ExxonMobil Corp. on Monday said it has completed the sale of its 130,000 b/d refinery and fuels terminal in Benicia, Calif., to Valero Energy Corp., San Antonio, for $895 million plus about $120 million in inventories, based on market-related prices at closing. Included in the deal is the assignment of California supply arrangements and ExxonMobil's interest in about 340 service stations. The stations are all Exxon-branded stations in California.
The deal marks Valero's entry into retail operations, the company said Monday. "Retail is a natural growth area for Valero because retail margins tend to be countercyclical to those in refining," said Bill Greehey, Valero's chairman and CEO. The company's strategic plan "has always been to enter the retail business through a major acquisition where we could also acquire an experienced management team in place."
Valero now owns and operates six refineries in the Gulf Coast, West Coast, and Northeast regions of the country. It's also expanded its refining base to more than 950,000 b/d, significantly strengthening its positions as the second-largest independent refining company in the US, Valero said.
"This acquisition fits perfectly with all of our strategic guidelines." said Greehey. "We expect the acquisition to be immediately accretive to our earnings per share and our cash flow." The deal also increases Valero's geographic diversity with access to West Coast margins.
The Benicia refinery is a high-conversion refinery capable of processing sour crude oils. Nearly 70% of the refinery's production is gasoline, most of which meets California Air Resources Board Phase 2 reformulated gasoline specifications. About 16% of the refinery's production is low-sulfur diesel and jet fuel. Greehey said the plant offers "great supply and distribution logistics" with waterborne and pipeline access.
Transfer of assets will be completed in mid-June, when ExxonMobil hands over to Valero its fuel marketing assets in Oakland, San Francisco, San Jose, and Santa Rosa. Terms of the agreement call for the Exxon brand to be withdrawn from these four metropolitan areas. Outside these areas, Valero will have the right to continue using the Exxon brand, as well as products and services associated with the brand, for at least 10 years.
ExxonMobil said it would still retain a "significant" presence in California through its 130,000 b/d Torrance, Calif., refinery and about 700 Mobil-branded service stations.
The sale has been approved by the US Federal Trade Commission and the California attorney general.
