Chevron to sell Hawaii refinery to private equity group
Chevron Corp has signed an agreement to sell its Hawaii refinery to private equity firm One Rock Capital Partners, ending a more-than six year quest to sell an asset not considered core to its business.
Terms of the deal were not disclosed, but industry estimates ahead of the sale pegged its value between $75 million and $300 million.
The 58,000 barrel per day refinery primarily supplies jet fuel to the U.S. military and airlines serving the Hawaiian islands. The deal, which is expected to close by December, also includes 58 gasoline stations spread throughout the archipelago and four storage terminals.
While both sides declined to disclose the price, in 2013 Tesoro Corp sold Hawaii’s only other refinery to Par Petroleum Inc. That $325 million deal included the plant, nearly double the Chevron refinery’s size at 94,000 bpd, and a network of retail gasoline stations.
Hawaii’s gasoline customers, living in one of the most-remote parts of the globe, usually pay the highest per-gallon price for gasoline. The average Hawaii gasoline price on Tuesday was $2.11 per gallon, about 23 percent above the national average, according to AAA.
Transporting crude for processing to a refinery in Hawaii’s islands is part of the reason costs are so much higher.
One Rock said in a press release it has a “strategic relationship” with Mitsubishi Corp, which holds stakes in Gulf of Mexico oil wells and is involved in crude trading.
The acquisition of Chevron’s downstream assets will mark the first oil refining company in One Rock Capital’s portfolio, which includes a holding company for landscape service providers, and companies that manufacturer food, chemicals and urinalysis supplies.
The sale comes as Chevron plans to slash spending by nearly 40 percent for each of the next two years as it focuses more on LNG and shale oil projects around the world and also aims to preserve cash for its 90-year-old dividend.
Chevron employs about 300 people in Hawaii at the refinery and product distribution terminals. It was not clear if One Rock planned to retain those employees and calls to the firm were not immediately returned.
Chevron had worked with Deutsche Bank on the sale. Chevron CEO John Watson told Wall Street in March 2015 that there was “quite a bit of interest” in refinery assets.
Shares of California-based Chevron rose 1.8 percent on Tuesday to close at $100.50 per share, in line with the market.
(Reporting By Liz Hampton and Ernest Scheyder; Additional reporting by Kristen Hays and Irwin Seba; editing by Grant McCool)