Calumet Retains Bank for Potential Sale of Wisconsin Refinery

Reuters, March 17, 2017

Calumet Specialty Products Partners has retained advisors for a potential sale of its refinery in Superior, Wisconsin, according to two people familiar with the matter. The refinery is relatively small by the standards of U.S. plants, with the ability to process 45,000 barrels of crude oil per day. Still, a deal could fetch as much as $500 million, according to one of the sources, who spoke on the condition of anonymity as the talks are private. Calumet has retained Tudor, Pickering, Holt & Co to advise on a possible transaction, the sources said.

They did not suggest who might buy the plant. A spokesman for Calumet declined to comment immediately on the company's plans for the plant. Potential bidders may include Par Pacific Holdings Inc , HollyFrontier and Suncor Energy, according to two other people familiar with refinery transactions. The companies did not immediately respond to requests for comment. The refinery's location, which provides access to domestic crude produced in North Dakota, could provide a cost advantage relative to other refineries. The plant is supplied primarily by crude carried through an Enbridge pipeline and railcars, according to Calumet's website. The company bought the refinery from Murphy Oil Corp in 2011 for just over $200 million. The plant produces gasoline, diesel, asphalt and other refined products. The refined fuels produced are distributed by a Magellan pipeline as well as by tank trucks and railcars.

Last year, Calumet tried to bolster its balance sheet with a $400 million secured note offering. Calumet has been shedding assets not related to producing specialty chemicals products. It already has sold its stake in the Dakota Prairie refinery joint venture. The company has increased volumes of Canadian crude at its refineries to try to boost profit margins. "We remain focused on continuing to run more heavy crude in our northern refineries," said Calumet Chief Executive Officer Timothy Go, who took the helm a year ago.

Canadian sour grades of crude were significantly discounted to benchmark West Texas Intermediate crude in 2016.

The company plans to upgrade the Superior refinery in 2017, spending as much as $20 million for improvements that are expected by the first half of 2018. The work is focused on optimizing product yields and overall performance at the refinery, Go said on a conference call with investors last month.

(Reporting by Ron Bousso and Jessica Resnick-Ault; Editing by Paul Simao)


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