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LyondellBasell (LYB) Considers Divestment of Houston Refinery

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LyondellBasell Industries N.V. (LYB - Free Report) recently announced that it is weighing strategic options for its Gulf Coast-based Refining Segment, including a potential sale.

LyondellBasell noted that despite the refinery being a well-performing asset, its divestment will prove to be beneficial as the facility will become part of a larger refinery. The company, in the process, can deliver significant value to its stakeholders.

The Houston Refinery has been under the company’s ownership since 2006. It is one of the largest U.S. refineries, having a capacity to transform 268,000 barrels per day of crude oil into high-value transportation fuels such as reformulated gasoline, ultra-low sulfur diesel, and jet fuel, as well as lubricants, chemical intermediates, and petroleum coke.

LyondellBasell has not provided any assurances regarding the outcome or timing of the divestment and does not intend to make further announcements until it is required or is appropriate. Bank of America and Vinson & Elkins are acting as financial advisor and legal counsel, respectively, in the strategic deal.

Shares of LyondellBasell have rallied 30.3% in a year, higher than the industry’s rise of 23.3%.

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In its second-quarter earnings call, the company stated that it expects demand for its products and financial results to remain strong. It envisions the rollout of vaccines and the progress of societal reopening globally to support solid worldwide demand for its products in both the manufactured goods and service industries over the coming quarters.

It is expects integrated polyethylene margins to remain strong as its customers look to address order backlogs, rebuild inventories and serve pent-up demand. It also anticipates higher mobility to drive demand for gasoline and jet fuel in the second half of 2021, contributing to improved margins in its Oxyfuels & Related Products and Refining businesses.

Zacks Rank & Key Picks

Currently, LyondellBasell carries a Zacks Rank #3 (Hold).

Better-ranked stocks in the basic materials space include Avient Corporation (AVNT - Free Report) , BASF SE (BASFY - Free Report) , each flaunting a Zacks Rank #1 (Strong Buy) and The Chemours Company (CC - Free Report) , carrying a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Avient has a projected earnings growth rate of 75.1% for the current year. The company’s shares have surged 72.3% in a year.

BASF has a projected earnings growth rate of 96.7% for the current year. The company’s shares have rallied 18.8% in a year.

Chemours has a projected earnings growth rate of roughly 86.4% for the current year. The company’s shares have grown 50.3% in a year.

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