Back to top

Analyst Blog

Zacks Equity Research

BP Closes $2.4B Texas Refinery Deal

BP TSO MPC

 ZacksTrade Now

This page is temporarily not available.  Please check later as it should be available shortly. If you have any questions, please email customer support at support@zacks.com or call 800-767-3771 ext.  9339.

British energy giant BP Plc (BP - Analyst Report) has sealed the $2.4 billion deal with Marathon Petroleum Corporation (MPC - Analyst Report) relating to the sale of its refinery in the Texas City, Texas.

The sold refinery has a 475,000 barrel per day capacity. In addition, it comprises a 1,040 megawatt cogeneration facility, four marketing terminals situated in the Southeast, retail marketing contract assignments for about 1,200 branded sites representing around 61,000 barrels per day (bpd) of gasoline sales, three operating intrastate natural gas liquids pipelines starting at the refinery and a 50,000 bpd share of BP's Colonial Pipeline Company shipper history.

The payment consists of $0.6 billion in cash, while the hydrocarbon inventory is valued at $1.1 billion and an earn-out arrangement of $0.7 billion is payable over six years, based on certain conditions. The refinery has been renamed as the Galveston Bay refinery by the buyer.

Even before the Macondo accident, the disposed facility witnessed a deadly explosion in March 2005. The incident took the lives of 15 workers and injured as many as 170, raising a safety alarm across BP's U.S. operations. Following this, the company shut down the refinery for about two years and incurred $1 billion in compensations to restore the unit. Again in 2007, BP announced that it spent $1.6 billion to recompense the sufferers.

In recent times, BP has divested a number of non-strategic assets that include the Gulf of Mexico (GoM) oil and gas assets to Plains Exploration & Production Co. for $5.55 billion. It has also disposed the Carson refinery in California to Tesoro Corporation (TSO - Analyst Report) for $2.25 billion. This divestiture is expected to close this year. However, the company intends to retain three core U.S. sites – Whiting in Indiana, Cherry Point in Washington and Toledo in Ohio.

These negotiations are in sync with BP’s $38 billion divestment program that sees the British major getting rid of its mature, non-core upstream assets to create a portfolio with strong growth potential operating from a smaller base by 2013. The divestitures also help the company to refocus on its U.S. fuels portfolio.

BP holds a Zacks Rank #3, which is equivalent to a short-term Hold rating.

Please login to Zacks.com or register to post a comment.

New to Zacks?

Start Here

Zacks Investment Research

Close

Are you a new Zacks Member or a visitor to Zacks.com?

Top Zacks Features

Learn more

Start for as little as $4.50 per trade.

My Portfolio Tracker

Is it Time to Sell?

One of the most important steps you can take today is to set up your portfolio tracker on Zacks.com. Once you do, you'll be notified of major events affecting your stocks and/or funds with daily email alerts.

More Zacks Resources

Zacks Rank Home - Evaluate your stocks and use the Zacks Rank to eliminate the losers and keep the winners.

Mutual Fund Rank Home - Evaluate your funds with the Mutual Fund Rank for both your personal and retirement funds.

Stock/Mutual Fund Screening - Find better stocks and mutual funds. The ones most likely to beat the market and provide a positive return.

My Portfolio - Track your Portfolio and find out where your stocks/mutual funds stack up with the Zacks Rank.

Zacks #1 Rank Top Movers for Zacks #1 Rank Top Movers

Company Symbol Price %Chg
DIXIE GRP IN DXYN 15.84 +7.90%
BOFI HLDG IN BOFI 85.30 +4.97%
RAMBUS INC RMBS 12.31 +4.41%
VIPSHOP HOLD VIPS 148.73 +4.35%
NETFLIX INC NFLX 345.74 +4.32%