It’s been a couple of months now since the Arkansas-based Murphy Oil Corporation announced board-of-director approval for plans to exit the refining business. Two American refineries and one in the UK at Milford Haven, Wales along with what was described as the "retail system" were put up for sale. The reason, according to the company’s president and chief executive officer David Wood: "Murphy’s upstream and US retail businesses have demonstrated marked growth and financial performance over the past several years. By exiting the refining business, we can fully focus our attention and resources on continuing that growth." Since then there has been much speculation, and not a sniff of confirmation, about who and how it would be sold. Murphy Oil anticipates a transaction being completed in the first quarter of 2011. Goldman, Sachs & Co is serving as exclusive financial advisor to Murphy during this process.
Murco has spent the past few years building up the brand in the UK, actively expanding its retail network. In 2007 Murphy Oil acquired the remaining 70% ownership of the Milford Haven Refinery which can process over five million tonnes of crude every year so it could make enough products to comfortably supply its thriving UK retail and commercial network. It currently supplies more than 450 forecourts, including around 225 dealers. But with everything up for sale, you might think those concerned would be in limbo.
But no, just as Forecourt Trader was going to press at the end of September, the following announcement came through: "Murco is pleased to announce it has signed a five-year supply agreement with Top Indies retailer, MPK Garages Limited. From the beginning of November, Murco will supply two MPK forecourts in the Bristol area."
Paul Kershaw, director at MPK said: "We are delighted with the supply agreement we have struck with Murco. It offers a great deal on pricing, deliveries and all-round dealer support. We were happy to conclude the agreement knowing Murco’s current situation and our expectation is that we will develop an excellent trading relationship that will remain unaffected by any change to the ownership of Murco."
Jim Mulheran, Murco’s dealer sales manager is keen to stress to existing and potential dealers that "it’s business as usual". He said: "The announcement from our parent company stated clearly the Board of Director’s plans to exit from their refining businesses worldwide and to focus their attention and resources on developing a premier international upstream business and a top quartile US retail franchise. The effect of this decision is that we find ourselves non-core to Murphy Oil’s business, but thanks to Murphy’s investment in Murco in recent years, we are well placed to grow as a profitable business in the future.
"Indeed, the situation we find ourselves in is not currently untypical in the UK oil industry. A number of our competitors are in a similar situation, but for us and for them, business continues as normal.
"I and my team of business development managers will continue to work as always for the benefit of our existing dealers and the recruitment of new dealers will continue.
"The excellent fuel supply package that we offer to dealers has not changed and we are currently in ongoing discussions with several dealer prospects. I am greatly encouraged that none of these prospects have been deterred by the Murphy Oil announcement and I am confident that many of our offers for supply will be accepted.
"All current dealers can be assured that their existing supply agreements will be honoured regardless of the outcome of the current situation and that we will be looking as we would normally do, to extend any existing arrangements in the normal course of events.
"I’m confident that whether for Murco or for any prospective purchaser, a strong and dynamic dealer network will continue to form an important part of the overall mix and that it will play a vital role in continuing to move the business forward."