Lyondell Takes Over Refinery

The company buys Citgo's 41.25% stake in their joint venture.
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Lyondell Chemical

(LYO)

acquired

Citgo's

41.25% stake in their refining joint venture in a deal valued at roughly $2.1 billion.

The acquisition gives Lyondell sole ownership of the Houston refinery. The total price includes Citgo's portion of the refinery's debt. At the same time, Lyondell negotiated a new five-year, 230,000-barrel-a-day crude oil contract with a unit of Petroleos de Venezuela, Citgo's parent, for the refinery.

Lyondell said the transaction will immediately add to its earnings. Had Lyondell owned 100% of the refinery for the first six months of the year, and had the new crude oil contract been in place, the company's profits would have increased to $640 million from $450 million, or to $2.47 a share from $1.74.

"This acquisition, coupled with a new market-based crude oil contract, unlocks the true value of this unique asset and contributes significantly to shareholder value," said Dan Smith, president and CEO of Lyondell. "We now will benefit fully from today's strong refining market conditions that we believe will continue into the foreseeable future."

The facility refines very heavy, high-sulfur crude oil into clean fuels, including reformulated gasoline and low-sulfur diesel, as well as other products like jet fuel and aromatics.