LONDON (SHARECAST) - Oil titan BP is to offload its Texas refinery and associated assets to American peer Marathon Petroleum Corporation for a total of 2.5bn dollars, as it continues to reposition its business in the US.
BP said on Monday afternoon that it has reached an agreement with Marathon for the sale, which includes the 475,000-barrels-per-day refinery and a portion of retail and logistics network in the south-east of America.
The $2.5bn includes $0.6bn of cash at closing, an estimated value of $1.2bn for hydrocarbon inventories and a $0.7bn six-year earn-out arrangement based on future margins and refinery throughput.
Since the start of 2010, BP has sold a total of $35bn worth of assets as part of its divestment programme. This is expected to increase to $38bn by the end of next year.
"Today's announcement is the second major milestone in the strategic refocusing of our US fuels business," said Iain Conn, the Chief Executive of BP's global refining and marketing business.
"Together with the sale of our Carson, California refinery, announced in August, the divestment of Texas City will allow us to focus BP's US fuels investments on our three northern refineries, which are crude feedstock advantaged, and their associated marketing businesses.
BP has assured that it will remain a significant retailer of fuels in the US with around 8,000 BP-and ARCO-branded sites in the Midwest, Pacific Northwest and along the East Coast. The company expects the transaction to close by early next year.
"BP remains committed to supplying U.S. customers with the fuels, lubricants and petrochemicals they depend on while at the same time delivering long-term growth and profits to our shareholders and we are pleased to be delivering on the strategy we announced last year," Conn said.
When we complete these sales and our Whiting Refinery upgrade project next year, we will have a smaller, well-positioned and highly competitive portfolio of refining and marketing businesses in the US.