Par Pacific Holdings, Inc. has entered into a definitive agreement to acquire Hermes Consolidated, LLC, doing business as Wyoming Refining Company, for approximately US$271.4 million, including the assumption of $58 million of indebtedness.
The transaction, which includes, the Wyoming refinery and related logistics assets, is expected to close in mid-July 2016, subject to customary closing conditions and regulatory approvals. Evercore has acted as financial advisor to Black Elk Refining, LLC, the owner of Wyoming Refining.
The Wyoming Refining facility is configured to meet the transportation fuel needs of the primary marketing regions in Wyoming and South Dakota. It increased its processing capacity to 18,000 barrels per day (bpd) in November 2015 with the addition of new prefrac and crude units. Over the past four years, Wyoming Refining has invested approximately $85 million in new assets and upgrades.
The refinery business is expected to generate approximately $40 million of annual Adjusted EBITDA, based on current forward crack spreads and the logistics operations are expected to consistently generate approximately $10 million of annual Adjusted EBITDA.2
In addition to the refining assets, the transaction includes the 140-mile Thunder Creek crude oil gathering system in northeast Wyoming that sources crude oil from the Powder River Basin. The Thunder Creek gathering system is also connected to the Butte pipeline, which allows Wyoming Refining to directly access Bakken crude from North Dakota. The transaction also includes a 40-mile clean products pipeline system that serves the Rapid City markets through the Magellan Products pipeline, two truck racks, a proprietary jet fuel terminal in Rapid City and a jet fuel pipeline that connects Wyoming Refining's proprietary aviation fuel terminal to Ellsworth Air Force Base.
William Pate, Par Pacific's President and Chief Executive Officer, stated:
"This acquisition fits perfectly with our previously disclosed acquisition strategy by utilizing our tax attributes and capital sources to build on our refining and logistics capabilities. The refinery enjoys attractive crude oil sourcing given its proximity to robustPowder River Basin production, pipeline connectivity to a niche refined products market, and a gasoline-oriented yield in a market with significant summer gasoline needs. The logistics infrastructure provides strategic access to crude and refined products markets, which we expect will generate stable cash flows and contribute to our Logistics segment profitability."