US Oil & Refining

Par Pacific to acquire US Oil & Refining, certain affiliates

$358 million addition expected to boost the company's mainland refining, logistics presence

Par Pacific Holdings recently signed a definitive agreement to acquire US Oil & Refining Co and certain affiliated entities for $358 million plus net working capital.

The acquisition includes a 42,000-barrels-per-day (bpd) refinery, marine terminal, unit train-capable rail loading terminal, and 2.9 million barrels (MMbbls) of refined product and crude oil storage. The refinery and associated logistics system are located in Tacoma WA and currently serve the Pacific Northwest market.

“This transformative acquisition connects our existing assets in Hawaii, Pacific Northwest and the Rockies to create an integrated downstream network with significantly enhanced scale and diversification,” said William Pate, president and CEO of Par Pacific Holdings. “We have been executing an ambitious strategic growth plan focused on attractive downstream markets for over three years and the acquisition of US Oil further demonstrates the progress we have made.

“We believe that this transaction provides a strong platform for earnings and cash flow growth.”

US Oil’s refinery is located on 139 acres of fee-owned land near Tacoma. The 42,000-bpd refinery has the flexibility to optimize its crude slate based on market conditions, the company said. Currently, discounted Bakken and Cold Lake crude represent more than 95% of its current crude slate.

US Oil’s diverse logistics assets include 2.9 MMbbls of storage capacity, a 14-mile jet fuel pipeline, a marine terminal with 15 acres of waterfront property, a unit train rail facility with 107 unloading spots, and a truck rack with six truck lanes and 10 loading arms. These assets provide connectivity to Bakken, Canadian and Alaskan crude; and Pacific, West Coast, Pacific Northwest and Rockies product markets.

Under the terms of the agreement, Par Pacific will purchase 100% of the equity interests of US Oil for a total consideration of $358 million plus net working capital. For the 12 months ended Sept. 30, US Oil generated an Adjusted EBITDA of approximately $86 million. Par Pacific estimates the transaction will result in annual operational and cost synergies of $7.5 million to $12.5 million.

The transaction is expected to be funded with proceeds from a $225 million secured term loan and $150 million of equity financing. Committed debt financing is being provided by Goldman Sachs, subject to customary terms and closing conditions. Committed equity financing is being provided by US Oil’s financial sponsor, but the Company may alternatively seek equity financing via the capital markets, Par Pacific said.

The transaction is expected to close in January 2019 and is subject to customary closing conditions.

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