Valero Energy Corporation (NYSE: VLO) announced today that it has agreed to acquire Chevron’s Pembroke refinery in Wales, U.K., as well as extensive marketing and logistics assets throughout the United Kingdom and Ireland, for $730 million, excluding working capital. Based on current market prices, working capital has an estimated value of $1 billion, although the final value for working capital will be determined at closing. The company expects to fund the transaction from available cash, and the transaction is expected to close in the third quarter of 2011, subject to regulatory approvals.
The Pembroke refinery has a total throughput capacity of 270,000 barrels per day, of which 220,000 barrels per day is crude capacity, and is one of Western Europe’s largest and most complex refineries, with a Nelson complexity rating of 11.8. The refinery has been well maintained and managed, and has an estimated cash operating cost 25 percent below Valero’s average, making it a competitive addition to Valero’s portfolio.
Similar to Valero’s other refineries, Pembroke can process a large and flexible slate of feedstocks, having used more than 60 different types of crude oil in the past decade. It has access to discounted crudes, and has a product slate of 44 percent gasoline, 40 percent distillates, 11 percent fuel oil and 5 percent other products. It receives feedstock cargoes by ship at its eight-berth deepwater dock, which can accommodate very large crude carriers.
In addition, the purchase price includes ownership interests in four major product pipelines and 11 fuel terminals, a 14,000 bpd aviation fuels business, and a network of more than 1,000 Texaco-branded wholesale sites, which is the largest branded dealer network in the U.K. and the second largest in Ireland. In total, more than half of the refinery’s production is distributed through this integrated marketing and logistics system.
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