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HollyFrontier to buy Sinclair Oil’s refining and logistics assets for $2.6bn

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HollyFrontier and its affiliate Holly Energy Partners (HEP) have signed agreements to acquire almost all of Sinclair Oil’s refining, renewable diesel, and logistics assets for $2.6bn.

The acquisition includes Sinclair Oil’s branded marketing business and all related commercial activities as well as its refineries and related operations and assets in Casper and Sinclair, Wyoming.

The deal also consists of its logistics and storage assets that include approximately 1,200 miles (1,931km) of pipelines, two crude oil terminals and eight light product terminals, with nearly 4.5 million barrels (MMbbl) of operated storage.

In addition, HEP will acquire Sinclair’s interests in three pipeline joint ventures that include Powder Flats Pipeline, Pioneer Pipeline and UNEV Pipeline.

However, the transaction does not include exploration and production assets owned by Sinclair Oil & Gas Company.

Sinclair Oil chairman and CEO Ross Matthews said: “As the oil and gas industry has evolved in recent years, we have carefully considered how best to position Sinclair Oil’s refinery and logistics assets and their related operations for the future.

“We’re confident these businesses – and the dedicated employees who operate them -will continue to thrive under this new ownership structure.

“We expect these businesses will benefit significantly from HollyFrontier’s and HEP’s operational expertise, their network of refineries and midstream assets in the Western U.S., and the flexibilities that come with being part of a larger organisation.”

The acquisition is expected to enable HollyFrontier to diversify its business by adding Sinclair’s integrated distribution network that includes 1,500 branded locations across 30 states.

HollyFrontier will also be able to expand the size of its renewables business with the addition of Sinclair’s renewable diesel unit (RDU), co-located at its Sinclair, Wyoming refinery. The RDU has a capacity to produce 10,000 barrels per day of renewable diesel, which is sold into California.

The deal is also expected to expand the combined company’s refinery footprint in the Rocky Mountain region, with the Sinclair and Casper refineries.

With a crude oil processing capacity of 678,000 barrels per stream day, the combined refining network will consist of seven complex refineries in the Rocky Mountains, Mid-Continent, Southwest and Pacific Northwest regions.

Subject to the satisfaction of customary closing conditions, including regulatory approvals, the transaction is expected to be completed in mid-2022.

Citi is serving as financial advisor to HollyFrontier on the transaction, while Morgan, Lewis & Bockius is acting as its legal counsel.

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