ExxonMobil Unloads 'On the Run' Retail Outlets to Couche-Tard

ExxonMobil recent sale of its On the Run convenience store franchise system to the owners of the Circle K brand didn't get a ton of coverage compared to the lead up to its earnings and dividend announcement. But it's important because it highlights the oil behemoth's hankering to get out of the retail fuel business.

Alimentation Couche-Tard, one of the largest convenience store operators in North America, bought about 450 On the Run convenience stores and another 43 of Exxon's company-owned and operated sites in Phoenix. The franchise stores, which will keep its On the run branding, are located in 28 states, mostly east of the Mississippi, and the corporate-owned stores are in the Phoenix area. The corporate stores will take on the Circle K brand name and the franchise locations will keep the On the Run brand, for now.

This is a huge deal for Couche-Tard because it establishes a relationship with an oil giant that just happens to be holding to another 800 corporate stores and more than 1,300 franchise locations. Exxon and Couche-Tard did not disclose the purchase price. A comment in the Globe and Mail from Couche-Tard CFO Raymond Paré hints that it was cheaper than it would have been a year or two ago.

Couche-Tard and other retail fuel operators may soon have a glut of locations to choose from. A number of other supermajors including ConocoPhillips, BP and Shell have talked about selling at least some of their retail fuel locations.

Margins in the retail fuel business are already tight. Exxon believes that consumption of gasoline has peaked and demand in the U.S. will shrink 22 percent between now and 2030. The staunchly conservative company is not going to wait to get rid of a shrinking profits ship. And if they can sell their other locations before the rest of the oil major gang joins in, Exxon may just make a bit more money than the rest.