Mergers & Acquisitions

ExxonMobil announces sale of Torrance refinery to independent PBF Energy

ExxonMobil announces sale of Torrance refinery to independent PBF Energy

ExxonMobil (XOM) has reached an agreement with PBF Energy (PBF) for the sale and purchase of its 155,000 barrel-per-day (bpd) refinery in Torrance, Calif., U.S.A., a lubricants distribution center at Vernon, products terminals at Vernon and Atwood, and associated California pipelines and other logistics assets, including facilities at the Southwest terminal for USD 537.7 million plus working capital, which will be valued at closing. ExxonMobil said the move furthered its efforts to adjust its refining portfolio.

Approximately 700 employees and 700 contractors work at the refinery and associated facilities.

PBF, based in Parsippany, N.J., U.S.A., recently bought the 189,000 bpd Chalmette, La. refinery, in which ExxonMobil holds 50% interest, through a separate, independent bidding process. That transaction is expected to close by the end of this year.

PBF expects to finance this latest transaction with a combination of cash, debt and equity. The transaction, which is expected to be immediately accretive to earnings, is expected to close in the second quarter of 2016, subject to customary closing conditions and regulatory approvals.

With these two acquisitions, PBF will increase its total crude throughput capacity to approximately 900,000 bpd. The independent U.S. refiner will restructure its company management into regions, creating the subsidiary PBF Energy Western.

“Upon completion of these two pending transactions, we will have operations spanning four (regions) and have diversified and increased our commercial footprint and flexibility,” PBF CEO Tom Nimbley said in a statement.

The Torrance refinery, located on 750 acres, is a high-conversion delayed-coking refinery with a Nelson Complexity Index of 14.9. The facility is strategically located in southern California with advantaged logistics connectivity that offers flexible raw material sourcing and product distribution opportunities primarily to the California, Las Vegas and Phoenix area markets.

The most significant of the logistics assets is a 171-mile crude gathering and transportation system, which delivers San Joaquin Valley crude oil directly from the field to the refinery.

Additionally, included in the transaction are several pipelines, which provide access to sources of crude oil including the Ports of Long Beach and Los Angeles, as well as clean product outlets with a direct pipeline supplying jet fuel to the Los Angeles airport.

The refinery also has crude and product storage facilities with approximately 8.6 million barrels of storage capacity.

The refinery accounts for about 8.3% of the state’s total refining capacity.

The refinery, 20 miles south of downtown Los Angeles, has been shut down since an explosion in February. California fined ExxonMobil more than USD 566,000 for workplace safety and health violations related to the blast. The refinery will be restored to full working order prior to closing.

ExxonMobil is retaining a presence in California through ongoing production of oil and natural gas and sales of fuels and lubricant products. Exxon- and Mobil-branded retail sites in the state are unaffected by the agreement.

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