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Utah Oil 'Jobber' Sells Bulk of Assets to Texas Company

Posted on: Wednesday, 7 June 2006, 21:00 CDT

By Steven Oberbeck, The Salt Lake Tribune

Jun. 7--Mike Peterson Oil Co., one of state's largest gasoline "jobbers," has sold the bulk of its assets to Houston-based Petroleum Wholesale L.P. in a move that marks a major expansion for the Texas company into northern Utah.

Mike Peterson, whose company held a dominant share of the gasoline-supply market in the Salt Lake Valley, said he decided to sell his company because the "timing, the opportunity and the offer was right." Terms of the deal were not disclosed.

"We're are among the largest jobbers in the state, and they are one of the largest in their market," Peterson said, noting that with his company's assets, Petroleum Wholesale will be a much more formidable competitor in Utah and nationally.

The term "jobbers" refers to petroleum wholesalers who buy product from refinery supply "racks" and transport the fuel and lubricants to customers.

Many jobbers, including Mike Peterson Oil and Petroleum Wholesale, operate their own convenience stores.

Petroleum Wholesale's general counsel Stuart Lapp said the Texas company owns approximately 200 convenience stores and travel centers in eight states. It operates some and leases some to other operators. It acquired 13 additional retail locations from Peterson Oil.

Peterson, however, retained six of his Utah convenience stores, Lapp said.

"He'll be one of our customers."

Founded 34 years ago, privately held Petroleum Wholesale annually sells, transports and delivers more than 500 million gallons of fuel a year to several hundred customers. Acquiring Peterson Oil is expected to increase that volume significantly.

Petroleum Wholesale entered the Utah market in mid-2003 by acquiring some assets of Tri-Valley Distributing though a bankruptcy court sale. Its other Utah assets include Holt Oil, Sperry Oil and Terry Oil.

To date, however, the company primarily has operated in southern Utah. "Our acquisition of Peterson Oil gives us a much larger presence throughout the state," Lapp said.

John Hill, state director of the Utah Petroleum Marketers and Retailers, said there are approximately 110 jobbers in Utah. Their numbers, however, have declined during the past 10 years because of a major consolidation trend in the industry.

And Mike Peterson Oil was one of the companies on the leading edge of that trend.

In late 2003, at about the same time that Petroleum Wholesale was entering the Utah market, Provo-based Mike Peterson Oil acquired ChevronTexaco Corp.'s retail operations in Salt Lake County in a deal worth $60 million to $65 million, according to industry estimates.

Prior to that acquisition, Mike Peterson Oil already owned seven Chevron-branded convenience stores in Utah County that operated under the Extra Mart name. It also held contracts to supply an additional 24 independently owned Chevron locations in Utah Valley.

Peterson estimated then that the addition of ChevronTexaco's retail operations -- the sale included more than a dozen Chevron-owned stores and contracts to supply another 55 independently owned branded outlets -- would push his company's annual revenue from $80 million to approximately $300 million.

"This is a huge move for us," Peterson said at that time, estimating that once the sale closed, his company would have a "virtually unheard of" 30 percent market share in the Salt Lake Valley.

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Copyright (c) 2006, The Salt Lake Tribune

Distributed by Knight Ridder/Tribune Business News.

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CVX,

Source: The Salt Lake Tribune

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