BP Sells Carson Refinery To Tesoro

BP Sells Carson Refinery To Tesoro

In a major announcement today, British energy group, BP plc (NYSE:BP) (LON:BP) agreed to sell its Carson refinery in California, to US based Tesoro Corporation (NYSE:TSO) for $2.5 billion (2.02 billion Euros). According to the company, the sale will help it to focus its investment and operations on its three refineries in the northern United States.

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The statement released by the British firm read “BP plc (NYSE:BP) (LON:BP) announced today it has reached agreement to sell its Carson, California refinery, and related logistics and marketing assets in the region, to Tesoro Corporation for $2.5 billion in cash.”

The sale of the refinery is a part of BP’s plc (NYSE:BP) (LON:BP) previously-announced plans to sell $38 billion of assets by the end of 2013, to pay off the expenses from the 2010 US Gulf of Mexico oil spill, which includes a clean-up bill and compensation costs. It already had announced in Feb last year plans for selling its major US refineries, including Carson as part of its restructuring strategy, and to meet its compensation costs. BP plc (NYSE:BP) (LON:BP) also plans to exit the Texas City facility, which lost 15 workers in 2005 due to an explosion and also raised safety questions across its US operations.

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Chief executive of BP’s global refining and marketing business, Iain Conn, said, “Today’s announcement is a significant step in the strategic refocusing of our US fuels business,” and added “Together, with the intended sale of Texas City, this will allow us to focus BP’s operations and investments exclusively on our three northern US refineries, which are crude feedstock advantaged, and their large and important marketing businesses.”

As per the deal, apart from the refinery near Los Angeles, which produces 266,000 barrels of oil a day, Tesoro will also acquire an associated logistics network of pipelines and storage terminals. Also included in the deal is BP’s ARCO-branded retail marketing network in Southern California, Arizona, and Nevada. The agreement also includes that BP will sell the ARCO retail brand rights and exclusively license those rights from Tesoro for Northern California, Oregon, and Washington.

Just last week, BP announced the sale of its Sunray and Hemphill gas processing plants in Texas, including the associated gas gathering system, to Eagle Rock Energy Partners for $227.5 million.

BP’s fortune was shattered two years ago when an explosion on the BP-leased Deepwater Horizon rig killed 11 workers and spilled millions of barrels of oil into the sea. The explosion of 2010 has been widely acknowledged to be the worst environmental catastrophe in US history. BP last month, announced a loss of $1.39 billion for the second quarter, compared to net profit of $5.72 billion in the year-earlier period. The oil giant’s earnings were hit mainly by lower output, falling oil prices and a near $5.0-billion write-down on the value of assets. Not only this but BP is also facing troubles in Russia over its Arctic oil exploration tie-up with the state giant Rosneft.

In another deal related to oil and natural-gas, Noble Energy, Inc. (NYSE:NBL) agreed to sell its Kansas properties to an affiliate of privately held Houston oil and gas company, Citation Oil & Gas Corp., for about $140 million

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Aman is MBA (Finance) with an experience on both Marketing and Finance side. He has worked as a Risk Analyst for AIR Worldwide, and is currently leading VeRa FinServ, a Financial Research firm. Favorite pastimes include watching science fiction movies, reviewing tech gadgets, playing PC games and cricket. - Email him at amanjain@valuewalk.com
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