Tidewater Midstream and Infrastructure Ltd. has entered into a purchase and sale agreement to acquire Husky Energy Inc.’s light oil refinery.
The Prince George Refinery is a 12.0 Mbbl/d light oil refinery that predominantly produces low-sulfur diesel and gasoline, in addition to other products, to supply the greater Prince George region. The refiner has significant onsite storage capacity of greater than 1.0 MMbbl and flexible logistics, with pipeline, rail and truck connectivity in place.
The Prince George region is generally in short supply of refined products, according to a company announcement. The refinery’s location within the Prince George region makes it a critical piece of infrastructure with a significant logistical advantage to address the demand for these products.
The purchase price is $215 million (subject to closing adjustments) plus acquired inventory (estimated at approximately $62 million, primarily related to light oil feedstock, line fill and refined product in storage). Transaction costs and taxes are estimated at $11 million. The purchase price is also subject to contingency payments.
Tidewater intends to finance the acquisition through an increase of its existing credit facility up to $600 million and a $100 million second lien term loan.
The Prince George refinery reported adjusted earnings before interest, tax, depreciation and amortization of approximately $100 million in 2018.
Current crude oil/condensate feedstock for the refinery can be supplied by existing light oil and condensate production from B.C. and Alberta, which Tidewater can readily access with its existing and planned midstream footprint, including the recently commissioned Pipestone Sour Gas Plant (“Pipestone”). Crude oil feedstock is currently delivered by pipeline from Taylor.
The refinery has optionality to receive feedstock supply by pipeline, rail and truck.
The refinery product yields of approximately 45 per cent diesel and approximately 40 per cent gasoline are primarily sold through Husky retail gas stations and via exchange agreements with other Husky retail partners, in addition, approximately 15 per cent of additional yields are LPG and heavy fuel oil.