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RE: COP Planning Sale Alliance Refinery

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Charles Randall

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Here is update on COP sales plans for Alliance Coking Refinery (along with COP Tx City refinery) which is seeking buyers – PBF Energy rumored to be among list.
Putting Phillips 66 label on COP downstream assets and selling off 247MBD alliance, shutting down/selling Trainer Refinery 185MBD & recent sale Wilhelmshaven German Refinery 260MBD is loss 700MBD (~692MBD) according article. Place those numbers against hyped increase of 90MBD (Borger 25MBD & Woodriver 60MBD – mostly coker additions) for Phase I WRN Cenovus JV expansion …… is not positive increase.

Nor does putting Phillips label (poor refining track record) make its remaining 2.7 MM BPD capacity the largest independent …… when it is still really a linked major integrated asset – stepchild as it may be becoming notwithstanding. (Only Consluting/Investor/Walstreet analyst…..or media would be stupid enough to swallow this viewpoint.)

The Alliance Coking Refinery is unlikely sell at $700MM – $1 Billion value either since that would put it in range of $US2850/MBD to $US4050/MBD range that is approaching 35-50% of repalcement value that only merged coking refineries achieve. Most sales have been in the $800 – 2000/MBD range (10-25% replacement value). But I would have to admit this refinery would still be good buy – much like the MAP Robinson Coking unit the Alliance Coker is under utilized as sweet crude anode grade processor & has coking furnace capable to process a much heavier & more sour crude having been designed for Alaska North Slope crude.

I think if Ecopetrol-Reficar/Colombia or Petrobras/Brazil (currently owns Pasadena Coking Refinery) were evaluating options for their increasing production of domestic crude that the Alliance Coking Refinery would be good selection. As article states it would also give PFB Energy some Gulf Coast refining assets to balance /offset its primarily East Coast/Europe Atlantic refining assets. Israel /Delek would do well to add it alongside existing Tyler (La Gloria) coking refineries as well.


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