Tesoro Petroleum to acquire BP refineries

Tesoro Petroleum and BP announced that they have reached an agreement for Tesoro to acquire BP's Mandan, North Dakota and Salt Lake City, Utah refineries and associated storage, pipeline, distribution and gasoline marketing operations for $ 677 mm, excluding working capital.
Upon completion of the deal, BP will transfer ownership of the two refineries, associated North Dakota crude and product pipelines, bulk storage, eight product distribution terminals, and 45 retail gasoline stations to Tesoro. BP will also assign to Tesoro contracts for about 300 Amoco-branded stations that are owned by about 80 Amoco-branded gasoline jobbers.
Subsequent to the transaction, Tesoro will own and operate five refineries with a combined throughput capacity of 390,000 bpd. In addition, Tesoro's branded retail network locations will expand to approximately 640 retail locations while adding approximately 700 employees to Tesoro. Tesoro and BP will quickly seek required regulatory approvals and hope to close the acquisition in the early part of the fourth quarter. The two refineries plan to continue to operate normally during the sales process and will meet all existing product supply commitments.

BP's Salt Lake City refinery has a crude oil capacity of 55,000 bpd and is the largest of four refineries in Utah. More than half of its production is gasoline, with principle other products of diesel and jet fuel. The Mandan refinery, which is located near Bismarck, North Dakota, has a rated capacity of 60,000 bpd and produces mostly gasoline, with the balance in distillates, jet fuel and other products.
Tesoro expects the transaction, which will be financed with debt, to be accretive to earnings and cash flow beginning in the fourth quarter of 2001. "We believe that these additions improve our ability to rapidly supply markets in areas that we have previously targeted for retail and commercial marketing expansion. These operations obviously complement our Mirastar investment program. Finally, we are excited about the opportunity to build new business partnerships with both the employees and the independent marketers in these areas," stated Bruce Smith, Tesoro's Chairman, President and CEO.

"We are delighted that Tesoro has recognized these refineries and related operations are top performers, and that they plan to offer employment to all of the current workforce. This is an important reassurance to our employees, the markets and the communities served," said Robert A. Malone, BP's Regional President for the Western US. "Today's milestone agreement ensures the markets supplied by the Salt Lake City and Mandan refineries will have their ongoing demand for gasoline and other petroleum products supply met."
Malone noted that the divestment was consistent with BP's global refining strategy, announced in 1999, of retaining only those refineries which provided advantaged supplies for its marketing operations - particularly in the provision of clean fuels - or where integrated with other parts of the business such as chemicals. Lehman Brothers served as financial advisor to Tesoro while Rothschild served as financial advisor to BP.

Tesoro Petroleum is an independent refiner and marketer of petroleum products and provider of marine logistics services. Tesoro operates three refineries in the western US with a combined capacity of 275,000 bpd. Tesoro's branded retail network is currently comprised of approximately 300 stations, of which more than 100 are company owned and operated.

BP is an international energy company involved in the exploration of crude oil and natural gas; refining, marketing, supply and transportation of hydrocarbons; manufacturing and marketing of petrochemicals; solar power systems; and gas-fired power generation.