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Old 12-22-2008, 01:52 PM   #1
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Arrow Flying J Files 4 Bankruptcy

My favorite truck stop, say it ain't so!

"Flying J, Oil Refiner, Transporter, Files for Bankruptcy

By Steven Church and Dawn McCarty
Dec. 22 (Bloomberg) -- Flying J Inc., an oil refiner, transporter and travel-center owner, filed for bankruptcy, blaming a cash crisis brought on by declines in oil prices.
The Ogden, Utah-based company listed assets of more than $1 billion and debt of $500 million to $1 billion in court documents filed today in Wilmington, Delaware.
Flying J expects to recover from “the precipitous drop in the price of oil” by reorganizing under Chapter 11 of the U.S. bankruptcy code, Chief Executive Officer J. Phillip Adams said in court papers.
The company employs about 16,000 people and is among the 20 biggest closely held companies in the U.S., with sales of more than $16.2 billion in 2007, according to court records. Founded in 1968 with four gasoline stations, it now operates 200 travel centers, two refineries and a 700-mile (1,126-kilometer) pipeline that carries gasoline and diesel from Houston to El Paso, Texas, according to court filings.
Affiliates Longhorn Partners Pipeline LP, Longhorn Pipeline Holdings and Longhorn Pipeline, Big West of California, Big West Oil, Big West Transportation, also sought protection.
The 30 largest consolidated creditors without collateral supporting their claims include Zion Bank, owed $85.8 million; CononcoPhillips, owed $69.4 million; Berry Petroleum Co., owed $26.1 million; Houston Refining LP, owed $19.1 million; and BP Oil Co., owed $17.5 million.
The case is In re Longhorn Partners Pipeline LP, 08-13384, U.S. Bankruptcy Court, District of Delaware (Wilmington).
To contact the reporter on this story: Steven Church in Wilmington, Delaware, at schurch3@bloomberg.net; Dawn McCarty in Wilmington, Delaware, at dmccarty@bloomberg.net.
Last Updated: December 22, 2008 13:15 EST"

Michael
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Old 12-22-2008, 02:16 PM   #2
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There's hope in Chapter 11

Hi Michael:

Chapter 11 is the reorganization provision of the Bankruptcy Code, not the liquidation provision (which is Chapter 7), so I imagine Flying J will continue to operate as a debtor-in-possession under Bankruptcy Court protection while it tries to get a reorganization plan approved by its creditors. It has an ongoing cash flow from its operations but may have had some debt coming due, so filed. I think you will be able to buy fuel, eat a nice meal, take a shower and park overnight for a while longer. It has a much more appealing truck stop operation than the old yucky Stuckeys, whose little pointy-roofed corpses still dot our Interstate highways.
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Old 12-22-2008, 05:09 PM   #3
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Thanks for the info Michael. We religeously use Flying J when we are travelling the interstates. AS Fred stated, Flying J will continue to operate as a debtor in possession and hopefully get things straightened out. On the surface you won't even know anything was going on. There may be some operational changes but you and I will never see it. Just the time we are living in with fuel prices tanking . As one of the major players in the game I don't envy Zions Bank with a credit of $85.8 Million.
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Old 12-22-2008, 05:28 PM   #4
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Just a followup on my last post. If you google Flying J you will find that the State of Iowa has some charges against Flying J for water pollution resulting from an oil spill. Guess in this business that is to be expected but with Flying J filing for protection under the bankruptcy laws more and more of that will be coming out in the press.
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Old 12-22-2008, 07:14 PM   #5
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The Flying J at I5 and Hwy 12 on Friday has been listed as the lowest gas price in the Lodi Area for several weeks. It is 16 miles from our Northern California home. When we stopped in there Friday morning about 6am on our way south, 87 was $1.89.9. Across the street at the ARCO 87 was $1.69.9. There were no customers buying gas at the Flying J. Up until a few days ago, the Flying J was 4-5 cents cheaper than the ARCO.

Lynn pointed the price at the ARCO out to the lady at the cash register at the Flying J. The lady said, "I'd go the the ARCO too."

We did.
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Old 12-22-2008, 08:07 PM   #6
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Sorry to be negative here folks, but I have ZERO sympathy for anybody in the oil business that is facing tough times. They weren’t having problems last summer when gas prices were approaching $5 a gallon. Maybe they should have kept a little capital “set aside for a rainy day”? Perhaps, just maybe, like the Big 3 auto makers, if their business model isn’t working, they need to reevaluate their business operations and not run to the government (read: YOU AND ME, the taxpayers) for protection when times get tough. And yes, I’m well aware how the bankruptcy laws work.

As stated above, sorry for the rant, but times are going to be very hard for the next few years. I’m not going to lose sleep over anybody in this particular business.

Just my 2 kopeks. Your mileage may vary, of course.

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Old 12-22-2008, 08:13 PM   #7
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Just as I figured out that they are the only place to go for LP Gas! They fill tanks by the gallon filled (instead of size). Hope they aren't doing it to downsize their operations.
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Old 12-22-2008, 08:50 PM   #8
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What are they saying?

When the price for gas was in the $4.00 + range station operators were telling us they made the same amount per gallon they made when fuel was about $1.50, and that the increased cost was due to evil speculators.

Now the operators are telling us they are experiencing hard times because fuel prices are down around $1.50. Am I missing something here?
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Old 12-22-2008, 09:12 PM   #9
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Now the operators are telling us they are experiencing hard times because fuel prices are down around $1.50. Am I missing something here?

Yes, you are. The sales volume is down-- Way down! Whatever the profit per gallon is/was, there are less gallons sold now and less profit.
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Old 12-22-2008, 09:51 PM   #10
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Quote:
Originally Posted by Larry in MO View Post
Yes, you are. The sales volume is down-- Way down! Whatever the profit per gallon is/was, there are less gallons sold now and less profit.
Right.........but you will never get your volume up by pricing your product 12% above the guy across the street. Perhaps that sort of thinking is one of the reasons they are in trouble.


Oh.....Well..... I've been saying for a long time now that if the oil companies ever get in trouble and want my help...Good Luck. The only place they will find sympathy is in the dictionary.
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Old 12-22-2008, 10:20 PM   #11
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Oh.....Well..... I've been saying for a long time now that if the oil companies ever get in trouble and want my help...Good Luck. The only place they will find sympathy is in the dictionary.
If you're looking for an "oil company" that is not the villain, it would be Flying J or Valero or others that do not own oil reserves. Most the the others own or lease oil reserves, refineries, and the other stuff. Flying J and Valero and like companies have to buy their oil on the open market. They are simply refiners, transporters, and retailers. That is a BIG difference.

Keeping in mind that the open market is a world market, everyone that refines/sells an oil product (including the tire people, paint people, fertilizer people, etc.) has to line up and bid. The price of light sweet crude that people are so fond of watching anymore is a futures market and does not consider transportation, refining, retail, advertising, and all the other cost involved.

In other words, Valero is bidding on oil to buy, refine, and retail. If they pay $140 for the oil on the world market, you will have $4.00 pump gas. If they pay $40, you will have $1.45 gas. And, yes, the retailers are getting a very few cents on each gallon sold. The profit is in the 44 oz soft drinks!

An interesting note: The Saudi Arabian Oil Co. is 22.8 times bigger than Exxon Mobil as far as oil reserves are concerned. The National Iran Oil Co. is 22.5 time bigger. Qatar is 12.75 times bigger and so on. Actually, Exxon is 17th largest oil company in the world. If the world market sells this stuff for $140 a barrel, that is what the going rate is and your pump gas will cost you more regardless of the company.
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