Husky sells B.C. refinery to Tidewater for $215M

Husky Energy is selling its Prince George, B.C., oil refinery to Tidewater Midstream and Infrastructure for an initial payment of $215 million so it can focus on assets in Canada and U.S. as well as offshore production, the company said.

The cash deal is due to close this year and will also include an adjustment for inventory and a contingent payment of as much as $60 million over two years, the Calgary-based company said in a statement.

“We continue to deliver on Husky’s five-year plan ... with an ongoing focus on capital discipline, consistent execution and increased margins,” Husky CEO Rob Peabody said in the statement. “The plan is aimed at further enhancing the resiliency of the company.”

The sale of the 12,000-barrela-day light oil refinery comes as Husky continues a strategic review of its retail and commercial fuels business. Husky also owns refineries in the U.S. at Lima and Toledo, Ohio, and Superior, Wis. The Superior refinery is undergoing repairs from a fire and won’t reopen until next year, the company reported earlier.

Husky said it would use the cash from the sale to strengthen its balance sheet and return value to shareholders. It’s also entering a five-year off-take agreement with Tidewater for refined products from the Prince George refinery. Tidewater is keeping all of the facility’s staff, Husky said.

Calgary-based Tidewater says it plans to finance the deal through an increase of an existing credit facility of up to $600 million and a $100-million second lien term loan, according to Bloomberg. Tidewater sees the pact adding more than 50 per cent to 2020 distributable cash flow per share, the news agency reported.

Tidewater focuses on natural gas processing, fractionation, liquids upgrading, transportation, storage, and marketing, according to its website. Its core operations are in the Deep Basin area of western Alberta, Edmonton, and Montney regions of Alberta and B.C., it said.

Several linked projects and assets across Canada’s West and the U.S. comprise what Husky calls its Integrated Corridor. These include thermal projects to heat and extract oil from tar sands at Lloydminster on the Saskatchewan-alberta border, as well as at Cold Lake and Fort Mcmurray, Alta.