US-based Phillips 66 announced the acquisition of the remaining 50% stake in WRB Refining from Canadian producer Cenovus Energy for $1.4bn. The deal gives Phillips 66 full ownership of the Wood River refinery in Illinois and the Borger refinery in Texas, which together have a processing capacity of 495,000 barrels per day.
Expansion of refining capacity
With this transaction, Phillips 66 will add approximately 250,000 barrels per day to its net refining capacity. The two facilities are designed to process a wide range of crude oils, from heavy and medium sour crudes to light sweet crudes. They also produce a significant share of transportation fuels.
Phillips 66 Chief Executive Officer Mark Lashier stated that the deal strengthens the company’s integrated business and consolidates its leadership position in a region where it already holds a strong presence. The move is part of a broader strategy to refocus on refining activities, following a prolonged proxy battle with activist investor Elliott Investment Management.
Cenovus divests downstream assets
Cenovus Energy said that selling its stake in WRB Refining would simplify its downstream portfolio and allow greater focus on heavy oil operations. The decision comes after some of its US refineries underperformed against expectations.
Upon closing, expected between the end of the third and the fourth quarters, Cenovus’s refining operations will include plants in Lloydminster, Lima, Toledo and Superior, with a combined throughput capacity of 472,800 barrels per day.
Proceeds directed to debt reduction
Cenovus indicated that proceeds from the sale will be used to reduce net debt and to increase shareholder returns through expanded share buybacks. The financial strategy is aimed at enhancing shareholder value while maintaining balance sheet flexibility.
The WRB Refining divestment follows Phillips 66’s earlier sale of its 65% majority stake in a German and Austrian fuel retail network earlier this year.
