Suncor Energy acquiring ConocoPhillips' Denver refinery and other assets

By OGJ editors

HOUSTON, Apr. 15 -- A unit of Suncor Energy Inc., Calgary, has agreed to buy ConocoPhillips' Denver refinery, 43 Phillips-branded retail stations, and associated storage, pipeline, and distribution facilities for $150 million.

In addition, Suncor Energy (USA) Inc. will purchase existing crude oil and product inventories associated with those assets. Closing of the acquisition remains subject to US regulatory approvals.

Suncor Energy Inc. Pres. and CEO Rick George said, "Additional refining and storage assets linked by existing pipeline to our growing oil sands production are key to effectively marketing our products into the US."

Banc of America Securities LLC analyst Tyler Dann called the deal "a relatively cheap entry into the Rockies. . . Canadian syncrudes continue to replace declining Rockies crude production, making the refinery a natural outlet for Suncor's Fort McMurray (Alta.) supply."

Dann said $40 million of the purchase price was for pipeline assets and $20 million was for the retail stations, meaning the refinery alone cost $90 million.

George said Suncor's continuing growth strategy includes seeking more downstream integration opportunities including the potential purchase of additional refining assets or expansion of Suncor's existing assets.

The company plans to spend up to $225 million by 2006 to meet new fuels legislation and enable the 62,000 b/d refinery to integrate Suncor sour crude blends. After 2006, the company believes it'll have the potential to integrate as much as 50,000 b/d of its own sweet and sour crude into the refinery.

Upon closing of the ConocoPhillips' acquisition, Suncor will assume 585 employees, including about 300 retail employees.