How is DCC Capitalising on Oil Majors' Cut Backs?

It’s no secret that the crude price crash has left oil majors reeling. But not everyone has been hit hard, with some businesses swooping in to capitalise on the chaos. After agreeing on a huge £235 million purchase of Norwegian petrol stations, international oil distribution company DCC has been snapping up deals from a string of oil majors.  

The latest transaction saw DCC purchase Esso's entire Norwegian petrol station network for a cool £235 million price tag. This brings its total petrol station ownership up to 1,000, with Chief Executive Tommy Breen confirming that it plans to continue to build its empire.

“From a modest position three years ago, DCC Energy will operate over 1,000 retail petrol stations and is ambitious to continue this development,” he comments.

A European empire

While some are surprised, the move has been in the works for several years. In 2013, DCC announced that buying up European petrol stations was one of its key growth strategies. Now, the company is delivering on its promise, and building up an impressive portfolio of petrol stations in France, Sweden and Norway.  

It kicked off its campaign by acquiring French gas company Butagaz from Shell in 2015, at a cost of £338 million. It’s now set its sights on other deals, with Breen confirming that the company is on the lookout for similar opportunities from other major oil giants.

DCC set to unlock big profits

As Norway’s third largest retail petrol station network, Esso sells more than 600 million litres of fuel each year, across more than 140 stations. Furthermore, it has more than 100 contracts to supply petrol to other privately owned, Esso-branded stations. For DCC, Esso’s enormous national presence spells big profits.

Expectations are high, with Breen maintaining that the DCC expects to make a 15pc return on capital in the first full year of its French acquisition ownership. Outlooks for the latest Norwegian buy-out are similar, with DCC’s recent share price jump reflecting the company’s strong position.  

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