Krotz Refinery Sale Update items: Several details, addtional news items and leads have come to light with news swapping with my contacts and rather than post all of them here is some recap items:
-Valero is rumored to sell Memphis to Alon also (makes sense because Krotz & Memphis share logistics & material management and both sales are being handled by JP Morgan) – likely 2 are separate to allow quicker completion of Krotz spring sale.
– Valero sale price of $333MM reflects about 40% replacement value on Krotz 85 MBD refinery (~$3950/Bbl crude capacity or $850/Bbl complexity) which is at lower end refining values (below Valero Sale Lima to Husky & Tesoro purchase Shell Calif Refineries).
– Valero has deal with Petrobras for purchase of Aruba after May 9 board approval and Petrobras plans to “Sync” Pasadena with Aruba. <Makes no sense to me since Pasadena is only 8.4 complexity & when it starts bringing in Brazil offshore crude coker & Fcc will need expansions. Also likely Petrobas will replace either Aruba’s 100MB Maya heavy oil or remaining other crude’s with some of its own Brazil offshore from big recent finds Tupri & New field – both require more FCC & Coker capacity than today’s and outside Pasadena’s small “Sync” range.
-The sale of Krotz, Aruba & Memphis (and others on block of course) will drop size/number refineries of Valero so that COP becomes No 1 US Refiner.
-The $100MM 3 year “earnout” (and 5 year offtake) reflects a view towards a declining refinery margin/market for Valero to propose / agree with this option.
-Petrobras is going add +14,000 jobs upstream = Engineers/Geologists/Oil Rig Workers and Drillers within 3 yers (all Brazil workers have first placement) as it develops the new field finds & $112 B that will allow it overtake output of all OPEC producers except Saudi Arabia.