TOSCO TO ACQUIRE BP OIL'S NORTHEAST U.S. ASSETS

Tosco Corp., Stamford, Conn., has agreed in principle to buy BP Oil Co.'s marketing and refining assets in the U.S. Northeast for $75 million. Main assets are the 190,000 b/d Marcus Hook, Pa., refinery on the banks of the Delaware River south of Philadelphia, inventory to be valued on closing, nine oil storage terminals with combined capacity of 6 million bbl, and associated pipeline interests in Pennsylvania, Maryland, New Jersey, Massachusetts, and Maine.

Nov. 13, 1995

3 min read

Tosco Corp., Stamford, Conn., has agreed in principle to buy BP Oil Co.'s marketing and refining assets in the U.S. Northeast for $75 million.

Main assets are the 190,000 b/d Marcus Hook, Pa., refinery on the banks of the Delaware River south of Philadelphia, inventory to be valued on closing, nine oil storage terminals with combined capacity of 6 million bbl, and associated pipeline interests in Pennsylvania, Maryland, New Jersey, Massachusetts, and Maine.

Tosco plans to operate the Marcus Hook refinery as an adjunct to the company's 200,000 b/d Bayway refinery at Linden, N.J. It will reconfigure certain operations at Marcus Hook "with little investment" in a move designed to improve its competitive position.

Tosco also will obtain an exclusive license valid for 15 years, with renewal options, for retail sales of gasoline and diesel fuel under the BP brand.

The license will cover Delaware, Maryland, the Washington, D.C., metro area, Pennsylvania, New Jersey, New York, Connecticut, Rhode Island, Massachusetts, Vermont, New Hampshire, and Maine. Portions of western Pennsylvania and Maryland currently supplied by BP's midwest region are excluded.

BP will participate in profits beyond a certain level for 5 years.

The term of Tosco's existing exclusive license with BP in nine states of the U.S. West also will be extended to 15 years from the closing date of the new transaction.

Completion of the latest transaction, subject to certain conditions, is scheduled for yearend.

Thomas D. O'Malley, Tosco chairman and chief executive officer, called the latest deal "a logical extension" of Tosco's arrangement with BP in the western U.S. Tosco sells products under the BP brand in Washington, Oregon, northern California, and other western states through a system of about 1,000 retail stations flying the BP flag.

Tosco figures its license to use the BP brand for 15 years will now cover a market area with about 40% of the U.S. population.

Tosco said BP's system of more than 500 jobber owned and operated facilities in the Northeast will be expanded and improved during the next 4 years. It plans to invest in the current jobber network and acquire existing sites or build new stations "where appropriate."

Tosco, operating three refineries on the U.S. East and West coasts, currently refines and markets more than 525,000 b/d of petroleum products.

BP expects its proceeds from the sale to be about $235 million. It also expects its participation in future profits, if refining margins in the Northeast improve during the next 5 years, to amount to a cumulative $50 million.

BP's third quarter results will include a writedown of about $385 million because of the sale - about half to cover book value losses and costs associated with the sale and the balance to provide for potential environmental liabilities.