Coastal Corporation

Product Details

Historical Context

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Coastal Corporation was originally founded in 1955 by Oscar Wyatt as the Coastal States Gas Producing Company.

Despite the impact of the energy crisis, Coastal maintained its profitability and continued to expand throughout the 1970s. The expansion was not confined to Texas. In 1973, Coastal acquired Colorado Interstate Gas Company, formerly the Derby Oil Company of Wichita, Kansas, along with its three refineries in a $182 million hostile bid. With the acquisition, Coastal became a national company. In 1973, Wyatt renamed the company Coastal States Gas Corporation.

In the first half of the decade, Coastal also sought to diversify into other energy markets. In 1973 it entered the coal mining field with the acquisition of Southern Utah Fuel Company. Also in 1973, with the acquisition of Union Petroleum Corporation, renamed Belcher New England, Inc., Coastal began the marketing and distribution of petroleum products. By 1975 revenues had reached $1.9 billion. Coastal's expansion continued in 1976 with the purchase of Pacific Refining Company's plant in Hercules, California, which increased its refining capacity to about 300,000 barrels per day. In 1977 Coastal acquired Miami-based Belcher Oil Company, one of the largest marketers of fuel oils in the Southeast.

In 1980, Wyatt changed the company's name to Coastal Corporation. Later that year, Wyatt and two other oil executives pleaded guilty to criminal violations of federal crude oil pricing regulations. Wyatt and the president of Coral Petroleum were each fined $40,000. Each company was required to refund $9 million to the U.S. Department of the Treasury, and each incurred $1 million in civil penalties. Economic recession and an oversupply of oil and natural gas, as well as conservation by consumers, led to Coastal's first loss, which amounted to $96.4 million for the year 1981. Wyatt trimmed the workforce and cut the budget, and within six months he had restored the company to profitability.

In 1987, despite sanctions prohibiting U.S. companies from dealing with Libya because of its terrorist connections, Wyatt negotiated a deal in which Libya supplied oil to Coastal's refinery in Hamburg, Germany. Wyatt's deal was legal because foreign subsidiaries of U.S. companies were exempt from U.S. regulations.

The U.S. government took action against Coastal's agreement with Libya in 1991 by prohibiting U.S. citizens from working for the venture. This act did not dissuade Wyatt from further deals with countries in the Middle East. Coastal bought large amounts of Iraqi crude in the 1980s, and prior to the commencement of the Persian Gulf War, Wyatt offered to sell Iraqi President Saddam Hussein part of the company's international marketing and refining operations. U.S. sanctions against Iraq following the war prevented Coastal from purchasing Iraqi oil, but Wyatt maintained close relations with Iraq in hopes of gaining access to the oil at some time in the future.

Coastal's operating revenues dropped considerably between 1996 and 1998, from $12.17 billion to $7.37 billion, making it a target for acquisition. Although the company rebounded from increased production of natural gas by more than 16 percent in 1998, coupled with rising oil prices that made Coastal's Petroleum business increasingly profitable, the board of directors and founder Oscar Wyatt continued with merger negotiations. This resulted in Coastal being acquired by the smaller El Paso Energy, whose primary business was in natural gas.

El Paso Corporation acquired Coastal in 2001, and El Paso largely divested itself of Coastal's Petroleum business with the Coastal brand being phased out. Its website was shut down immediately upon the buyout. El Paso then gradually sold off the Coastal retail gasoline business.

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