U.S. refiner Phillips 66 said on Tuesday it will acquire the remaining 50% stake in WRB Refining from Cenovus Energy for $1.4 billion, giving it full ownership of two major U.S. refineries.
WRB includes the Wood River refinery in Illinois and the Borger refinery in Texas, which have a combined crude throughput capacity of 495,000 barrels per day (bpd).
The refineries — which would add about 250,000 bpd to Phillips 66’s net refining capacity — can process heavy and medium sour crudes as well as light sweet crudes, and produce a high percentage of transportation fuels.
Phillips 66 has been streamlining its business to focus on refinery business, following a long-drawn proxy battle with activist investor Elliott Investment Management.
Elliott had advocated exploring a sale or spinoff of the midstream business and other divestments to concentrate on refining. Earlier this year, Phillips 66 sold its 65% stake in a German and Austrian fuel retail business.
“With full ownership of the Wood River and Borger refineries, we are strengthening our integrated business and expanding our position in a region where we lead the industry,” Phillips 66 CEO Mark Lashier said.
Meanwhile, the Canadian oil and gas producer has reported underperformance at some of its U.S. refineries. Cenovus said the WRB sale will simplify its downstream business and sharpen its focus on assets tied to heavy oil operations.
The companies expect the transaction to close between the end of the third and fourth quarters. After closing, Cenovus’s refining business will include plants in Lloydminster, Lima, Toledo and Superior, with total throughput capacity of 472,800 bpd.
Cenovus said it would use the proceeds to reduce net debt and accelerate shareholder returns by boosting share repurchases.
(Reporting by Vallari Srivastava in Bengaluru; Editing by Tasim Zahid)