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Delek in Talks buy Another US Refinery

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This topic contains 4 replies, has 2 voices, and was last updated by  Charles Randall 12 years, 5 months ago.

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  • #3555

    Charles Randall
    Participant

    <Here is news item on Delek looking to buy another (owns previous La Gloria/Crown Tyler Refinery now) US Refinery in 75-100 MBD range. Wonder if the partner is Valero selling one of its smaller refineries? – CER>
     
    Delek US Holdings in talks to buy U.S. refinery
     
    Sunday 6/29/08 TEL AVIV (Reuters) – Delek US Holdings Inc (DK.N) has begun negotiations to purchase a U.S. refinery in a possible $1 billion deal, parent company Delek Group Ltd (DELKG.TA) said on Sunday.
    In a statement to the Tel Aviv Stock Exchange, Delek Group did not identify its negotiating partner or the refinery, which it said could produce between 75,000 and 100,000 barrels per day.
    Delek Group said a deal could include the purchase of fuel tankers and agreements to supply 400 to 450 gas stations and convenience stores.
    It said Delek US Holdings Inc was holding preliminary negotiations and it was impossible at this stage to assess whether a deal would be agreed or when one might be completed.
    (Writing by Jeffrey Heller, Editing by Alan Raybould)

  • #6755

    Charles Randall
    Participant

    Here is news item on Delek looking to buy another (owns previous La Gloria/Crown Tyler Refinery now) US Refinery in 75-100 MBD range. Wonder if the partner is Valero selling one of its smaller refineries?
     
    The size mentioned does match profile of two Oklahoma refineries that are currently on the block:
    Valero Energy Corp and Sunoco have entertained offers on their refineries in that state. Delek may also be a contender for Valero’s Memphis or Krotz Refineries although Memphis is larger than cited range
     
    Delek buying a refinery now is bold move since refinery margins have been dropping since January due high crude prices & weak gasoline demand.  But Delek has been seeking a second refinery since it went public & with its single Tyler Coking refinery it is behind the curve with other small refiners like Alon & Western Refining who have both closed deals recently leaving Delek without similar economy of scale to its peers. 
     
    It is looking at this acquisition to expand all 3 areas of its business. Delek is an Israeli conglomerate operating 3 segments: Refining, Marketing & Retail. The refining business runs the Tyler 60 MBD coking refinery, the marketing segment sells refined products on a wholesale basis in west Texas, and the retail segment sells gas as well as operates network 400 company-operated retail fuel & convenience stores.  
     
     Regards

  • #6753

    Anonymous

    Could Delek be interested in Yorktown refinery of WNR?  It is recently renovated and is outside the core area of WNR.

  • #6752

    Charles Randall
    Participant

    Delek’s target is unlikely to be Westerns Yorktown for several reasons: 1.) It is only 62 MBD below 75-100 MBD announced range, 2.) Western just bought  Giant’s 3 refineries in 2007 & Yorktown was the largest (Western also got mkt confirmation it was good purchase by large runup in stock price) & thier only refinery with coker ….so their sale / required price would not likely fit range most refinery purchase have been going for; and 3.) Doubtful that Western’s growth program would give up any sizeable number stations that seem to be linked with Deleks target. 
     
    But anything is possible……just seems highly unlikely.
    Regards

  • #6747

    Charles Randall
    Participant

    <Here is recent link to Sunoco option / comparison Delek shopping items to the Sunoco Tulsa sale expectations: timing/size/price/stations ect.- CER>
     
    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.

    A Sunoco

    CM8ShowAd(“336×280”);

    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.

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