Calgary, Prince George, B.C. 鈥� One of Canada鈥檚 smallest refineries has been sold. Husky Energy announced on Oct. 4 it has reached an agreement for the sale of its Prince George Refinery to Tidewater Midstream and Infrastructure for $215 million in cash plus a closing adjustment for inventory, and a contingent payment of up to $60 million over two years.
Husky previously announced it was considering selling the Prince George Refinery to focus on its 鈥渋ntegrated corridor鈥� and offshore businesses. The integrated corridor is a series of physically-linked assets that includes upstream thermal crude production, storage, committed pipeline capacity and refineries. This includes the Lloydminster upgrader and refinery, as well as the refinery in Superior, Wisconsin. 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鈥檚 East Coast and in the Asia Pacific region.
鈥淲e continue to deliver on Husky鈥檚 five-year plan outlined at our Investor Day in May, with an ongoing focus on capital discipline, consistent execution and increased margins,鈥� said CEO Rob Peabody in a release. 鈥淭he plan is aimed at further enhancing the resiliency of the company.鈥�
Proceeds of the sale will be used in accordance with Husky鈥檚 funding priorities, which include maintaining the strength of the balance sheet and returning value to shareholders.
Tidewater is retaining all refinery staff.
The transaction is expected to close in the fourth quarter of 2019, subject to regulatory approvals.
The 12,000 barrel-per day Prince George Refinery, located in Prince George, B.C., 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.
Put in perspective, the Prince George Refinery has about 9 per cent of the capacity of the Co-op Refinery Complex in Regina.
The strategic review of Husky鈥檚 retail and commercial fuels business continues to progress.
TD Securities Inc. is acting as financial advisor, with Torys LLP as legal advisor.
