3 Min Read
(Adds company comment on stock drop)
By Ernest Scheyder
July 9 (Reuters) - Shares of World Fuel Services Corp fell for a second day on Tuesday after the company said crude oil sold by one of its units was being carried by railcars involved in the deadly train derailment in Lac-Megantic, Quebec, last weekend.
Much of the drop in the share price occurred before official confirmation that World Fuel products were involved in the crash.
World Fuel, formed in 1984, brings together buyers and sellers for oil and other fuels across the Western Hemisphere. It does not drill for oil or directly transport it, and most of its customers are involved in aviation, shipping and trucking. The company's profit comes by extracting margins from buying and selling of fuels.
A runaway oil tanker train carrying World Fuel's crude oil derailed in Lac-Megantic shortly after 1 a.m. Saturday, exploding in a deadly ball of flames and killing at least 13 people.
The train was carrying North Dakota crude to a refinery in Saint John, New Brunswick, owned by privately held Irving Oil.
Shares of Miami-based World Fuel, one of the largest publicly traded fuel distributors in the world, fell 0.7 percent to $38.82 on Tuesday, after being down as much as 4.6 percent earlier in the session.
The stock dropped 6 percent on Monday, though official confirmation that World Fuel's products were involved in the crash did not come until after the close of trading on Monday.
Given the time difference, World Fuel said it believed the stock drop on Monday might not have been related to the Quebec crash.
"I don't know that World Fuel's name was associated with the Quebec incident before the market closed yesterday," said Jason Bewley, World Fuel's vice president of investor relations. "I don't know how that connection could have been made."
It was unclear whether World Fuel leased the railcars involved in the crash or if they were leased by another party. Bewley declined to comment, though he said World Fuel does lease some railcars and does carry insurance.
"We're hopeful that the loss will not be very meaningful at the end of the day," he said.
Shares of Dakota Plains Holdings, which has a joint venture with World Fuel and owns rail-loading facilities in North Dakota's Bakken shale field, where railcars involved in the Quebec disaster were filled, fell 24 percent to $1.90 on Tuesday.
Dakota Plains did not respond to a request for comment.
World Fuel's annual revenue has more than doubled since 2008, the start of the North American shale boom. (Reporting by Ernest Scheyder in New York and Sayantani Ghosh and Garima Goel in Bangalore; Editing by Saumyadeb Chakrabarty, Bernard Orr and Steve Orlofsky)