price $96.12 1yr Target $114.26 Analysts 14 1yr Cap Gain 18.87% Dividend $2.00 Yield 2.08% 1yr Est Tot Return 20.95% Market Cap $27.24 Bil Beta 2.34 EPS (ttm) $8.90 Payout Ratio 22.47% EPS next yr $9.31 EPS next 5 yrs 9.70% P/E 11.21 PEG 1.16 Forward P/E 10.72 Debt/Equity 0.62 ROA 9.00% ROE 25.60% ROI 15.90% Sales $98.08 Bil Income $2.52 Bil Profit Margin 2.56% |
| 3. Tesoro Corporation (TSO), together with its subsidiaries, is engaged in refining and marketing petroleum products in the United States. It operates in two segments, Refining and Retail. The Refining segment refines crude oil and other feed stocks into transportation fuels, such as gasoline, gasoline blend stocks, jet fuel, and diesel fuel, as well as other products, including heavy fuel oils, liquefied petroleum gas, petroleum coke, and asphalt. This segment also sells refined products in the wholesale market primarily through independent unbranded distributors; and in the bulk market primarily to independent unbranded distributors, other refining and marketing companies, utilities, railroads, airlines, marine, and industrial end-users in the western United States. It owns and operates 6 refineries with a combined crude oil capacity of approximately 850 thousand barrels per day. The Retail segment sells gasoline, diesel fuel, and convenience store items through company-operated retail stations, and third-party branded dealers and distributors in the western United States. As of July 21, 2014, it operated approximately 2,200 retail stations under the Tesoro, Shell, ARCO, Mobil, Exxon, and USA Gasoline brands. Tesoro Corporation was founded in 1939 and is headquartered in San Antonio, Texas. (Daily Chart) | Price $85.11 1yr Target $98.50 Analysts 12 1yr Cap Gain 15.73% Dividend $1.70 Yield 1.99% 1yr Est Tot Return 17.72% Market Cap $10.83 Bil Beta 1.94 EPS (ttm) $6.70 Payout Ratio 25.37% EPS next yr $7.10 EPS next 5 yrs 11.60% P/E 12.86 PEG 1.11 Forward P/E 12.13 Debt/Equity 0.96 ROA 5.80% ROE 19.10% ROI 12.50% Sales $40.63 Bil Income $872.00 Mil Profit Margin 2.14% |
| 4. Western Refining, Inc. (WNR) operates as an independent crude oil refiner and marketer of refined products. Its Refining segment owns and operates two refineries, and related refined product distribution terminals and asphalt terminals, as well as operates a crude oil gathering pipeline system. This segment offers crude oil and other feedstocks into refined products, such as gasoline, diesel fuel, jet fuel, and asphalt to the wholesale distributors and retail chains. The company's Retail segment operates retail stores that sell gasoline, diesel fuel, and convenience store merchandise. As of December 31, 2013, it operated 228 retail locations in Arizona, Colorado, New Mexico, and Texas; a fleet of crude oil and refined product truck transports; and a wholesale petroleum products distributor that operates in Arizona, California, Colorado, Nevada, New Mexico, Texas, Maryland, and Virginia. Western Refining, Inc. was founded in 1993 and is headquartered in El Paso, Texas. (Daily Chart) | Price $45.57 1yr Target $53.71 Analysts 7 1yr Cap Gain 17.86% Dividend $1.20 Yield 2.63% 1yr Est Tot Return 20.49% Market Cap $4.42 Bil Beta 1.98 EPS (ttm) $5.64 Payout Ratio 21.27% EPS next yr $3.72 EPS next 5 yrs 7.60% P/E 8.20 PEG 1.08 Forward P/E 12.43 Debt/Equity 1.38 ROA 11.20% ROE 54.00% ROI % Sales $ Bil Income $ Bil Profit Margin % |
| 5. Northern Tier Energy LP (NTI), an independent downstream energy company, is engaged in refining, retail, and pipeline operations in the United States. It operates through two segments, Refining and Retail. The Refining segment offers refined products, including gasoline, diesel, jet fuel, and asphalt to resellers and consumers primarily in the Petroleum Administration for Defense District II region. This segment also owns various storage and transportation assets, such as light products terminal, heavy products terminal, storage tanks, rail loading/unloading facilities, the Aranco and Cottage Grove pipelines, and Mississippi river dock, as well as owns a Minnesota Pipeline, a 455,000 barrel per day crude oil pipeline system that transports crude oil. The Retail segment operates convenience stores under the SuperAmerica brand name, which sell various grades of gasoline and diesel; tobacco products; and immediately consumable items comprising beverages, prepared food, and various snacks and prepackaged items. As of December 31, 2013, it operated 164 convenience stores, as well as supported 75 franchised convenience stores. This segment also owns and operates SuperMom's bakery, which prepares and distributes baked goods and other prepared food items for sale in the company-operated and franchised convenience stores, and other third party locations. Northern Tier Energy GP LLC operates as the general partner of the company. The company was founded in 2010 and is headquartered in Ridgefield, Connecticut. (Daily Chart) | Price $24.52 1yr Target $27.57 Analysts 7 1yr Cap Gain 12.43% Dividend $1.96 Yield 7.99% 1yr Est Tot Return 20.42% Market Cap $2.28 Bil Beta Unk EPS (ttm) $2.60 Payout Ratio 75.38% EPS next yr $3.24 EPS next 5 yrs 1.10% P/E 9.43 PEG 8.57 Forward P/E 7.57 Debt/Equity 0.90 ROA 25.60% ROE 70.90% ROI 35.00% Sales $5.56 Bil Income $240.50 Mil Profit Margin 4.31% |
| 6. Delek US Holdings, Inc. (DK) operates as an integrated downstream energy company that operates in petroleum refining, logistics, and convenience store retailing businesses. The company operates in three segments: Refining, Logistics, and Retail. The Refining segment owns and operates two refineries in Tyler, Texas, and El Dorado, Arkansas; and produces various petroleum-based products used in transportation and industrial markets. The Logistics segment gathers, transports, and stores crude oil, as well as markets, distributes, transports, and stores refined products. It also offers crude oil transportation services for terminalling and marketing services; and markets light products using third-party terminals. This segment owns approximately 400 miles of crude oil transportation pipelines, 190 miles of refined product pipelines, 600-mile crude oil gathering system, and associated crude oil storage tanks with an aggregate of approximately 7.6 million barrels of active shell capacity. The Retail segment markets gasoline, diesel, and other refined petroleum products, as well as convenience merchandise. As of August 6, 2014, this segment operated a network of approximately 362 company-operated convenience store locations operated under the MAPCO Express, MAPCO Mart, East Coast, Fast Food and Fuel, Favorite Markets, Delta Express and Discount Food Mart brand names. The company serves oil companies, independent refiners and marketers, jobbers, distributors, utility and transportation companies, independent retail fuel operators, and the United States government. Delek US Holdings, Inc. was founded in 2001 and is headquartered in Brentwood, Tennessee. (Daily Chart) | Price $35.98 1yr Target $42.00 Analysts 10 1yr Cap Gain 16.73% Dividend $0.60 Yield 1.66% 1yr Est Tot Return 18.39% Market Cap $2.06 Bil Beta 1.65 EPS (ttm) $3.34 Payout Ratio 17.96% EPS next yr $2.85 EPS next 5 yrs -1.80% P/E 10.77 PEG Unk Forward P/E 12.64 Debt/Equity 0.59 ROA 6.60% ROE 19.80% ROI 16.60% Sales $8.32 Bil Income $198.60 Bil Profit Margin 2.37% |
| 7. Alon USA Energy, Inc. (ALJ) operates as an independent refiner and marketer of petroleum products primarily in the South Central, Southwestern, and the Western regions of the United States. The company operates in three segments: Refining and Marketing, Asphalt, and Retail. The Refining and Marketing segment operates sour and heavy crude oil refineries located in Big Spring, Texas, as well as in Paramount, Bakersfield, and Long Beach, California; and a light sweet crude oil refinery located in Krotz Springs, Louisiana with a combined throughput capacity of approximately 214,000 barrels per day. This segment refines crude oil into petroleum products, such as gasoline, diesel fuel, jet fuel, petrochemicals, petrochemical feedstocks, asphalt, and other petroleum-based products. It also markets motor fuels to distributors under the Alon brand; licenses Alon brand name; and provides payment card processing services, advertising programs, and loyalty and other marketing programs to licensed locations. This segment also markets its refined products to other refiners and third parties. The Asphalt segment sells paving asphalt to road and materials manufacturers, and highway construction/maintenance contractors as ground tire rubber, polymer modified, or emulsion asphalt. The Retail segment operates convenience stores that offer various grades of gasoline, diesel fuel, food products, tobacco products, non-alcoholic and alcoholic beverages, and general merchandise to the public primarily under the 7-Eleven and Alon brands. As of March 6, 2014, this segment operated 300 owned and leased convenience store sites primarily in Central and West Texas and New Mexico. The company was founded in 2000 and is headquartered in Dallas, Texas. Alon USA Energy, Inc. is a subsidiary of Alon Israel Oil Company, Ltd. (Daily Chart) | Price $14.12 1yr Target $17.80 Analysts 5 1yr Cap Gain 26.06% Dividend $0.40 Yield 2.83% 1yr Est Tot Return 28.89% Market Cap $982.75 Mil Beta 1.87 EPS (ttm) $0.24 Payout Ratio 166.67% EPS next yr $0.76 EPS next 5 yrs 50.15% P/E 58.83 PEG 1.17 Forward P/E 18.51 Debt/Equity 0.85 ROA 0.80% ROE 2.90% ROI 11.40% Sales $7.10 Bil Income $17.70 Mil Profit Margin 0.23% |
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