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SAN ANTONIO -- Tesoro Petroleum Corp. signed an asset purchase agreement with Williams Energy Partners L.P. to sell its Northern Great Plains Products System for $110 million in cash.
The system includes a product pipeline from Mandan, N.D., to Minneapolis and terminals in Jamestown and Moorhead, N.D., and Sauk Centre and Roseville, Minn. The transaction will require regulatory approval and is expected to close in October.
The purchase agreement excludes Tesoro's Mandan refinery and terminal, a crude-gathering system in western North Dakota and a network of retail outlets.
"We believe the sale of these assets will enhance our ability to access new customers by providing increased logistics flexibility which will permit us to capture new synergies," said Bruce Smith, president and CEO of Tesoro. "The sale to Williams Energy Partners gives our shareholders two benefits; first, we will be able to improve Mandan's product marketing flexibility and second, the sale demonstrates our commitment to our stated goal to reduce debt by raising $200 million this year by selling assets."
Proceeds from the sale will be used to pay down a portion of the company's bank debt and for general corporate purposes. The company estimates the earnings before interest, taxes, depreciation and amortization from the asset sold to be in the range of $12-13 million annually before synergies.
Tesoro operates six refineries in the United States with a combined capacity of nearly 560,000 barrels per day and maintains a network of 750 convenience stores.