Arclight Capital to Divest Petroleum Products Corp.

Arclight Capital, a leading private equity company, has made the decision to sell one of its first acquisitions, Petroleum Products Corp., which it purchased nearly a decade ago. This move comes as part of Arclight Capital’s strategic efforts to optimize its portfolio.

Arclight Capital, based in Boston, has successfully completed numerous acquisitions totaling over $27 billion. In 2015, the firm expanded into the downstream energy sector with the acquisition of Petroleum Products Corp.

This acquisition included about a dozen terminals located in Pennsylvania. These terminals, along with the associated supply company, have proven to be highly profitable. With a combined storage capacity of approximately 4 million barrels, these facilities range in size from 150,000 to over 500,000 barrels.

The terminals are strategically situated in various cities across Pennsylvania, including Allentown, Altoona, Coraopolis, Dupont, Pittsburgh, Neville Island, Harrisburg, Northumberland, Sinking Springs, Mechanicsburg, Highspire, and Lancaster.

The transaction between the two privately held companies was conducted discreetly, and the financial details were not disclosed.

Notably, the storage tanks at these properties hold a wide range of products such as gasoline, diesel fuel, heating oil, kerosene, ethanol, and biodiesel. Additionally, Arclight Capital has introduced renewable diesel at select locations. These terminals are seamlessly connected through pipelines, barges, and rail networks, allowing for efficient supply routes from the Gulf Coast, New York, Philadelphia, and the Midwest.

Following the acquisition, Arclight Capital rebranded the company as Lucknow-Highspire Terminals (LHT), with its main office now located in Middletown, Pennsylvania.

Moreover, Arclight Capital utilized subsidiaries to expand its presence in other downstream energy ventures. One of the most significant expansions occurred in 2015, when Arclight acquired Gulf Oil LP from Cumberland Farms.

In December 2023, Arclight Capital successfully sold Gulf Oil to the Metroplex subsidiary of RaceTrac. Currently, the company has a pending agreement to sell five bulk terminals to Global Partners.

Arclight Capital’s decision to divest Petroleum Products Corp. showcases its commitment to strategic optimization and maximization of shareholder value.

ArcLight’s Downstream Investments

In recent years, ArcLight affiliates have been involved in several significant transactions within the energy industry. During the period from 2016 to 2018, they acquired the assets of TransMontaigne Partners and entered into a joint venture with BP to purchase Thornton’s, a prominent Midwest convenience-store chain. As a result, BP now holds full ownership of the company.

One noteworthy investment by ArcLight was its involvement with the former Hovensa refinery located in St. Croix, V.I. The company invested substantial amounts of money with hopes of revitalizing the refinery’s production of diesel, jet fuel, and gasoline. Unfortunately, this endeavor faced significant challenges and ultimately led to the refinery filing for Chapter 11 bankruptcy protection in 2021. At present, Hovensa refinery owes nearly $2 billion to its creditors.

Moving forward, it is anticipated that LHT, an entity associated with ArcLight, will attract considerable attention from other terminal operators or suppliers. Marathon Petroleum and Global Partners, for instance, expressed their interest before ArcLight’s acquisition. Furthermore, the inclusion of numerous storage farms in Pennsylvania would significantly enhance Marathon Petroleum’s influence within the state.

Marathon Petroleum further expanded its operations in Pennsylvania during the fourth quarter of the previous year by quietly entering various eastern terminals.

While reached out to ArcLight for comment, the company declined to respond.

–Reporting by Tom Kloza; Editing by Jeff Barber

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