Phillips 66 Co. recently announced its plans to generate $3 billion through the sale of non-core assets. Although specific assets were not disclosed, refining industry insiders speculate that the Wood River, Ill., and Borger, Texas, refineries may be offered to partner Cenovus Energy.
Both facilities are jointly owned by Cenovus and Phillips 66, with operating rights held by the latter. Cenovus CEO Alex Pourbaix had previously expressed a preference for operating refineries in which the company holds an ownership stake. In line with this strategy, Cenovus acquired BP's share in the Toledo, Ohio refinery earlier this year.
The joint ventures between Cenovus and Phillips 66 have been instrumental in handling large volumes of western Canadian crude in Alberta. The Wood River refinery, with a capacity of 180,000 b/d, primarily processes heavy sour crude, while the Borger plant, with a capacity of 92,000 b/d, utilizes various North American crude blends.
Analysts estimate that if Phillips 66 were to sell its 50% stake in the Wood River refinery, the cost to Cenovus could range from $400 million to $500 million – similar to the acquisition of BP's share.
Refining sources suggest that the Toledo deal involved a long-term supply agreement with BP, which likely impacted the final sales price.
During a recent conference call discussing the company's third-quarter financial results, Phillips 66 executives indicated that while they were not actively seeking sales opportunities, they acknowledged the potential value of their high-performing assets to potential buyers. This statement sparked speculation that the jointly owned refineries might be put on the market.
According to Phillips 66, every $1/bbl discount in Western Canadian Select oil equates to approximately $100 million in annual EBITDA.
Phillips 66 did not provide additional information regarding the asset disposal process when requested by OPIS.
(Reporting by Tom Kloza; Editing by Jeff Barber)
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