Par Petroleum Corp. (OTCBB: PARR) completed its purchase through its subsidiary, Hawaii Pacific Energy LLC, of Tesoro Hawaii LLC from Tesoro Corp. (NYSE: TSO) for $75 million in cash, the company announced on Sept. 26.
The purchase price includes market value of net working capital and a contingent earnout payment of up to $40 million. The acquired assets include a 94,000 barrel per day-capacity refinery; storage capacity for 2.4 million barrels of crude oil and 2.5 million barrels of refined products; and related logistics assets, including five refined product terminals, 27 miles of pipelines and a single point mooring terminal. In addition, HPE has rights to sell gasoline through a network of 31 Tesoro-branded retail stations in Hawaii. Tesoro Hawaii, which will be renamed Hawaii Independent Energy LLC, will operate as a separate wholly owned subsidiary of Par Petroleum and will be headquartered in Oahu, Hawaii.
The refinery produces gasoline, jet fuel, high sulfur diesel, low sulfur fuel oil and high sulfur fuel oil. It is also a leading supplier of ultra-low sulfur diesel to the Hawaiian Islands and has a Nelson complexity rating of 5.7 times. Major process units include crude distillation, vacuum distillation, hydrocracking, naphtha hydrotreating, reforming and visbreaking. The refinery is located in the Campbell Industrial Park in Kapolei, about 20 miles west of Honolulu.
“We are looking forward to being a reliable and productive member of the Hawaii business community, and we have the right team to optimize this asset,” Will Monteleone, Par Petroleum chairman CEO, said in the release. “I have to recognize the employees on the Islands who we have come to know. Despite the uncertainty at the refinery over the past two years, they have maintained operational excellence and have performed at, or exceeded, industry safety metrics.”
Par also completed the previously announced $125 million ABL revolving facility with Deutsche Bank and a crude oil supply and intermediation arrangement with Barclays. Barclays will provide crude oil and feedstocks to the refinery on a realtime basis. In conjunction with the acquisition, Par completed a $200 million private placement of common stock at $1.39 per share which was led by existing shareholders Zell Credit Opportunities Fund and funds managed on behalf of Whitebox Advisors.
Par Petroleum Corp. is an independent energy company focused on managing and maintaining interests in various energy-related assets, primarily natural gas assets located in the Piceance Basin in western Colorado. The company is based in Houston.