Petroplus to Acquire British Petroleum PLC’s Coryton Refinery

abarrelfullabarrelfull wrote on 12 Aug 2014 14:25
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February 01, 2007

Petroplus Holdings AG (SWX: PPHN) and BP PLC today announced that Petroplus intends to acquire the Coryton Refinery, the adjacent bulk terminal and BP’s UK bitumen business, located on the Thames Estuary in the United Kingdom. The Coryton Refinery has a total nameplate crude capacity of approximately of 172,000 barrels per day and up to an additional 70,000 barrels per day of other feedstocks, principally straight run fuel oil. Subject to the review and approval from regulatory authorities, the transaction is expected to close in the first half of 2007. The Board of Directors of Petroplus has approved the transaction and BP has received all necessary internal approvals.

“The Coryton Refinery will be a very significant addition to Petroplus’s current portfolio of North Sea refining assets. The refinery is sophisticated, with a Nelson Complexity Rating of 12.0. Approximately 80% of Coryton’s output is in the form of clean transportation fuels.”

The sale price of $1.4 billion (plus hydrocarbons, to be valued at closing) includes the adjacent bulk terminal and BP’s UK bitumen business which is closely integrated with the refinery.

Until the transaction is completed, BP will continue to operate the Coryton refinery. Under the terms of the agreement Petroplus will enter into a supply agreement with BP to supply BP’s UK based retail and other businesses. The off-take agreement will provide for a majority of the total production volume of the refinery and will be priced at market rates.

Coryton is a major refinery in the Southeast of the United Kingdom, and is the primary supplier of gasoline, diesel fuel, heating oil and jet fuel in this market. Coryton has a large marine facility for importing crude oil and other feedstocks as well as exporting products. The refinery supplies both Heathrow and Gatwick airports with jet fuel via direct pipelines and has one of the largest road distribution terminals in Europe. Coryton currently produces approximately 40% gasoline, 40% middle distillates with the remainder of production being LPGs, fuel oil and bitumen. The refinery currently employs in the region of 540 staff and numerous contractors.

Commenting on the potential acquisition, Mr. Thomas D. O’Malley, Chairman and Chief Executive Officer of Petroplus, remarked, “The Coryton Refinery will be a very significant addition to Petroplus’s current portfolio of North Sea refining assets. The refinery is sophisticated, with a Nelson Complexity Rating of 12.0. Approximately 80% of Coryton’s output is in the form of clean transportation fuels.” O’Malley continued, “The management and staff are a professional, well-trained workforce and the key to the future success of this facility. Petroplus will emphasize safety and environmental compliance as it does at all its facilities. Coryton has a well established culture in this regard and we will continue to emphasize a strong program of constant improvement.”

Mr. O’Malley concluded, “We are committed to working with our BP counterparts to ensure that we provide a safe and stable transition period for the refinery and all of its employees. We look forward to a successful transaction.”

Karyn F. Ovelmen, Chief Financial Officer of Petroplus, stated, “In total, this acquisition represents about a 55% increase to our processing capacity and represents a significant increase to our earnings and operating cash flows. We expect to fund the acquisition primarily with debt. To maintain a strong balance sheet and an appropriate ratio of debt-to-total capitalization, we are considering the issuance of a maximum of six million shares of equity. The combination of debt and equity versus all debt is more accretive to cash flows with minimal dilutive effect to earnings per share. Following the acquisition, we expect our debt-to-total capitalization ratio to be about 45%. We intend to use the expected excess cash flow from this refining asset to ultimately bring down the debt balance. With this acquisition, Petroplus will solidify its position as Northwest Europe’s leading pure-play refining and wholesale marketing company.”


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