SAN ANTONIO, Texas (AP) -- Tesoro Petroleum Corp. said Tuesday it has agreed to buy two oil refineries and 45 service stations in Utah and North Dakota from BP PLC for $677 million.
BP, formerly called BP Amoco, said the sale fit the company's strategy of focusing its refining business away from gasoline to specialty lines such as chemicals.
Tesoro said it will borrow to finance the purchase, which it expects to complete in the fourth quarter after securing regulatory approval.
The refineries, in Mandan, N.D., and Salt Lake City, Utah, mainly produce gasoline. The deal also includes storage, pipelines and gasoline-marketing operations connected to the refineries.
Tesoro will pick up BP-owned service stations in Utah and North Dakota. London-based BP said it will also give San Antonio-based Tesoro contracts to supply about 300 Amoco stations that are owned by independent distributors. Those stations are located in Idaho, North Dakota, Utah, Washington, Wyoming, Nevada, Oregon, Montana and Colorado.
After the deal closes, Tesoro will own and operate five refineries with a combined capacity of 390,000 barrels of oil per day and supply a network of about 640 service stations. Tesoro currently has about 300 stations, including more than 100 that are owned and operated by the company
Tesoro will gain about 700 employees from the BP transaction, it said.
According to BP, its Utah refinery is the largest of four in the state, with a capacity of 55,000 barrels of oil per day. More than half of its production is gasoline, but it also makes diesel and jet fuel. It employs about 190 workers.
The North Dakota refinery, near Bismarck, employs about 210 people and has a capacity of 60,000 barrels per day. It produces mostly gasoline along with some jet fuel and other products, BP said.
Robert A. Malone, BP's regional president for western states, said the sale fit the plan BP announced in 1999 to only keep refineries that make specialty products such as clean fuels and chemicals.
Last year, BP sold a Louisiana refinery to Tosco and is selling a Virginia refinery and its share of the Singapore Refining Co. The company operates refineries in Texas City; Whiting, Ind., Toledo, Ohio; Cherry Point, Wash.; and Carson, Calif.
After the Tesoro sale closes, the company said, it will have a refining capacity of 2.8 million barrels a day, including 1.5 million barrels per day in the United States.
In trading Tuesday on the New York Stock Exchange, Tesoro shares rose 23 cents to close at $11.23, and BP shares fell 60 cents to close at $47.35.
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