Sprague Energy Acquires Merrill Marine Terminal Services, Inc.

PORTLAND,ME, October 25, 2004 - Sprague Energy Corp. today announced it has reached an agreement to acquire the assets of Merrill Marine Terminal Services, Inc. and to secure an exclusive long-term lease of property from Merrill Industries in Portland, Maine. 

Merrill Marine Terminal Services, Inc. has provided cargo-handling services in the Port of Portland since the early 1980's.  During its nearly 25 years of operation, Merrill's has grown from a strictly bulk facility handling primarily coal and salt to a multi-cargo facility handling numerous break-bulk commodities including newsprint, tapioca and pulp.   Merrill is a leader in handling break-bulk commodities in New England. 

During the announcement, PD Merrill, owner of Merrill Marine Terminal Services, Inc. stated, "This is a logical move because it ensures this facility will continue to be a vigorous component of Portland's working waterfront and of Maine's industrial transportation infrastructure.  Sprague will benefit from our break-bulk handling expertise, and our customers will benefit from Sprague's commitment to the region and its ability to continue to invest in the facility."  

Sprague currently owns and operates 19 oil and bulk terminals throughout New England and New York State.  In Maine, Sprague operates oil distribution facilities in South Portland and Searsport.  In addition, just this past year, Sprague, with assistance from Merrill and the Maine Port Authority, began operating a break-bulk facility in Searsport providing services to mid-coast and northern Maine.

Sprague's objectives are to acquire Merrill's expertise in handling break-bulk materials, and expand its range of services.  "Sprague has operated in Maine for 100 years, and we are committed to continuing to support Maine's industrial sector and economic growth," said John McClellan, President and CEO of Sprague Energy.  "Combining our capabilities with Merrill's will allow Sprague to strengthen its services to the state of Maine.  Many of Merrill's materials handling customers are the same customers that Sprague has supplied with industrial fuels; these customers should gain from our integrated offerings, and we hope to attract new businesses into the state."

Sprague is already planning to build an additional warehouse on the premises to increase efficiencies in operations.  Sprague also plans to continue to use the Merrill Marine Terminal Services, Inc. name.  "In the marine terminal world, the name Merrill Marine Terminal Services, Inc. has earned a valuable reputation.  We plan to continue to build upon it," added McClellan.

Sprague currently employs approximately 400 people, including 60 at its South Portland and Searsport facilities. Merrill currently employs 42 full-time employees, more than 25 part-time employees.  McClellan noted, "it is our intention to expand the base of business and to grow the facility, which should result in increased employment levels."

About Sprague Energy
Founded in 1870 as a distributor of coal and oil, today Sprague Energy is the leading independent supplier of energy products and materials handling services in the Northeast. A network of 19 owned terminals coupled with throughput and exchange arrangements at 85 other facilities enable the company to respond to customer needs in ever changing markets. Through its owned terminals the company also provides bulk and break bulk handling services to a broad range of industries.  Sprague's slogan, "Demand more than supply" is backed up by a commitment to innovation and a dedication to customer satisfaction. Sprague has also received numerous awards for conducting its business in a safe and environmentally sound manner.  Sprague is a wholly owned subsidiary of Axel Johnson Inc., a member of the Axel Johnson group of Stockholm, Sweden.  Please visit Sprague's web site at www.Spragueenergy.com

About Merrill Marine Terminal Services, Inc
In the mid-1970's, Paul E. Merrill decided to re-establish cargo handling capability in the Port of Portland.  In 1977, he made the first land acquisition and began developing Merrill's Marine Terminal primarily to serve the forest products industry of northern New England. Both inbound solid fuels and raw materials and outbound finished products were envisioned.  Further products, both inbound and outbound were added as the Terminal became recognized as a quality service provider within the shipping industry.  Currently, the Marine Terminal receives 80 to 90 vessel calls annually, which includes two to three project cargoes, about 200,000 metric tons of newsprint, baled wood pulp, tapioca and other break-bulk cargoes, and about 350,000 metric tons of bulk commodities. Its role as a high quality niche performer for regional industry is well established among its long-term customers, several of who have relied on Merrill for transportation services for generations.