PAPCO Expands in the Mid-Atlantic

ShellCanopy-Newtown-0003-7x5An acquisition of the Tidewater retail assets of SMO Inc. boosts PAPCO’s store count in southeastern Virginia.

By Erin Rigik, Associate Editor.

It’s been a busy fall for petroleum marketer PAPCO Inc., which acquired the Tidewater, Va. retail assets of SMO Inc., a wholly-owned subsidiary of The Wills Group in August, and remains poised for further growth across the Eastern U.S.

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The recently announced acquisition included 23 Shell-branded retail gas stations and one Exxon location in southeastern Virginia.

PAPCO is an energy supplier in the Eastern U.S. that markets refined fuels, lubricants, risk management products and fuel card fleet management programs to a broad customer base from industrial, retail, marine, commercial and transportation companies, as well as federal, state and municipal government end users. Prior to the SMO acquisition, PAPCO supplied 127 retail locations in four states, with three of these locations owned by PAPCO, but leased to independent operators. With the SMO acquisition complete, PAPCO now services 151 sites, of which 15 are company owned and leased to operators.

Taking Over
Virginia Beach, Va.-based PAPCO began servicing the newly acquired 24 sites on Aug. 30. The changeover worked seamlessly with the stores remaining up and running as the business switched hands.

“We did a lot of work up front to make sure there was minimal downtime for our operators,” said Steve Leisten, sales director for branded fuels at PAPCO. “We installed and tested our inventory and commission management hardware and software ahead of the changeover date. With that in place, it took maybe 30 minutes to complete the changeover.”

The fuel brand and image are set to remain the same and any store remodels going forward will be determined at a future date on a store-by-store basis.

“The Tidewater acquisition made sense, being in our core market of southeastern Virginia where the company was founded,” said Eric Rosenfeldt, vice president of sales, supply and trading for PAPCO. “We have a lot of different assets here in this market, including fleet and retail locations, trucking assets and our headquarters. We’re very familiar with the landscape and the retail gasoline market, so it was a nice fit. Steve and his group do a good job of managing what was 127 sites prior to this acquisition, and we felt with their expertise, as well as our long-term established footprint in this market, it would be a good fit for our company.”

Today, PAPCO positions itself as a total solutions provider for its dealer locations—offering a range of services from bulk fuels to pricing options to online account access and inventory management. The company maintains longstanding relationships with a number of leading gas brands, including Shell, CITGO, BP, Exxon, Mobil and Valero, and also offers its retail partners unbranded fuel supply.

“We are a fuel supplier, but we also have two dedicated territory marketing managers that work very closely with the owner-operators—not just on the fuel program and pricing—but on c-store operations, best practices, compliance and safety requirements, planograms, foodservice and product offerings,” said Frank Daniels, director of marketing for the Virginia chain. “We have an advisory-based relationship with our retailers, not just a fuel supplier relationship, so that’s a value-added part of our offering that we bring to our customers in this space.”

Rosenfeldt noted that one particularly advantageous value-add PAPCO brought to the operators within the SMO acquisition is its ability to leverage its already strong relationship with Shell and Motiva.

“Additionally, we will work with them on the marketing and merchandising of the actual site itself,” Rosenfeldt said. “Another key thing we bring that enhances the relationship in working with the operators is that we take a lot of pride in our ability to manage the fuel side of the business through innovative technology. We look to manage their inventory at their sites, and because we have a fully-integrated supply chain relationship direct with refiners through pipelines and barges all the way to the retail outlet, we can enhance their capabilities in the market.”

Growth Focused
PAPCO, which supplies fuel in 15 states continues to eye future growth opportunities. In 2012, PAPCO’s sales, marketing, trading and supply departments expanded and moved to a newly-renovated office space in Virginia Beach. Also in 2012, PAPCO purchased the commercial and governmental fuels divisions of ISObunkers, an acquisition that leveraged the company’s supply and marketing capabilities along the U.S. East Coast.

“Our acquisition last year was focused on the Northeastern part of the U.S., our core market is here in the Mid-Atlantic area, and we also branched into the Southeastern part of the country,” Rosenfeldt said. “Last December, we began purchasing fuel directly from refiners in the Gulf Coast region and shipping it all along the Colonial Pipeline. As you look back from a macro standpoint, shipping along the Colonial Pipeline and the ISObunkers acquisition together have given us an entire Gulf Coast to Northeast presence. From our ability to manage fuel to our relationships with resellers and end users, our offering is quite diverse. Whether it’s a fleet card, a retail management or risk management offering, we’ve been able to capture market share by going to a variety of different customers with a great offering and a secure supply chain.”

PAPCO continues to consider any and all opportunities for growth to its retail business, be it an acquisition model or organic expansion. “Today, we view our long-term core retail market area as the Maryland, Delaware,

North Carolina and Virginia regions. We also believe that our new supply capabilities will bring dramatic expansion to not only these core markets, but allow for us to focus on expansion along the entire East Coast,” Leisten said.

PAPCO has a long history in the fuel business. It got its start back in 1958 when C. Roger Malbon started a family oil business called Princess Anne Petroleum, servicing the oil delivery needs of primarily large commercial buildings with central heating plants. In 1976, Princess Anne Petroleum Co. purchased CAPCO, a small residential and commercial business, and PAPCO was born, named from a blend of Princess Anne Petroleum Co. and CAPCO.

“In the early 1980s, PAPCO entered the c-store business as a lessee dealer for Texaco. Through that relationship PAPCO built and purchased c-store locations and operated all the locations until 2004, when they were all converted to lessee dealer operations,” Leisten said. In the mid-90s PAPCO entered into a wholesale distributor contract with CITGO, creating its second affiliated gas brand.

PAPCO at a Glance
Founded: 1976 following the merger of Princess Anne Petroleum Co. and CAPCO Inc.
Locations: 151 locations, 15 of which are owned by PAPCO and leased to operators. The remaining 136 locations are units that PAPCO supplies and provides operational support.
Services: Bulk fuels, lubricants, equipment and storage systems, fleet fueling cards, tank monitoring, inventory management, price risk management, diesel exhaust fluid (DEF) and fuel consignment.

Management Team:
CEO: John Malbon
President: Gary Gilmore
Vice President, Finance and Operations: Beth Johnson
Vice President, Sales, Supply and Trading: Eric Rosenfeldt
Sales Director, Branded Fuels: Steve Leisten
Director of Marketing: Frank Daniels

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