Oil refiner and marketer
Western Refining Inc.
) has acquired 100% general partner interest and 38.7% limited
partner interest in
Northern Tier Energy LP
) from ACON Investments LLC and TPG Capital - the private equity
sponsors of the latter. The transaction was settled at a
consideration of $775 million. The remaining limited partner
units, apart from Western Refining's recently acquired 35.6
million units - remains publicly traded.
NORTHERN TIER (NTI): Free Stock Analysis
SM ENERGY CO (SM): Free Stock Analysis Report
WESTERN REFING (WNR): Free Stock Analysis
WESTERN REF LOG (WNRL): Free Stock Analysis
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The acquisition is a strategic move by Western Refining to gain
access to areas that have direct pipeline connectivity to crude
oil resources in the Bakken, Permian, San Juan, and western
Canada regions. The assets under transaction include the 89,500
barrels per day (Bbl/d) St. Paul Park refinery at Minnesota that
has pipeline connectivity to Bakken and Canadian crude oil.
Western has also acquired a 17% stake in a crude oil pipeline
with 455,000 Bbl/d capacity and other logistics assets like
product terminals, rail facilities and the Mississippi river
dockage. Also, the company now owns the SuperAmerica retail chain
that has a network of 163 company-operated convenience stores.
Per management, the deal would have an immediate effect on its
earnings and cash flow. The move not only increases the
geographic reach of the company's refining business but also
increases its scale of operations, reaching refining capacity of
242,500 barrels per day.
The El Paso, Texas-based company partly funded the deal through a
senior secured term loan of $550 million. The remaining $245
million (including fees and other expenses) was settled in cash
The limited partner interest at NTI should benefit shareholders
as it would generate a variable distribution for them, in
addition to the traditional distribution from
Western Refining Logistics LP
Western Refining is an independent refiner and marketer of
refined petroleum products in the Southwestern and Mid-Atlantic
regions of the U.S. that currently holds a Zacks Rank #3 (Hold),
implying that it is expected to perform in line with the broader
U.S. equity market over the next one to three months.
Meanwhile, one can consider other stocks in the energy sector
like the Zacks Ranked #1 (Strong Buy)
SM Energy Company
) which is expected to outperform in the same time frame.