Independent refiner Tesoro Corporation TSO recently announced that its master limited partnership, Tesoro Logistics LP TLLP, has completed the acquisition of the remaining Alaska storage and terminalling properties of Tesoro. The transaction was valued at roughly $444 million, of which $400 million was paid in cash.
The transaction took place in two stages. On Sep 16, Tesoro Logistics acquired terminal assets comprising refined product terminals in Anchorage and Fairbanks, thereby completing the second stage. These assets have a combined capacity to store more than 600,000 barrels. For this, Tesoro received $160 million of cash and $18 million of common and general partner units of Tesoro Logistics. Tesoro received 358,712 units in the form of common units and 20,440 units in the form of general partner units at a price of $47.05 each.
In the first stage, which closed on Jul 1, 2016, Tesoro Logistics acquired storage assets including crude oil, feedstock and refined product storage tanks in Kenai, AK. The combined capacity of the tanks – having connectivity with Kenai Refinery of Tesoro along with Tesoro Alaska Pipeline and Nikiski Products Terminal of Tesoro Logistics – was 3.5 million barrels. Tesoro had received $239 million in cash and $27 million in common and general partner units of Tesoro Logistics.
TESORO CORP Price
This acquisition is expected to help Tesoro Logistics build its logistics capabilities in the region thereby providing completed solutions for customers in Alaska.
San Antonio, TX-based Tesoro is one of the largest independent oil refiners in the U.S. with a combined crude oil processing capacity of approximately 895,000 Bbl/d. The company operates via three segments – Refining (accounted for 58.4% of the company’s total 2015 operating income), TLLP (13.2%) and Marketing (28.4%).
Currently, the company carries a Zacks Rank #3 (Hold), which implies that the stock will perform in line with the broader U.S. equity market over the next one to three months.
Some better-ranked players in the oil refining and marketing sector include Par Pacific Holdings, Inc. PARR and Murphy USA Inc. MUSA. Both these stocks sport a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
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