Western Refining Inc. fetches $360 million in a master limited partnership transaction with Western Refining Logistics.
Western Refining Inc. has announced that it has committed to an agreement to drop down the company’s southwest wholesale business to its master limited partnership (MLP) unit, Western Refining Logistics, LP. The deal will fetch about $360 million for the oil refiner and marketer. This transaction will be made of cash and Western Refining Logistics units.
The assets under sale have fuel sales of about 79,000 barrels per day dedicated to Western Refining as well as to other third-party customers. Western Refining’s southwest wholesale business is not just about fuel but it also includes a lubricant products distribution business and crude oil trucking operations. This is located in the Permian and San Juan basins.
Details of the transaction were provided by both parties. Western Refining and Western Refining Logistics intend to sign a 10-year fuel supply and crude oil trucking agreement. The southwest wholesale business has an expected 2015 earnings before interest, taxes, depreciation and amortization (EBITDA) of about $40 million.
Jeff Stevens WNRL and WNR President and Chief Executive Officer mentioned in an interview, “We are committed to delivering consistent distribution growth to WNRL unit holders and this first acquisition is the next step in fulfilling that commitment. The wholesale drop down should provide a significant increase in EBITDA for WNRL. Western’s wholesale business has a long history of delivering profitable results and this transaction unlocks the value of that business and provides cash to WNR for future growth opportunities. This is a very positive step for the continued success of both organizations.”
WNR’s Board of Directors and the Board of Directors of the general partner of WNRL and its Conflicts Committee approved the terms and conditions of the transaction. The Conflicts Committee was advised by Bracewell & Giuliani, its legal counsel, and Evercore Partners, its financial advisor. WNR was advised by Vinson & Elkins LLP, its legal counsel.
Management mentioned that the drop down of assets should increase the partnership’s EBITDA, which should allow Western Refining Logistics to maintain its distribution growth. Western Refining is an independent refiner and marketer of refined petroleum products in the Southwestern and Mid-Atlantic regions of the U.S.
Western Refining Logistics on the other hand is a fee-based MLP that owns logistics assets. It is involved in terminalling, transportation and storage of crude oil and refined products. Western Refining owns general partner, along with 65% of the limited partnership interest in the partnership. Both Western Refining and Western Refining Logistics carry a Zacks Rank #3 which means that both the companies are expected to perform in line with the broader U.S. market in the next one to three months.
About Western Refining Inc.
Western Refining Company, L.P. is a Texas-based Fortune 300 crude oil refiner and marketer operating in the Southwestern, North-Central and Mid-Atlantic regions of the United States. Western Refining has been publicly traded on the New York Stock Exchange since January, 2006 and ranks as the fourth largest publicly traded independent refiner and marketer in the nation.
Western Refining Company is headquartered in El Paso, Texas; its refineries are located in El Paso, Gallup, New Mexico and St. Paul Park, Minnesota. With a combined crude oil processing capacity of approximately 242,500 barrels per day (38,550 m3/d), it is one of the major players in the oil industry in the Southwest and Mid – Atlantic regions. These refineries produce light products, consisting of gasoline, diesel fuel, and jet fuel. The El Paso refinery delivers to a number of other markets with the use of a pipeline. Western Refining has a wholesale division that works in conjunction with the refining operations. Western Refining therefore serves a broad customer base in Arizona, California, Colorado, Minnesota, Nevada, New Mexico, western Texas, Utah, Wisconsin, northern Chihuahua, Mexico, and the central East Coast region. Western Refining Company stock market evolution:
About Western Refining Logistics
Western Refining Logistics is headquartered in El Paso, Texas. It is a fee-based, growth-oriented Delaware limited partnership recently formed by Western Refining to own, operate, develop, and acquire terminals, storage tanks, pipelines, and other logistics assets. Western Refining Logistics’ assets consist of pipeline and gathering assets and terminalling, transportation, and storage assets in the Southwestern portion of the U.S. This includes 300 miles of pipelines and around 7.9 million barrels of active storage capacity together with a number of other assets. Western Refining Logistics stock market evolution:
About Jeff Stevens
Mr. Jeff A. Stevens has been the President at Western Refining, Inc. since February 2009 and has been its Chief Executive Officer since January 2010. Mr. Stevens serves as the Chief Executive Officer and President of Western Refining Terminals, Inc., Giant Four Corners, Inc., Giant Stop-N-Go Of New Mexico, Inc., Western Refining Yorktown Holding Company, Western Refining GP, LLC, and San Juan Refining Company.