Calumet Specialty Products Partners LP, Indianapolis, has signed a definitive agreement to buy Montana Refining Co. Inc., which operates a small heavy-oil refinery in Great Falls, Mont., for $120 million plus an amount for working capital to be determined later.
The seller is Connacher Oil & Gas Ltd., Calgary, which said disposition of the refinery is part of a strategic review it began earlier this year (OGJ Online, Feb. 22, 2012). Connacher also has signed a letter of intent to sell its conventional oil and gas assets to an undisclosed buyer for $18.3 million cash.
The refinery to be acquired by Calumet has crude capacity of 9,500 b/d and handles mainly heavy feedstock from Canada.
Processing capacities include 2,800 b/d of fluid catalytic cracking, 1,000 b/d of catalytic reforming, and 1,100 b/d of hydrotreating.
Calumet Vice-Chairman and Chief Executive Officer Bill Grube said the acquisition “develops our long-term strategy of diversifying our crude slate and geographic presence.”
Connacher said it expects the working-capital adjustment to the Montana Refining purchase price to be $35-50 million.
The company’s conventional upstream properties, all in southern Alberta, produced 305 b/d of crude oil and 2.139 MMcfd of natural gas in the second quarter of 2012.
In a press statement, Connacher said the refinery and conventional-property sales would allow it to “pursue development opportunities to increase production at Great Divide,” its oil sands leasehold near Ft. McMurray, Alta.
In the second quarter, two of its Great Divide properties, Algar and Pad One, produced an average 11,651 b/d of bitumen via steam-assisted gravity drainage.