Ashland looking for refining partners, may dump exploration
ASHLAND, Ky. (AP) _ Under pressure from shareholders, Ashland Inc. is considering selling its oil exploration business and wants to link with another refiner to sell more gasoline.
As a result, Providence Capital Inc. will drop an effort to elect three members to Ashland’s 17-seat board. Ashland also will reimburse Providence Capital for up to $75,000 in expenses.
Providence, founded in 1990 by investment banker Herbert Denton and Chicago real estate tycoon Sam Zell, only owns 100 shares of Ashland but says it represents bigger shareholders dissatisfied with Ashland’s financial performance.
Denton, Providence’s president, said Ashland’s announcement Monday ``is broadly responsive to our concerns and seems to have an appropriate sense of urgency.″
Ashland said it will seek partners for its petroleum refining and marketing business, which includes the well-known Valvoline and SuperAmerica names.
The move would follow similar arrangements by other big energy companies. Texaco, Shell and Saudi Aramco are finalizing details of a pact to combine U.S. refining and marketing operations. British Petroleum PLC and Mobil Corp. are combining European refining and marketing operations.
Providence reportedly wanted to boost the company’s shares by spinning off some of its business units and jettisoning its struggling refining operations.
Ashland also said Monday it is pursuing a merger or spinoff for its oil and natural gas exploration unit, which posted a $6 million operating loss last year.
The exploration division has never been a key to the company’s success, spokesman Stan Lampe said. More than 90 percent of the 354,000 barrels of crude oil Ashland uses a day come from outside sources, he said.
Money saved from planned spending cuts in refining and exploration will be channeled into chemicals, highway construction and other businesses.
In another move aimed at boosting its stock, Ashland is killing a plan to sell $100 million worth of shares and instead will buy back 1 million shares annually.
Ashland will consolidate its refining and marketing businesses into one group, headed by Fred Brothers, group operating officer for the company’s successful chemical division.