Exxon Mobil Corp agreed to sell its Billings, Montana, refinery and related pipeline properties to Par Pacific Holdings Inc for $310 million.
The sale ends a years-long effort by the U.S. oil giant to further reduce its refining footprint and concentrate production on plants along the U.S. Gulf Coast and in the Midwest. It also has been selling oil-producing properties to boost returns.
“ExxonMobil is focused on investing in facilities where we can manufacture higher-value products such as lubricants and chemicals,” said Karen McKee, the head of the oil company’s product solutions unit.
The deal for the 63,000-barrel-per-day refinery is expected to close in the second quarter of 2023, Exxon said in a statement.
Par Pacific was one of several independent refiners eying the plant and looking to invest some of this year’s record refining profits to expand its assets, according to people familiar with the matter.
Profit margins for processing crude into gasoline, diesel and jet fuel hit five-year highs in the United States earlier this year, helping the sales appeal. Rising travel and fewer refineries from pandemic shutdowns have pushed the average U.S. gasoline retail price to $3.84 a gallon this week, up from $3.36 a year ago.
Included in the sale are the Silvertip Pipeline, Exxon’s interest in the Yellowstone Pipeline and Yellowstone Energy LP and its interests in products terminals in Montana and Washington.
“This acquisition expands our fully integrated downstream network in the western United States,” said Par Pacific Chief Executive Officer William Pate.
Since 2013, Houston-based Par Pacific has purchased refineries in Hawaii, Wyoming and Tacoma, Washington.
Par Pacific shares jumped 8.7% to $21.62 on Thursday, their highest level in two and a half years.
“The acquisition benefits Par’s credit profile because it increases scale and diversification and will be funded within existing liquidity,” credit rating service Moody’s said.
Par said it would pay for the Billings purchase with cash on hand and existing credit lines.
Under the deal, Par Pacific will continue supplying fuel to Exxon and Mobil-branded stations in the region.
For the Billings refinery’s 300 employees, including 150 workers represented by the United Steelworkers union (USW), the news of the sale agreement ends worries about a possible closure of the plant.
U.S. refining capacity has fallen by 1 million bpd since 2019, primarily because of plant closures amid reduced demand following lockdowns during the COVID-19 pandemic.
