HOUSTON (Reuters) - ConocoPhillips (COP.N) on Wednesday said it is selling 600 company-owned U.S. gasoline stations to PetroSun West LLC for $800 million, completing the oil major’s exit from the low-margin, highly competitive retail business.
ConocoPhillips, which operates the Phillips 66, Conoco and 76 brands in the western and central United States, is the latest big oil company to sell its service stations.
“Tying up capital in a retail gas station is not its most efficient use,” Phil Weiss, energy analyst at Argus Research Co, said. “The margins on the product side aren’t that high. You can be getting only pennies a gallon.”
Service stations have struggled with shrinking margins even as gasoline prices topped $4 per gallon because they have not been able to keep pace with soaring crude oil prices.
Privately held PetroSun, the largest independent gasoline and convenience store operator on the U.S. West Coast, said the deal will leave it with operations in 10 states and annual petroleum sales of more than 1 billion gallons.
The service stations will still carry one of ConocoPhillips’ brand names, a ConocoPhillips spokeswoman said.
Conoco, the third-largest U.S. oil company and second-largest refiner, will continue to produce gasoline and sell fuel on a wholesale basis to stations.
Shares of Houston-based ConocoPhillips rose 1.5 percent or $1.20 to $83.58 in midday trading on the New York Stock Exchange.
Additional reporting by Matt Daily in New York and Saumyadeb Chakrabarty in Bangalore; Editing by Maureen Bavdek, Phil Berlowitz