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Exxon's Canadian unit offloads gas stations for $2.1 bln

Mar 09, 2016 08:56 AM EST

Canadian unit of Exxon Mobil Corp has decided to sell retail gas stations in the country. The remaining Exxon Mobil-owned retail gas stations will be sold to five fuel distributors for C$2.8 billion ($2.1 billion). The transaction on may be completed by end of 2016 subject to the regulatory approvals.

The five distributors, who're buying out retail gas stations from Canadian unit of Exxon Mobil, are Alimentation Couche-Tard Inc, Eleven Canada Inc, Harnois Groupe pétrolier Inc, Parkland Fuel Cor and Manitoba and Wilson Fuel Co.

The Wall Street Journal (WSJ) reports that the deal for 497 Esso branded retail gas stations across Canada would be sold for $2.1 billion (C$2.8 billion). Exxon Mobil Corp-owned Imperial Oil Ltd is the second largest integrated oil producer in Canada. Imperial Oil has announced the decision to sell 497 Esso branded retail outlets to five distributors.

Imperial Oil supplies oil as a wholesaler to retail outlets that figured in the deal are among 1,700 Esso retail gas stations in Canada. Imperial Chief Executive Rich Kruger said in a statement: "We believe these agreements represent the best way for Imperial to grow in the highly competitive Canadian fuels marketing business."

Out of the five distributors, three are already running Esso branded retail gas stations in Canada. Imperial Oil started evaluating sale plan right from January 2015. About 2,100 of 1,700 Esso branded gas stations are under a wholesale model, in which other parties own outlets under Esso brand. Imperial Oil supplies gasoline to these outlets, according to Reuters.

"The Esso brand has a leading presence in Canada through our distributor network and strong prospects for continued growth to the benefit of our customers and shareholders," further adds Kruger. Energy companies are preferring to offload assets to face adverse conditions in the wake of lower oil prices. Oil price is hovering below $40 per barrel.

Imperial oil has decided to maintain cash reserves in the wake of weaker oil prices. It pared its budget -2016 to C$1.8 billion lower than 2015 budget of C$3.6 billion. Imperial Oil's fourth quarter earnings fell 85 percent to $102 million. Distributors who're buying retail outlets are optimistic of expansion after the deal, according to The Globe And Mail.

Alimentation Couche-Tard Inc will buy retail gas stations in Ontario and Quebec 7. Eleven Canada Inc is to acquire retail outlets in Alberta and British Columbia. Harnois Groupe pétrolier Inc is to buy Quebec. Parkland Fuel Cor will buy retail outlets in Saskatchewan, and Manitoba and Wilson Fuel Co will get Nova Scotia and Newfoundland.

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