Houston-based Par Pacific Holdings Inc. clinched a $358 million deal on Tuesday to connect assets in the Pacific Northwest and Rockies to an integrated downstream network sourced in part with Western Canada and Bakken Shale crude oil.
The definitive agreement to acquire privately held U.S. Oil & Refining Co. and affiliated entities includes a 42,000 b/d refinery, marine terminal, rail loading terminal, and 2.9 million bbl of refined product and crude oil storage.The refinery and associated logistics system in Tacoma, WA, serves the Pacific Northwest market.
"This transformative acquisition connects our existing assets in Hawaii, Pacific Northwest and the Rockies to create an integrated downstream network with significantly enhanced scale and diversification," Par Pacific CEO William Pate said.
"We have been executing an ambitious strategic growth plan focused on attractive downstream markets for over three years, and the acquisition of U.S. Oil further demonstrates the progress we have made. We believe that this transaction provides a strong platform for earnings and cash flow growth."
In the Pacific Northwest and the Rockies, Par Pacific owns and operates an 18,000 b/d refinery, a logistics system and 33 retail locations. It also owns 46% of Laramie Energy LLC, a natural gas production company with operations and assets concentrated in Western Colorado.
In addition, Par Pacific owns and operates a 94,000 b/d refinery and a logistics system in Hawaii.
U.S. Oil's refinery is on 139 acres of fee-owned land near Tacoma. The refinery has the flexibility to optimize its crude slate based on market conditions. Currently, discounted Bakken oil and Cold Lake crude from Canada represent more than 95% of the slate.
U.S. Oil's logistics assets include a marine terminal with 15 acres of waterfront property, a unit train rail facility with 107 unloading spots, truck rack with six truck lanes and 10 loading arms, as well as a jet fuel pipeline.
Under the agreement, Par Pacific is purchasing all of U.S. Oil’s equity interests for $358 million plus net working capital. Par Pacific estimates that annual operational and cost synergies of $7.5-12.5 million would result from the combination.
The transaction, set to be completed in January, is to be funded with proceeds from a $225 million secured term loan and $150 million of equity financing.