Meteor Industries Inc. History
Denver, Colorado 80202
Telephone: (303) 572-1135
Fax: (303) 572-1803
Sales: $118.4 million (1998)
Stock Exchanges: NASDAQ
Ticker Symbol: META
NAIC: 42272 Petroleum and Petroleum Products Wholesalers (Except Bulk Stations and Terminals); 44719 Other Gasoline Stations
Meteor Industries Incorporated is a petroleum products marketing and distribution company that has shown exceptional growth and profitability while establishing itself as a major regional player. Since 1993 Meteor has successfully assimilated eleven acquisitions and in the process built one of the most extensive distribution networks in the Western United States. The Company's mission is to continue growing aggressively through internal expansion and earnings-accretive acquisitions in a highly fragmented industry. Key Dates:
- Graves Oil & Butane founded.
- Graves Oil bought by Names and Staal; Meteor founded.
- Hillger Oil and Duke City Distributing acquired.
- Tedken and Fleischli Oil acquired.
- Jardine acquired.
Meteor Industries Inc. is one of the fastest-growing distributors and marketers of petroleum products in the Southwestern United States. Founded in 1993 by a former accountant and a corporate attorney, Meteor focuses primarily on rural or sparsely populated areas that haven't been penetrated by the company's older and more powerful competitors. Meteor is active in almost every aspect of the petroleum industry, from wholesale dealings with small business owners to the ownership and operation of convenience stores. Meteor's growth plan is based on the acquisition of small, well-established businesses.
Meteor's Beginnings: The Acquisition of Graves Oil & Butane
Meteor was founded in 1993 by Edward J. Names and his business partner, Dennis R. Staal. Names had an undergraduate degree in Economics from the University of Colorado at Boulder and a law degree from the University of Denver. After his graduation from the latter in 1980, Names was active in both the practice of corporate law and high-profile business dealings in the Colorado area. In 1983 he became president of the Denver-based Alfa Resources, a position he held until 1995, and in 1982, after being an attorney for only two years, he became a partner at the mid-sized law firm of Schmidt, Elrod & Wills. In 1987 Names acted as special counsel to the law firm of Wills and Sawyer, a relationship he continued until 1992. Names's involvement in the business and law communities of Colorado provided contacts that proved helpful when he founded Meteor in the early 1990s.
Names's partner Staal was a Nebraska native who served as a C.P.A for Arthur Anderson and, from 1973 to 1976, as the Controller for the Health Planning Council of Omaha. In the late 1970s Staal became involved in the oil industry, becoming director of the Wulf Oil Corporation in 1977 and, two years later, that company's president, a position he kept until 1981. Staal served as a director of the Chadron Energy Corporation from 1979 to 1981 and as a director of the Saba Petroleum Company from 1986 to 1991. In the late 1980s Staal became involved with Alfa Resources, of which Names was president, and the two decided to form the partnership that resulted in Meteor.
Meteor came into being through the acquisition of a small company located in Farmington, New Mexico, called Graves Oil & Butane. Graves was engaged primarily in the wholesale marketing of propane, gasoline, diesel, and other petroleum products. While Graves made most of its revenue through its wholesale business, the company also owned and operated four gasoline stations in Farmington, one gasoline station and convenience store in Albuquerque, and three lube stations in central New Mexico.
Graves was founded in 1956 by Theron J. Graves, a prominent New Mexico businessman who owned several small companies in the area. Graves Oil was from its start focused on the distribution and marketing of petroleum products, and within a few years of its inception had struck up contracts with numerous local gas stations and service centers. At that time New Mexico was experiencing a population boom as the result of the government's expansion of military operations in the state, and the larger oil companies were rapidly expanding the number of retail gasoline stations in the area. This expansion translated into an increased customer base for Graves's wholesale division, and the company grew quickly throughout the 1960s.
Next, Graves turned its focus to the retail side of the industry, opening a series of service stations in Farmington. Because the town was small, its petroleum market had largely escaped the attention of huge national chains, allowing small, family-owned companies like Graves to get a foothold in a notoriously competitive industry.
As gasoline stations evolved to include convenience stores and mini-marts, Graves kept up with the competition. In Albuquerque the company opened a 24-hour 'super station,' which, by the early 1990s, was generating $3 million annually and had more than 2,500 square feet of space. Graves was also quick to respond to new automation trends in the petroleum retail industry: when 'cardlock' systems became popular with cross-country vacationers and truck drivers, Graves installed four cardlock systems at various locations. These systems allowed a customer automatic access to fuel through the utilization of a specially designed, pre-authorized card that activated the fuel pump and recorded the amount put into the vehicle. The customer was billed later. The cardlock system was useful for encouraging repeat customers, as the cards could only be used at company-owned stations.
Nevertheless, Graves's wholesale division remained the company's primary focus and was consistently responsible for about 80 percent of its revenue during its first three decades. Despite the vicissitudes of the oil industry in the 1970s and 1980s, the company's profits grew slowly and steadily, and by the early 1990s Graves was a small but solid presence in New Mexico.
1993-95: Meteor Makes Its Mark
Graves's solid reputation attracted the attention of Names and Staal when the two joined forces in the early 1990s, and the partners purchased Graves for $7.5 million. The acquisition served as the foundation for the newly formed Meteor Industries, with Names acting as CEO and Staal as CFO. Meteor continued operating some of the Graves locations under their original name, but the company's headquarters was relocated to Denver.
Meteor developed a growth strategy that continued to reflect Graves's industry focus. Wholesale distribution of petroleum products to commercial retailers as well as to oil and mining companies made up the majority of Meteor's business, while the company developed franchise agreements with Phillips Petroleum, Fina Oil, and Sun Oil to expand the company's retail division. The acquisition of Graves was only the beginning for Meteor, which quickly began casting about for other, similar companies that could be added to its roster.
In 1994 Capco Resources Ltd., a company that owned interests in oil and gas production companies throughout the United States, Canada, South America, and Pakistan, bought a majority interest in Meteor. Capco's involvement in Meteor gave the fledgling company more financial backing than it would otherwise have had, and made it possible for Meteor to move forward with its aggressive acquisition plans. Two years after the acquisition of Graves, Meteor purchased Hillger Oil, a company with revenues of $20 million a year that operated several convenience stores in the Southwest. That same year, Meteor acquired Duke City Distributing, a company with annual revenues of about $8 million that operated one convenience store in addition to its wholesale business.
1996-99: Meteor's Rapid Rise
In 1996 Meteor acquired two more companies, American Propane LLC and Innovative Solutions Incorporated, both small companies which were rapidly absorbed into Meteor's management structure. The following year, Meteor purchased Tedken Oil, a wholesaler and retailer of oil products, with annual sales of $5 million, and Fleischli Oil, with annual revenues of about $85 million. Fleischli had marketing and distribution agreements in Colorado, Wyoming, South Dakota, Nevada, Utah, Montana, Nebraska, and Idaho.
In 1998 Meteor purchased two more small oil companies, Tri-Valley Gas and R & R Oil, with annual sales of $15 million and $11 million, respectively. R & R Oil was a particular boon to the company, as the acquisition greatly strengthened Meteor's presence in the Wyoming and Rocky Mountain Powder River Basin regions, both of which, because of their sparse populations, had open petroleum markets.
In 1999 Meteor acquired Jardine Petroleum, a distribution company with annual sales of more than $50 million. Founded in the 1930s, Jardine had a strong history in Utah and proved to be one of Meteor's most successful purchases. Jardine added eight more locations to Meteor's cardlock network, added several distribution facilities to the company's wholesale division, and increased its transportation services as well. Through the Jardine purchase, Meteor acquired the assets of Petro Express and PetroSolutions, divisions of Jardine that delivered petroleum products to the company's wholesale and retail customers. The same year Meteor strengthened its presence in northern Colorado with the acquisition of Carroll Oil, which operated five convenience stores in Northern Colorado and had two commercial cardlock systems. In February 2000, Meteor announced that it had sold its retail store subsidiary, Meteor Stores, Inc., to Capco Energy, Inc.. The deal was reportedly worth $1.5 million and was effected in order to allow Meteor to focus on expanding its wholesale and distribution operations. The company signed a five-year contract to supply the stores sold to Capco with petroleum products.
After only six years in business, Meteor had averaged two acquisitions a year, attained annual revenues of more than $100 million, and was operating 13 offices in ten states. Moreover, despite the company's phenomenal growth, it maintained a reputation for a friendly, inclusive management style. Meteor often retained the managers and executives from the businesses it acquired, which helped to create a collaborative managerial atmosphere. Rarely, in fact, did Meteor approach a company that had not already expressed an interest in selling. Many of the companies Meteor acquired reflected a trend in the oil industry, as small, family-owned oil companies sold out as the result of either pressure from huge corporations or simple lack of interest from the next generation. Meteor stood out as a company willing to consolidate these small businesses into a powerful regional company.
Principal Subsidiaries: Meteor Marketing Inc.; Graves Oil & Butane Co., Inc.; Innovative Solutions and Technologies, Inc.; Meteor Holdings LLC (73%).
Principal Competitors: Tosco Corporation; 7-Eleven, Inc.
- Callanan, John, 'Meteoric Growth,' Journal of Petroleum Marketing, August 1999, p. 16.
- Locke, Tom, 'Meteor Plans More Acquisitions, Equity Offering,' Wall Street Journal, July 7, 1999, p. C12.
- 'Meteor Industries Announces Record Year-End Results,' PR Newswire, March 30, 1999.
- 'Meteor Industries, Inc. Acquires Tedken Oil C. Assets and Operations,' PR Newswire, February 13, 1997.
- 'Meteor Industries, Inc. Agrees to Acquire Fleischli Oil Company, Inc.,' PR Newswire, August 13, 1997.
- 'Meteor Industries, Inc. Agrees to Acquire R & R Oil Company,' PR Newswire, November 5, 1998.
Source: International Directory of Company Histories, Vol. 33. St. James Press, 2000.