Phillips 66's Asset Sale May Involve Refinery JVs with Cenovus -- OPIS

Phillips 66 Co. last week said it hopes to raise $3 billion through the sale of non-core assets. And while company officials wouldn't identify which assets they may look to offload, refining industry sources suggested it may offer its interests in the Wood River, Ill., and Borger, Texas, refineries to partner Cenovus Energy.

The facilities are jointly owned with Cenovus and Phillips 66 has operating rights at both.

Cenovus CEO Alex Pourbaix told investors in February that the company would prefer to operate refineries in which it has an ownership stake. The company later bought out BP's share in the 155,000 b/d Toledo, Ohio, refinery.

The two joint ventures have provided a home for the large volumes of the western Canadian crude that Cenovus brings to market in Alberta. The 180,000 b/d Wood River refinery runs substantial amounts of very heavy sour crude and the 92,000 b/d Borger plant uses an assortment of North American crude blends.

When Cenovus purchased BP's interest in the Toledo plant, it paid $370 million for the 50% stake. If similar metrics are used for Wood River, buying out Phillips 66's 50% stake could cost between $400 million and $500 million.

Refining sources, however, said the Toledo deal included a multi-year supply agreement with BP that likely affected the sales price.

In a Friday conference call to discuss its third-quarter financial results, Phillips 66 officials suggested that they were under no pressure to make sales but recognized they "have some high performing assets that might be more valuable to others," leading to speculation that the two jointly owned refineries could be in play.

Phillips 66 said that $1/bbl discount in Western Canadian Select oil translates into about $100 million of annual EBITDA.

Phillips did not respond to OPIS requests for more information on the asset disposal process.

This content was created by Oil Price Information Service, which is operated by Dow Jones & Co. OPIS is run independently from Dow Jones Newswires and The Wall Street Journal.

--Reporting by Tom Kloza, [e-mail]; Editing by Jeff Barber, [e-mail]

(END) Dow Jones Newswires

October 31, 2023 14:00 ET (18:00 GMT)

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