Mexico



Very usefull links



PW
Bookstore





News links

AP

AFP

Aljazeera

Dow Jones

Oil price

Reuters

Bloomberg

Views and News
from
Norway

 

 

 

 

Marathon to buy Andeavor in biggest oil refining deal

Bloomberg

Marathon will become the largest independent U.S. refiner with easy access to mexican markets. Offer is a 24 percent premium to Andeavor's share price - Marathon to become biggest U.S. refiner after buying Andeavor - Play Video

By Laura Blewitt

HOUSTON
Petroleumworld 05 01 2018

Marathon Petroleum Corp. agreed to buy rival Andeavor for $23.3 billion in the biggest-ever deal for an oil refiner that would create the largest independent fuel maker in the U.S.

The offer, payable in either cash or shares, values Andeavor at about $152.27 a share, the companies said in a statement Monday. That represents a 24 percent premium over Friday's closing price .

Marathon shares sank as much as 8.9 percent in early trading with analysts at RBC Capital Markets seeing the deal done at “peak refining bullishness.” Andeavor rose as much as 18 percent. Shares of Andeavor, Marathon and other independent refiners have soared to record highs this year.

Growing fuel demand, both in the U.S. and Latin America, and a shale boom that's expanded access to relatively inexpensive domestic supply have given American refiners a leg up against foreign competitors.

“Why wouldn't you do this deal?” Greg Goff, Andeavor's chief executive officer, said on a conference call Monday. “The time is right now, because for this industry, the wind is behind our backs.”

Passing Valero

Marathon is focused in the Midwest and Gulf Coast, while Andeavor concentrates on the western U.S., including refineries and pipelines it acquired in last year's merger with Western Refining Inc. The combination, which will use the name Marathon, would overtake Valero Energy Corp. as the biggest in U.S.-based oil refiner by capacity, generating about 16 percent of the nation's total, according to Bloomberg calculations.

“Wow!” Matthew Blair, director of refining research at Tudor Pickering Holt & Co., wrote in a report. Blair called Andeavor a “big winner” in a deal that is “extremely positive.” As for Marathon, meshing the two giant companies will be key, Blair said, adding that regulatory problems should be minimal, “given the disparate geographical markets of each company.”

First in Fuels

Merger would create biggest holder of U.S. refining capacity


Source: Energy Information Administration. U.S.-based capacity only, as of Jan. 1, 2017.

Note: Shell includes 50% Deer Park equity and Louisiana refineries previously held in Motiva JV. Andeavor includes assets previously held by Tesoro and Western Refining.

The companies said they expect annual cost and operating synergies of about $1 billion within the first three years. Given projected cash-flow generation, Marathon's board also approved share buybacks of $5 billion. Gary Heminger, Marathon's CEO, will be chief executive. Goff will become executive vice chairman.

The boards of both companies unanimously approved the deal, which is expected to close in the second half of this year, subject to regulatory and shareholder approvals.

Passing Phillips

Marathon's shares were down 6.8 percent to $75.88 as of 12:17 p.m. in New York, while Andeavor jumped 13 percent to $138.72.

Findlay, Ohio-based Marathon is the third-largest U.S. refiner by market capitalization, valued at about $38.6 billion, according to data compiled by Bloomberg. Last year the company sold 5.8 billion gallons of fuel through its Speedway convenience store chain. The combined company would pass Phillips 66 , valued at $51.9 billion, as the largest U.S. independent refiner by market capitalization.

San Antonio, Texas-based Andeavor, formerly known as Tesoro Corp., is the fourth-largest, worth $18.7 billion. The company's assets also include 5,300 miles of pipelines and 40 marine, rail and storage terminals.

Last week, Andeavor announced two joint ventures to move crude oil from West Texas to the Gulf Coast.

Permian Access

The first venture, a pipeline project majority owned by Phillips 66, would haul as many as 700,000 barrels per day of crude from the Permian Basin to the Corpus Christi, Sweeny and Freeport area. The second is a stake in a new marine terminal under development by Buckeye Partners LP that would connect with the pipeline.

Marathon's Galveston Bay refinery, which currently buys about 200,000 barrels a day of light domestic oil, could benefit from the pipeline connectivity, Heminger said in a conference call Monday.

Marathon's natural gas processing capacity will also increase by about 20 percent under the deal, to more than 10 billion cubic feet per day.

The combined entity expects to be well-positioned to capitalize from upcoming regulations to reduce pollution from ships. Andeavor's port assets in California, coupled with Marathon's in the U.S. Gulf Coast, will give the combined company the ability to sell lower-sulfur ship fuel.

“Ports are the lifeblood to refining out in those markets,” Heminger said Monday.

Other stories: Marathon ready to supply Mexico fuel market from both coasts

Petroleumworld.com

Hit your target - Advertise with Us

Strory by Laura Blewitt; With assistance by Naureen S Malik, and Dan Murtaugh from Boomberg.

bloomberg.com/ 04 30 2018

We invite all our readers to share with us
their views and comments about this article.
Write to editor@petroleumworld.com

By using this link, you agree to allow PW
to publish your comments on our letters page.

Any question or suggestions,
please write to: editor@petroleumworld.com

Best Viewed with IE 5.01+ Windows NT 4.0, '95,
'98,ME,XP, Vista, Windows 7,8,10 +/ 800x600 pixels

 

 

 

 

 

TOP

Contact: editor@petroleumworld.com,

Editor & Publisher:Elio Ohep/
Contact Email: editor@petroleumworld.com

CopyRight © 1999-2016, Paul Ohep F. - All Rights Reserved. Legal Information

PW in Top 100 Energy Sites

CopyRight©1999-2017, Petroleumworld ™  / Elio Ohep - All rights reservedThis site is a public free site and it contains copyrighted material the use of which has not always been specifically authorized by the copyright owner.We are making such material available in our efforts to advance understanding of business, environmental, political, human rights, economic, democracy, scientific, and social justice issues, etc. We believe this constitutes a 'fair use' of any such copyrighted material as provided for in section 107 of the US Copyright Law. In accordance with Title 17 U.S.C. Section 107, the material on this site is distributed without profit to those who have chosen to view the included information for research, information, and educational purposes. For more information go to: http://www.law.cornell.edu/uscode/17/107.shtml. If you wish to use copyrighted material from this site for purposes of your own that go beyond 'fair use', you must obtain permission fromPetroleumworld or the copyright owner of the material.