Tesoro Corp., through its affiliate Tesoro Alaska Co. LLC, recently announced that it agreed to acquire Flint Hills Resource’s (FHR) wholesale marketing and logistics assets in Anchorage and Fairbanks, Alaska.
The transaction includes: all FHR wholesale fuel marketing contracts in Alaska; an Anchorage terminal with 580,000 barrels (bbl) of total in-service storage capacity, with truck rack and rail loading capability; a Fairbanks airport terminal that includes 22,500 bbl of in-service jet fuel storage and truck rack; and a multiyear terminaling agreement at FHR’s North Pole terminal, which will provide efficient rail offload capabilities and provide Tesoro access to Alaska’s interior.
The former FHR North Pole refinery, however, is not part of this acquisition, according to Tesoro.
The transaction, expected to close within 60 days, is anticipated to improve Tesoro’s ability to serve customers from its existing Anchorage terminal, as a result of Tesoro gaining access to rail loading capabilities located at the FHR Anchorage terminal. This extends Tesoro’s ability to efficiently and reliably serve the Alaska interior.
Tesoro expects to offer qualified third parties access to the FHR Anchorage terminal.
“Tesoro has the best West Coast refining position in our universe, and is currently benefiting from a tight West Coast gasoline market,” Brad Heffern, analyst for RBC Capital Markets LLC, said in a note to clients.
“However, we already assume that West Coast cracks are stronger than historical levels in our valuation, and still see no sum-of-the-parts upside. We also see little value to unlock from Tesoro’s marketing business, and think that a monetization of the Tesoro Logistics LP general partner is unlikely in the near term,” Heffern noted.
Bryan Sims can be reached at bsims@hartenergy.com
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