Marathon Petroleum Buys BP's Texas City Refinery

Texas City Refinery

Marathon Petroleum has agreed to buy BP's Texas City Refinery and related marketing and logistics assets for as much as $2.5 billion. The refinery has a 451,000 b/d capacity and is positioned well to benefit from growing production in plays like the Eagle Ford.

The deal includes several related assets:

Texas City refinery, three intrastate NGL pipelines originating at the refinery, an allocation of BP's Colonial Pipeline Company shipper history, four terminals, retail marketing contract assignments for approximately 1,200 branded sites and a 1,040 megawatt cogeneration (cogen) facility. The base purchase price is $598 million, plus inventories estimated at $1.2 billion. The agreement also contains an earnout provision under which MPC could pay up to an additional $700 million over six years, subject to certain conditions. The transaction is expected to be accretive to earnings in the first year of operation. The acquisition is expected to be funded with cash on hand, and is anticipated to close early in 2013, subject to customary closing conditions and regulatory approvals.

Read more at marathonpetroleum.com

Marathon Petroleum and Valero Refineries are Adding Eagle Ford Oil

Marathon Petroleum and Valero Energy refineries are expanding to accept more Eagle Ford Shale crude oil. Both companies have expansion plans that will allow greater volumes of oil to flow through the refineries and the companies want Eagle Ford crude because it is easier to refine than the heavy crudes that are imported from South America. On the back of Marathon Oil's Eagle Ford Shale acreage acquisition, Marathon Petroleum might stand to benefit the most if refining margins hold. 

For Marathon Petroleum, there are some promising developments that could boost future operations in a big way. The company’s Garyville refinery in Louisiana has been performing above expectations. A capacity of 436,000 barrels per day last year to a current output of 464,000 bpd indicates the company’s appetite for expansion. However, a higher capacity doesn’t seem to have whetted its appetite.

In fact, Marathon has already received the approval from state regulators to increase the refinery's overall capacity to 545,000 bpd. This is very promising. Distillate exports from this refinery have gone up in the second quarter to 70,000 bpd from 65,000 bpd earlier.

Additionally, with the advent of shale plays, sweet crude processing should see growth. The company's Texas refinery is, in fact, looking to increase crude oil processing from the Eagle Ford shale play. This region will witness a significant ramp up in production by next year, when most upstream companies will have their wells flowing.

Valero Energy (NYSE: VLO ) has already ramped up its Eagle Ford crude inputs, with its Corpus Christi refinery processing 25,000 bpd. It is also planning to increase its Three Rivers refinery capacity from 40,000 bpd to 60,000 bpd. Valero seems to have a head start here. Marathon, which has plans to increase its sweet crude intake at its Texas City refinery, should stand to benefit.

Read the full news release at fool.com

Marathon Oil News: More Eagle Ford Deals to Come

News out of Marathon Oil is that it plans to continue its upbeat attitude about the Eagle Ford.  Marathon Oil is fresh off of a 3.5 billion acquisition of Eagle Ford Shale acreage and a recent spinoff of it's refinery business.  Expect the upstream focused Marathon Oil to continue acquiring shale oil property for development.

"The head of Marathon Oil Corp. announced Friday his company will continue to buy acreage in the Eagle Ford and other shale basins where it already has operations as a means of growing its exploration business following the spin- off of its refining unit."

"Marathon announced earlier this month it plans to buy oil and gas properties in the Eagle Ford shale field in South Texas for $3.5 billion."

"Marathon CEO Clarence Cazalot said the Houston-based company concentrate primarily on oil acquisitions in the Eagle Ford, Niobrara and Bakken shales."

“ 'We are not spending very much money on natural gas,' Cazalot said. 'You’ll note about all of those, they are predominantly liquids focused.' ”