Sorry!! The article you are trying to read is not available now.
Thank you very much;
you're only a step away from
downloading your reports.

Why Are Private Equity Firms Buying Up Refineries on the East Coast?


As oil and gas companies idle their East Coast refineries, PE firms like Carlyle Group and Blackstone Group have been snapping them up.

MINYANVILLE ORIGINAL For a while, it seemed as if the East Coast refining industry was in terminal decline. Yet, after Phillips 66 (NYSE:PSX) idled its Trainer, Pennsylvania, refinery Delta Air Lines (NYSE:DAL) swooped in and purchased the 185,000 barrel per day (or bpd) facility in June. Some of the units have already restarted and the refinery should be fully operational at the end of September.

Delta will spend $100 million on the 185,000 bpd refinery to maximize jet fuel production. Overall, the refinery purchase was part of a plan to gain greater control over its supply chain and to better manage its biggest expense, jet fuel.

Sunoco (NYSE:SUN) had also announced plans to idle two of three of the largest refineries in Pennsylvania - the ones in Philadelphia and Marcus Hook.

Then, in July, private equity firm Carlyle Group (NASDAQ:CG) confirmed that it would purchase a two-thirds stake in the 330,000 bpd Philadelphia refinery, with Sunoco retaining a minority stake. And just like that, the East Coast (or PADD 1) region's refining industry appears to have turned a corner.

Carlyle Group's deal to buy the Philadelphia refinery will close in the third quarter. When it does, the company will join a growing list of private equity firms that have invested in refineries in recent years.

Blackstone Group (NYSE:BX)- and First Reserve-backed PBF Energy owns three refining assets in the US, including one in Paulsboro, New Jersey, and one in Delaware City. In 2010, TPG Capital led a team of three private equity firms to acquire most of Marathon Oil's (NYSE:MRO) refining assets in Minnesota.
No positions in stocks mentioned.
The information on this website solely reflects the analysis of or opinion about the performance of securities and financial markets by the writers whose articles appear on the site. The views expressed by the writers are not necessarily the views of Minyanville Media, Inc. or members of its management. Nothing contained on the website is intended to constitute a recommendation or advice addressed to an individual investor or category of investors to purchase, sell or hold any security, or to take any action with respect to the prospective movement of the securities markets or to solicit the purchase or sale of any security. Any investment decisions must be made by the reader either individually or in consultation with his or her investment professional. Minyanville writers and staff may trade or hold positions in securities that are discussed in articles appearing on the website. Writers of articles are required to disclose whether they have a position in any stock or fund discussed in an article, but are not permitted to disclose the size or direction of the position. Nothing on this website is intended to solicit business of any kind for a writer's business or fund. Minyanville management and staff as well as contributing writers will not respond to emails or other communications requesting investment advice.

Copyright 2011 Minyanville Media, Inc. All Rights Reserved.
Featured Videos