On Friday, Husky Energy announced the sale of its 12,000 barrel per day Prince George Refinery (PGR) to Tidewater Midstream and Infrastructure.
To complete the sale, Tidewater Midstream and Infrastructure will pay Husky Energy $215 million in cash as well as a closing adjustment for inventory, and a contingent payment of up to $60 million over two years.
In a press release issued by Tidewater Midstream, the company says “PGR has significant onsite storage capacity of greater than 1.0 MMbbl and flexible logistics, with pipeline, rail and truck connectivity in place.
“The Prince George region is generally in short supply of refined products. The PGR’s location within the Prince George region makes it a critical piece of infrastructure with a significant logistical advantage to address the demand for these products.”
Husky previously announced it was selling the Prince George Refinery to focus on its Integrated Corridor and Offshore business.
The Integrated Corridor is a series of physically-linked assets that includes upstream thermal crude production, storage, committed pipeline capacity and refineries. The Integrated Corridor is designed to maximize margin capture, access to markets and optionality.
The Offshore business focuses on oil and gas production off Canada’s East Coast and in the Asia Pacific region.
“We continue to deliver on Husky’s five-year plan outlined at our Investor Day in May, with an ongoing focus on capital discipline, consistent execution and increased margins,” said CEO Rob Peabody.
Husky says proceeds of the sale will be used in accordance with its funding priorities, which include maintaining the strength of the balance sheet and returning value to shareholders.
Tidewater Midstream says it is will retain all refinery staff and intends to finance the purchase through an increase of its existing credit facility up to $600 million and a $100 million second lien term loan.
The Prince George Refinery processes light oil into low-sulphur gasoline and ultra-low sulphur diesel, along with other products. As part of the sale, Husky will enter into a five-year offtake agreement with Tidewater for refined products from the Prince George Refinery.
The sale is expected to close in the fourth quarter of 2019, subject to regulatory approvals.
Husky Energy says the strategic review of its retail and commercial fuels business is ongoing.
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