Par Pacific Holdings, an oil and gas exploration and production company based in the US, has signed an agreement to acquire downstream business US Oil & Refining and some affiliated entities for $358m plus net working capital.
The acquisition will include a 42,000bpd refinery; marine terminal; unit train-capable rail loading terminal; and storage for 2.9mmbbls of refined product and crude oil.
The refinery and logistics system are located in Tacoma, Washington, and serve the Pacific Northwest market.
US Oil’s 42,000bpd refinery is located on 139 acres of fee-owned land near Tacoma and has the flexibility to optimize its crude slate based on market conditions.
Its logistics assets include 2.9mmbbls of storage capacity; proprietary 14-mile jet fuel pipeline; marine terminal with 15 acres of waterfront property; unit train rail facility consisting of 107 unloading spots; and a truck rack with six truck lanes and 10 loading arms.
These logistics assets provide connectivity to Bakken, Canadian and Alaskan crude and Pacific, West Coast, Pacific Northwest and Rockies product markets.
Under the agreement, Par Pacific will purchase 100% equity interests of US Oil for a total consideration of $358m plus net working capital.
The transaction is expected to be funded through a $225m secured term loan and $150m of equity financing.
Goldman Sachs will provide committed debt financing, subject to customary terms and closing conditions.
US Oil’s financial sponsor will provide committed equity financing, but the company is likely to alternatively tap the capital markets for equity financing.
The transaction, which is subject to customary closing conditions, is expected to close in January 2019.
For the 12 months ended September 30, 2018, US Oil generated Adjusted EBITDA of approximately $86m.
The company expects the transaction to result in annual operational and cost synergies of $7.5m to $12.5m.
Par Pacific Holdings president and CEO William Pate said: “This transformative acquisition connects our existing assets in Hawaii, Pacific Northwest and the Rockies to create an integrated downstream network with significantly enhanced scale and diversification.
“We have been executing an ambitious strategic growth plan focused on attractive downstream markets for over three years and the acquisition of US Oil further demonstrates the progress we have made.”