09 October 2012

BP to sell Texas City Refinery to Marathon Petroleum Corporation for $2.5 billion

- BP has now announced over $35 billion toward its goal of $38 billion divestments 


08 October 2012 - BP announced today it has reached an agreement to sell its Texas City, Texas refinery and a portion of its retail and logistics network in the Southeast U.S. to Marathon Petroleum Corporation for $2.5 billion (which 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 U.S. 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 U.S.” 

With today’s agreement the total value of the divestments that BP has agreed since the beginning of 2010 is now over $35 billion. BP expects this total to reach $38 billion by the end of 2013

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 U.S. 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 U.S., 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. 

“This sale will reduce BP’s presence in the Southeast U.S., however BP remains firmly committed to growing and strengthening our BP-branded retail network and the value of the BP brand east of the Rockies in partnership with BP-branded jobbers and dealers,” said Doug Sparkman, president of BP’s East of Rockies fuels business. “A number of valued jobbers are affected by this transaction and we are committed to working very closely with Marathon Petroleum to make this transition as smooth as possible.” 

BP continues to invest heavily in its three northern U.S. refineries. The company is in the midst of a multi-billion dollar modernization effort at its Whiting Refinery in Northwest Indiana. The BP Cherry Point Refinery in the state of Washington is being upgraded to produce cleaner-burning diesel fuel and the BP Husky joint venture near Toledo, Ohio is investing to improve its gasoline making capabilities. 

BP has invested more in the United States over the last five years than any other oil and gas company. With more than $52 billion in capital spending between 2007 and 2011, BP invests more in the U.S. than in any other country. The company is the second largest producer of oil and gas in the U.S., a major oil refiner and a leader in alternative energy sources including wind power and biofuels. BP provides enough energy each year to light the entire country. With 23,000 U.S. employees, BP supports nearly a quarter of a million domestic jobs through its business activities. 

Source: BP