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Sunoco refinery sale talk boosts shares
By Staff and Wire Reports
Last Modified: 7/1/2008 3:48 AM
Shares of Sunoco Inc. had their largest increase in almost 11 years Monday amid expectations that the company may sell its west Tulsa refinery for $1 billion.
Philadelphia-based Sunoco rose $3.21, or 8.6 percent, to $40.69 on the New York Stock Exchange, the largest daily gain since July 1997. Before Monday, the shares had declined 48 percent this year as record crude prices cut margins from processing oil into gasoline and diesel by almost one-third.
Delek US Holdings Inc. said Friday that it’s in talks with an unnamed company to acquire a U.S. refinery that can process 75,000 to 100,000 barrels of crude a day.
The Tulsa refinery can process more than 85,000 barrels of oil per day.
The $1 billion deal would also include a fuel-storage terminal, tanker trucks and wholesale supply contracts with 400 to 450 retailers, Franklin, Tenn.-based Delek said in a public filing after the close of stock trading for the weekend.
Delek, a unit of Netanya, Israel-based Delek Group Ltd., expects the talks to conclude by the end of July.
Sunoco has said that it was considering the sale of its Tulsa refinery. Spokesman Thomas Golembeski didn’t immediately return a phone call.
official has said a decision is forthcoming. On May 1, during the company’s quarterly earnings conference call, Chief Financial Officer Thomas Hofmann said the company continues to evaluate its options.
“Our expectation would be that the decision would be made kind of late second, early third quarter,” Hofmann said during the call.
The plant employs about 375 people and primarily produces lubricants.
Sunoco is currently investing $400 million in the refinery to add infrastructure and equipment. The additions will give the facility the ability to convert high-sulfur heating oils to low-sulfur diesel.
The project is scheduled for completion in 2010 and is not expected to affect the number of employees, Sunoco has said. The refinery was acquired by Sunray DX in 1968. Sunray later merged with Sun Oil Co.
Delek US Holdings rose 20 cents, or 2.2 percent, to $9.21. Before Monday, the company’s shares had fallen 55 percent this year.