Petroleum & Petrochemical Business Sunoco Sells Refining Business
American petroleum company Sunoco, known as the supplier of high performance racing fuels for NASCAR races, plans to exit its refining business in 2012 latest. For the future the company plans to focus on its supply, retail and logistics business. Sunoco has already split its energy division Sunoco Energy and recently sold its petrochemical branch to Braskem.
Philadelphia, Pennsylvania/USA – American petroleum and petrochemical manufacturer Sunoco has announced to exist its refining business, intending to sell its Pennsylvanian refineries in Philadelphia and Marcus Hook. Sunroco explains this decision as part of a recent comprehensive strategic review of the company that aims on maximizing the potential for Sunoco’s logistics and retail businesses while providing extra benefits for the company's shareholders. Credit Suisse Securities (USA) has been retained to assist in the review process.
While Sunoco is currently looking for buyers for its refineries, a decommissioning of the main processing units at the facilities in July 2012 if no a suitable transaction cannot be implemented is planned. Sunoco already split of its energy business SunCoke Energy in march. Sunoco Chemicals, the companies petrochemical branch, had already been sold to Braskem of Brazil last year.
“We have made progress in increasing the efficiency of our refineries over the last several years, but given the unacceptable financial performance of these assets, it is clear that it is in the best interests of shareholders to exit this business and focus on our profitable retail and logistics businesses which have higher returns, growth potential, and provide steady, ratable cash flow,” said Lynn L. Elsenhans, Sunoco’s chairman and chief executive officer
Following the exit of the refining business, the company expects to record a pretax noncash charge of between $1.9 billion and $2.2 billion in the third quarter of 2011 related to impairment of the plant and equipment in the refineries. Should the plants not be sold and idled, the company expects additional pretax charges of up to $500 million, due to contract terminations, staffing costs and severance. In addition, selling the refineries could gain approximately US $2 billion (at current market prices) from the liquidation of all crude oil and a significant portion of its refined product inventories.
Regarding the strategic review process, Elsenhans said, “With SunCoke’s recent initial public offering, our complete exit from the chemicals business, and our plan to exit refining, we have an opportunity to take a fresh look at all aspects of the company and gain added perspective on how best to use our cash and maximize the potential for our strong retail and logistics businesses with a view toward creating value for our shareholders.”
The company plans to discuss these developments during a conference call on Tuesday, September 6, 2011 at 9:00 a.m. ET. The call will be publicly available at Sunoco's website.