15th June, 2016:

Par Pacific Holdings announced Tuesday the purchase of Wyoming Refining Co. in a deal worth $271.4 million.  The transaction includes Wyoming Refining’s 18,000-barrel-per-day refinery in Newcastle, as well as a 140-mile crude gathering pipeline and 40 miles of refined product pipelines.  Par Pacific executives touted the Newcastle refinery’s proximity to the emerging oil play in the Powder River Basin and access to niche markets with significant gasoline needs.  William Pate, Par Pacific president and CEO, called the transaction a “bullseye” for the Houston-based company.  “It’s an area, given the size of our company, where we can grow our business,” Pate told financial analysts in a conference call announcing the deal.  Wyoming Refining, a subsidiary of Black Elk Refining LLC, purchased the Newcastle facility in 2011.

Par Pacific executives approached Black Elk Refining about the prospects for a deal last fall.  The refining operation has undergone significant renovations in recent years. Wyoming Refining invested $85 million in the operation over the last four years, boosting daily production by roughly 4,000 barrels, Par Pacific executives said.  Under terms of the deal announced Tuesday, Par Pacific will assume about $123 million of Wyoming Refining’s debt. Par Pacific will sell $50 million in stock to raise cash and will borrow another $100 million to help finance the purchase. The transaction is expected to close in mid-July.  Par Pacific is a Houston-based holding company that operates a Hawaiian refinery and natural gas production in Colorado. The firm also markets and distributes crude throughout the western United States. The company reported an annual loss of $39.9 million in 2015, down from a $47 million in 2013. 

Company executives said the deal was attractive due to northeastern Wyoming’s strong tourism market and the presence of Ellsworth Air Force Base outside of Rapid City.  Roughly 55 percent of the Newcastle refinery’s output is geared toward local gasoline demand, which is fueled in large part by the summer driving season. The refinery is also a supplier of aviation fuel to Ellsworth.  “It tends to be a tourist-driven market with a strong defense presence,” Pate said.  The refinery’s proximity to the Powder River Basin makes the project’s economics attractive, executives said.  Powder River Basin crude has, on average, sold for $3.80 per barrel less compared with the national benchmark over the last decade. The spread between crude and refined products has averaged $18.23 per barrel over the last three years.  Par Pacific shares were up 11.82 percent Tuesday to close at $15.80.

By Star Tribune