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SALT LAKE CITY -- Holly Corp. said it agreed to buy ConocoPhillips' Woods Cross refinery and related assets near Salt Lake City, including 25 gas stations, for $25 million. The deal is expected to close by April 30.
Major oil companies have been seeking to sell smaller refineries such as Woods Cross as tighter environmental fuel specifications force the plants into costly upgrades. The refinery has a crude oil capacity of 25,000 barrels per day. ConocoPhillips is the largest U.S. refiner and 6th largest oil company in terms of reserves, according to Reuters.
Holly, based in Dallas, is in the businesses of refining, transportation and wholesale marketing of petroleum products through affiliates Navajo Refining Co. and Montana Refining Co.
"We expect the acquisition to be significantly accretive to our earnings and cash flow from the start," said Holly President Matthew Clifton. "The refinery is well-maintained, well-staffed and is currently meeting EPA-mandated cleaner burning gasoline requirements through January 2009."
The additional assets include pipelines and other transportation assets used in connection with the refinery, 25 gas stations and convenience stores in Utah and Wyoming along with a 10-year exclusive license to market fuels under the Phillips brand in Utah, Wyoming, Idaho and Montana. Financing is expected to be a combination of cash and an inventory financing, the company said. Both companies have approved the transaction, subject to "certain conditions," including Federal Trade Commission approval, Holly said.
In other news, ConocoPhillips said it has reduced crude runs at its 223,000 bpd refinery in Sweeny, Texas, by 40,000 bpd due to a lack of crude exports from strike-bound Venezuela.
Venezuela's oil industry has been paralyzed for more than three weeks by a general strike in protest of President Hugo Chavez.
A spokeswoman for ConocoPhillips told Reuters the cuts were implemented midweek due to a shortfall in Venezuelan heavy crude oil, of which the plant generally buys and runs about 165,000 bpd. The duration of the cuts was unknown. "We're developing plans for replacing the crude supply with alternative sources," said the spokeswoman.