Par Pacific to acquire Wyoming Refining and related assets
Par Pacific Holdings Inc. has entered into a definitive agreement to acquire Hermes Consolidated LLC (dba Wyoming Refining Co.) for $271 MM, including the assumption of $58 MM of indebtedness.
Wyoming Refining owns and operates the 18-Mbpd Newcastle, Wyoming refinery and related logistics assets. The transaction is expected to close in mid-July 2016, subject to customary closing conditions and regulatory approvals.
The Wyoming Refining facility is strategically configured to meet the transportation fuel needs of the primary marketing regions in Wyoming and South Dakota. The facility increased its processing capacity to 18 Mbpd in November 2015 with the addition of new prefrac and crude units.
"This acquisition fits perfectly with our previously disclosed acquisition strategy by utilizing our tax attributes and capital sources to build on our refining and logistics capabilities," said William Pate, Par Pacific's p and CEO. "The refinery enjoys attractive crude oil sourcing given its proximity to robust Powder River Basin production, pipeline connectivity to a niche refined products market, and a gasoline-oriented yield in a market with significant summer gasoline needs. The logistics infrastructure provides strategic access to crude and refined products markets, which we expect will generate stable cash flows and contribute to our Logistics segment profitability."
Over the past four years, Wyoming Refining has invested approximately $85 MM in new assets and upgrades. The refinery business is expected to generate approximately $40 MM of annual adjusted earnings before interest, taxes depreciation and amortization (EBITDA), based on present forward crack spreads, and the logistics operations are expected to consistently generate approximately $10 MM of annual Adjusted EBITDA, according to the company.
In addition to the refining assets, the transaction includes the 140-mi Thunder Creek crude oil gathering system in northeast Wyoming that sources crude oil from the Powder River Basin. The Thunder Creek gathering system is also connected to the Butte pipeline, which allows Wyoming Refining to directly access Bakken crude from North Dakota.
The Thunder Creek gathering system is located within 20 mi of major drilling and development areas in the Powder River Basin, where production has increased more than 200% since 2011. With proximity to this growing resource base, discounted crude oil relative to WTI is a key benefit to Wyoming Refining.
The transaction also includes a 40-mi clean products pipeline system that serves the Rapid City markets through the Magellan Products pipeline; two truck racks; a proprietary jet fuel terminal in Rapid City; and a jet fuel pipeline that connects Wyoming Refining's proprietary aviation fuel terminal to Ellsworth Air Force Base.
One of Wyoming Refining's primary downstream markets is the Rapid City, South Dakota metropolitan area, with a population of approximately 135,000. With several national parks and monuments in the area, this region is a major summer tourist destination that attracts millions of visitors annually.
Evercore acted as financial advisor to Black Elk Refining LLC, the owner of Wyoming Refining.
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