Caltex Share Price Surges 2% on Woolworths Deal News

By ,

Caltex Australia Limited [ASX:CTX], an energy corporation, is riding a market wave today. The company stock is up on the back of a Woolie’s deal.

Until a few years ago, Caltex was a branded-version of Chevron Corporation [NYSE:CVX], who maintained 50% ownership. Chevron sold their portion in May 2015 and Caltex has since been entirely owned by Australian shareholders. The company’s main operations include petrol stations and convenience stores.

As of writing, CTX is up just over 4% by midday.

Why did this happen to Caltex’s shares?

A newly penned agreement with Woolworths almost certainly caused the jump in CTX. The contract will see Woolworth’s four-cents-a-litre discount be extended to 104 existing and 125 new Caltex operations. It is a 15-year whole fuel supply agreement.

Although this deal looks especially sweet for Woolworths, with an $80 million per year benefit, another $50 million one-time payment from Caltex and greater convenience sales — Caltex’s long-term position is definitely better than if BP had won Woolies’ petrol business.

And Woolworths customers can now get their discounts and rewards at Caltex fuel points! Yay!

Also boosting their stock is Australian competition regulators’ refusal to allow Woolworths to spin-off its petrol business to BP. Caltex was in danger of losing their fuel supply contract…

What’s next for Caltex?

Despite recent winnings (BP’s failed bid, the new contract), Caltex needs to watch out over the long term.

Even though Woolworths entered into the agreement, they say they still plan to offer an IPO or sell their petrol business — which would affect who Caltex works with.

While we wait to see what Woolies decides with their petrol interests, they and Caltex are planning a convenience offering under the Metro brand. The plan is to have 250 in six years, and 50 in the next two. The food convenience stores will be run by Caltex…

At the moment, all is looking good for Caltex. Check back here to see if anything changes…


Ryan Clarkson-Ledward,
For Money Morning

PS: Population growth is booming — find out here how you can make the most of a massive global infrastructure rush in this free report ‘Four Ways you can Cash in on Australia’s $70 Billion Infrastructure Mega Boom’.

About Money Morning Editorial

Money Morning is Australia’s most outspoken financial news service. Your Money Morning editorial team are not afraid to tell it like it is. From calling out politicians to taking on the housing industry, our aim is to cut through the hype and BS to help you make sense of the…

Profit Guidance Sends Caltex Share Price into Nosedive

Fuel supplier and convenience retailer Caltex Australia Ltd [ASX:CTX] has had its share price value cut by almost a quarter this morning. In their unaudited profit guidance released this morning, Caltex have forecast some worrying figures.

Caltex’s Share Price Continues Downtrend following CRM Update

Shares of petroleum refiner, distributor and convenience store operator Caltex’s share price seen a 7% drop in value over the past three days.The trigger for the downtrend seems to be…

Caltex Australia’s Share Price Fuels Guidance Results

Caltex Australia’s share price have lifted 6.37% after the release of the company’s end of FY18 results — and the announcement of a dramatic buyback plan.

Caltex Share Price Plummet 5.8% after Poor Profit Guidance

At time of writing, Caltex Australia Ltd [ASX:CTX] shares are trading at $25.46 on the back of the release of their year-end unaudited profit guidance for 2018.

Should You Buy Caltex Australia Limited at this Share Price?

Caltex Australia Limited [ASX:CTX] was mostly flat today. The stock was trading at $34.98 a share at 3pm today, which was a 0.1% gain on yesterday’s close…