Business & Industry
Monday, October 08, 2012
Marathon Petroleum to Purchase BP's Texas City Refinery
and Related Logistics and Marketing Assets
- Adds a world-scale 451,000 barrel per day refinery
- Includes 100% ownership of cogeneration facility
- Adds four light product terminals, refinery-related pipeline assets and Colonial Pipeline shipper history
- Assignment of branded-jobber contracts for approximately 1,200 retail locations
- Expands MPC's integrated operations model
- Expected to be immediately accretive to earnings
FINDLAY, Ohio - Marathon Petroleum Corporation (NYSE: MPC) today announced it has signed a definitive agreement to purchase BP's 451,000 barrel per calendar day (475,000 barrel per stream day) Texas City refinery, three intrastate NGL pipelines originating at the refinery, an allocation of BP's Colonial Pipeline Company shipper history, four terminals, retail marketing contract assignments for approximately 1,200 branded sites and a 1,040 megawatt cogeneration (cogen) facility. The base purchase price is $598 million, plus inventories estimated at $1.2 billion. The agreement also contains an earnout provision under which MPC could pay up to an additional $700 million over six years, subject to certain conditions. The transaction is expected to be accretive to earnings in the first year of operation. The acquisition is expected to be funded with cash on hand, and is anticipated to close early in 2013, subject to customary closing conditions and regulatory approvals.
The BP Texas City refinery is one of the largest and most complex in the U.S., with a Nelson complexity index of 15.3. The facility is strategically positioned to provide products throughout the U.S. Gulf Coast, Midwest and Southeast, as well as into export markets. The refinery has the flexibility to process a wide range of crude oils, and has access to price-advantaged mid-continent and Canadian crudes via pipelines as well as waterborne cargoes. The cogen facility provides steam for the refinery and other local third-party facilities and the electric power for the refinery, selling any excess to the utility grid. In addition to the Texas City facilities, the transaction includes three intrastate NGL pipelines originating at the refinery, shipper history on Colonial pipeline representing 50,000 barrels per day (bpd) and light product terminals in Jacksonville, Fla.; Charlotte and Selma, N.C.; and Nashville, Tenn. The transaction also includes assignment of branded-jobber contracts supplying approximately 1,200 BP retail locations, representing approximately 64,000 bpd of gasoline sales, in the southeastern U.S.
"This world-scale refinery and related assets complement our current geographic footprint and align well with our strategic initiative of growing in existing and contiguous markets to enhance our portfolio. This acquisition will provide MPC the opportunity to capture synergies across our existing Gulf Coast operations; optimize commercial and process improvements; expand our retail presence in the Southeast; and enhance our ability to sell products into export markets," said MPC President and Chief Executive Officer Gary R. Heminger. "The acquisition of these assets at an attractive price provides the opportunity to add significant long-term value to our shareholders. We are pleased that MPC's financial performance and cash generation allow us to continue our balanced approach of making value-enhancing investments in the business and returning capital to our shareholders."
Heminger also stated, "We have a long-standing commitment to safe and environmentally-conscious operations. BP has made significant investments to improve the safety, reliability and environmental performance of the refinery in recent years. We will leverage those investments in the refinery with our continuing focus on safe and reliable operations. In addition, we have been a part of the Texas City community for many years through our Texas City refinery, and this acquisition will deepen our commitment to that area."