BP to sell Texas City Refinery to Marathon Petroleum
09 October 2012
BP has confirmed earlier rumours that it will sell its Texas City Refinery to Marathon Petroleum
Corporation for $2.5 Billion, raising the total for its post-Macondo recovery fund to over $35 billion out of its total goal of $38 billion. The deal includes part of its retail and logistics network in the Southeast US.
The $2.5bn includes $0.6bn of cash at closing, an estimated value of $1.2bn for hydrocarbon inventories and a $0.7bn six year earn-out arrangement based on future margins and refinery throughput).
“Today’s announcement is the second major milestone in the strategic refocusing of our US fuels business,” said Iain Conn, chief executive of BP’s global refining and marketing business. “Together with the sale of our Carson, California refinery, announced in August, the divestment of Texas City will allow us to focus BP’s U.S. fuels investments on our three northern refineries, which are crude feedstock advantaged, and their associated marketing businesses. Marathon Petroleum is a highly respected refiner and marketer. Their ability to take on the responsibilities of this large and complex refinery will be good for the long-term future of the business and its employees. Although largely a merchant refinery, we have decided to also sell certain terminals and marketing assets in the Southeast US.”
Subject to regulatory and other approvals, Marathon Petroleum will purchase the 475,000 barrel per day refinery, associated natural gas liquids pipelines, and four marketing terminals in the Southeast US. BP will also assign certain branded jobber contracts supplying approximately 1,200 retail sites in Tennessee, Mississippi, Alabama and Florida which could be supplied by the refinery. BP will remain a significant retailer of fuels in the US, with approximately 8,000 BP and ARCO-branded sites in the Midwest, Pacific Northwest and along the East Coast. BP anticipates the transaction will close by early 2013.
The sale of Texas City, where 15 people were killed and 170 injured in an explosion seven years ago, is part of a $38bn asset disposal plan designed in part to cover the costs of the 2010 Deepwater Horizon incident in the Gulf of Mexico.
“During the past several years the Texas City Refinery has been transformed through a resolute focus on safe, compliant, and reliable operations and in recent months has returned to profitability. It does not, however, fit with the long-term strategic direction of BP’s global refining portfolio,” said Texas City Refinery manager Keith Casey. “I believe today’s announcement is good for our workers, good for our community, and positions the refinery to achieve its full potential over the long term as part of one of the leading refiner-marketers in the US”
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