Cenovus Energy acquires BP’s 50% stake in Toledo refinery, assumes operatorship

Cenovus Energy (TSX: CVE) (NYSE: CVE) has agreed to purchase BP PLC’s 50% stake in the BP-Husky Toledo refinery in Ohio for US$300 million – giving it full ownership of the refinery.

Since combining with Husky Energy in 2021, Cenovus has held 50% of the refinery. The transaction is expected to close by the end of 2022, with Cenovus’ president and chief executive officer Alex Pourbaix saying acquiring BP’s stake opens the door for a number of opportunities.

“Fully owning the Toledo Refinery provides a unique opportunity to further integrate our heavy oil production and refining capabilities.”

“Operating the refinery will open up additional synergies and capital efficiency opportunities, including connectivity with our nearby Lima refinery,” he said.

The price tag for the purchase is said to be US$300 million in cash, plus inventory value, with Cenovus and BP also inking a multi-year product supply agreement.

Cenovus expands capacity

Acquiring BP’s stake will give Cenovus an additional 80,000 barrels per day of downstream throughput capacity, including 45,000 barrels per day of heavy oil refinery capacity, bringing the company’s total refining capacity across its assets to 740,000 barrels per day.

The Toledo refinery processes up to 160,000 barrels of oil per day. It has been supporting Ohio’s economy for more than 100 years, with employment and supplying gasoline, diesel and other essential fuels and products.

Cenovus’s executive vice-president, downstream Keith Chiasson said the company aims to build on the refinery’s tradition of providing for the state of Ohio.

“It has provided economic opportunities and critical energy products to the people of Ohio and surrounding areas for decades, and we look forward to continuing that tradition once we assume full ownership of the facility,” he said.

As for employees, more than 580 BP refinery workers will also join Cenovus at closing.

BP focuses on offshore growth in Canada

BP America chairman and president Dave Lawler said Cenovus was the best candidate to assume ownership of the refinery.

“We are proud of the business we have built in Toledo, which has provided thousands of good-paying jobs and made significant contributions to Ohio’s economy and America’s energy security for decades,” he said.

“As our partner in Ohio, Cenovus is ideally placed to take this important business into the future.”

To help reshape its North American oil and gas portfolio to maximise long-term profitable growth,

BP agreed in June to sell its interest in the Sunrise oil sands project in Alberta, Canada, to Cenovus, while acquiring Cenovus’s interest in the Bay du Nord project offshore Newfoundland and Labrador.

Following the close of that deal, also expected in 2022, BP will have no interests in oil sands production and will shift its focus to future potential offshore growth in Canada.