Permian Basin Affects Alon USA C-stores

DALLAS — Lower gas prices and the subsequent slowdown in oil drilling has had a significant effect on Alon USA Energy’s Permian Basin stores, located in the Midland/Odessa, Texas, region. The Permian Basin has long been one of the most important oil and gas-producing areas of the United States.

For Alon's fourth quarter ended Dec. 31, same-store merchandise sales in these 60 stores — which account for 19 percent of Alon’s total c-store count — fell 12 percent compared to the same quarter in 2014, Paul Eisman, the company’s president and CEO, said Thursday during its 2015 fiscal fourth-quarter earnings call.

Eisman noted, however, that the in-store sales decline in these Texas stores has slowed down thus far in 2016’s first quarter, perhaps a positive sign.

“I don’t know [if] we’ve reached a bottom, but maybe we are close to one,” he said.

On a positive note, Albuquerque, N.M. — known as The Land of Enchantment — is proving to be quite enchanting for Alon. The 14 convenience stores the Dallas-based company acquired in Albuquerque in August have “exceeded our expectations” and led Alon’s retail division to a new era of growth, according to Eisman.

In fact, Alon is so pleased with retail operations in Albuquerque that the company opened two more c-stores in the region recently.

Alon’s retail division posted overall net operating income of $4 million in 2015’s fourth quarter, a $5-million decline year over year.

Same-store merchandise sales were essentially flat, while same-store fuel sales dropped by more than 3 percent year over year.

Merchandise sales in the retail division overall increased slightly to $80.958 million. However, merchandise sales per site per month dropped by $4,000 to $87,000, and merchandise margins declined by more than 1 percentage point to 31.1 percent.

At the forecourt, retail fuel sales in terms of gallons rose by more than 2 million gallons year over year to 52.15 million gallons. Retail fuel sales per site per month decreased by 1,000 gallons to 58,000 gallons.

Retail fuel margin dropped by 7.6 cents per gallon year over year to 20 cents per gallon, but much of this change could attributed to the record margin environment in the fourth quarter of 2014, Alon noted. 

Companywide, Alon reported a net loss of $52.5 million for its most recent quarter, compared to a net profit of $6.7 million in the same period a year prior.

Alon USA operated 309 convenience stores as of Dec. 31.