(Corrects second paragraph to say evaluating gasoline stations and convenience stores instead of all businesses)
By Kristen Hays
HOUSTON, Jan 28 (Reuters) - Global Partners LP has laid off 8 percent of its work force and aims to handle only ethanol, not crude, at its rail terminal in Oregon in response to the nearly 70 percent plunge in oil prices since mid-2014, the company said on Thursday.
The company also cut its distribution for the October-December period by 33.7 percent compared to the previous quarter, and is evaluating its portfolio of gasoline stations and convenience stores for possible disposition or reconfiguration.
Global Partners’ stock price fell more than 21 percent to close at $15.38 Thursday on the New York Mercantile Exchange.
“We continue to be negatively impacted by fixed costs associated with our crude oil business, including railcar leases,” Chief Executive Officer Eric Slifka said in a statement.
“As a result, in the first quarter we have implemented a number of initiatives to reduce expenses and manage our cash flow,” he said.
Global Partners has been expanding its railport and terminal at the Port of St. Helens in Clatskanie, Oregon, to increase storage, handle Panamax-sized vessels and increase crude offloading capability to up to 120,000 barrels per day. That project is slated to be finished in the third quarter this year.
The company held a meeting for analysts at the terminal in November 2014, touting that $100 million project.
However, the plunge in oil prices has narrowed discounts of North American crudes to global crudes, eroding rail transport profitability.
Slifka said the company was “taking steps” to use the Oregon terminal for ethanol transloading “during this period of headwinds in the crude market.” The terminal houses an ethanol plant.
The company cut 70 jobs, about 8 percent of its work force excluding convenience store workers. Jobs were slashed at the Oregon terminal as well as the company’s crude loading terminals in North Dakota and its corporate offices.
The company did not explain the issues with railcar leases, but current monthly leases for the newest, safest tank railcars that carry crude have fallen about $700 from $1,300 early last year and up to $2,450 in 2014.
Companies that signed multi-year leases when they were at their highs have to pay those costs whether or not they move crude unless they negotiate new rates with lessors. (Reporting By Kristen Hays; Editing by Tom Brown)