Dominion Partners, L.C.

Gus Miller, president and CEO of the Norfolk-based distributor and retailer, said the company had wanted to move into Richmond for a long time.

NORFOLK -- In a major expansion beyond its Hampton Roads market, Miller Oil Co. has acquired a chain with a dozen combination gas station/convenience stores in the Richmond area.

Miller Oil, already the largest gasoline retailer in southeastern Virginia, also has purchased 18 gas stations in Hampton Roads from Shell Oil Co.

The two transactions, involving a total of 33 stations, boosted the number of Miller Oil-owned stations to 96.

The Breez' In chain, based in Chester, was attractive because it had a major presence in markets where Miller Oil had hoped to expand, said Augustus C. ``Gus'' Miller, president and chief executive officer of the Norfolk-based distributor and retailer.

"We've wanted to move into the Richmond area for a long time, but it didn't make sense to have one or two stores there," said Miller.

By acquiring four stations in the Hopewell-Colonial Heights area and eight in the Richmond suburbs, his Norfolk-based company stands to gain a significant share of gasoline sales in those markets, he said. The transaction also included three Breez' In combination stores in Virginia Beach. Two more stores are under development in the Richmond suburbs.

The price, said Miller, was "in excess of $5 million," and the transaction will bring $27 million of annual revenue to Miller Oil.

In the 11 months of its current fiscal year, Miller Oil rang up $80 million of sales from gasoline and $25 million of convenience-store sales.

The company, Miller said, paid ``several million dollars'' in cash for Shell's Hampton Roads stations, but he declined to be specific.

The transaction calls for Miller Oil to help boost sales of Shell's gasoline in the region. As part of their agreement, Shell will provide his company with marketing, real estate and financial support to open additional stations, he said.

In Hampton Roads, Shell's share of local gasoline sales had slipped in recent years to about 3 percent, and the company was dissatisfied with what it was earning on its local investment, Miller said.

"They made the decision that they weren't going any further in this market," he said.

Instead of pulling out, the oil refining-and-marketing giant decided to hook up with an expanding distributor, Miller said. Their agreement, he said, materialized after seven months of discussions.

Miller Oil's back-to-back deals occurred amid accelerating consolidation among the nation's gasoline refiners and retailers. Earlier this year, British Petroleum Co. agreed to acquire Amoco Corp., a major gasoline retailer in Hampton Roads with a refinery in Yorktown. Meanwhile, Shell, Texaco Inc. and Aramco have agreed to consolidate some of their refining and gasoline-retailing operations.

Low oil prices and shrinking profit margins on gasoline have prompted some oil companies to concentrate their company-owned stations in larger metropolitan areas. In the process, they've relied more heavily on distributors for sales of gasoline in smaller markets.

"Ten years ago, the major oil companies did 25 percent of their business through distributors and 75 percent directly,'' Miller said. ``Today at least 60 percent of their business is done through distributors.''

Some of the new stations Miller Oil acquired may be closed or sold, and the gasoline brands at others may be changed, Miller said. The company already was selling Amoco, Exxon and Mobil gasoline and picked up three other brands -- Shell, BP and Texaco -- with its recent transactions.

"With six brands, it's going to be difficult to keep all of those companies happy,'' he acknowledged.

Miller Oil's managers, he said, will spend a week in early November analyzing each of the company's stations and then deciding which brands to use at particular stations.