BP to Sell Texas City Refinery to Marathon Petroleum

BP said on Monday that it will sell its Texas City refinery and other assets to Marathon Petroleum for as much as $2.5 billion, as the British oil company nearly completes its plan to pare back assets.

The company embarked on a $38 billion divestiture program after the Deepwater Horizon disaster of 2010, and has sold off properties from offshore holdings in the Gulf of Mexico to tracts of shale in Wyoming. With the closing of the Texas City sale, BP will have sold $35 billion worth of assets.

Under the terms of the deal, Marathon Petroleum will pay $598 million and include inventories worth about $1.2 billion. An “earn-out” provision could lead to an additional $700 million over six years if the facility meets certain performance targets.

As part of the deal, BP will also include some of its retail and logistics network, including four marketing terminals. The company will continue to own and operate facilities in the northern part of the country.

“Today's announcement is the second major milestone in the strategic refocusing of our U.S. fuels business,” Iain Conn, the head of BP's global refining and marketing business, said in a statement.

Shares in BP were flat at 436.68 pence. Shares in Marathon Petroleum leaped 7.5 percent, to $59.

Major oil companies have been pushing to divest their refining businesses, largely to focus on drilling for oil and gas in shale formations across the country. Refining is largely seen as a more volatile operation, one that also faces pressure from competitors in China and India.

The British company sold its refinery in Carson, Calif. and its Arco retail network to Tesoro in August for $2.5 billion. Marathon Petroleum itself was the product of Marathon Oil spinning off its refining and marketing operations, creating one of the nation's largest independent refiners.

The Texas City refinery, which BP inherited from its purchase of Amoco in 1998, is one of t he biggest refining facilities in the country, with a capacity of 475,000 barrels a day. The 78-year-old plant focuses on natural gas liquids, which have been resurgent amid the shale boom. It was the site of an explosion in 2005 that killed 15 workers, eventually leading to a record $87 million in fines against BP.

Gary R. Heminger, Marathon Petroleum's chief executive, said in a statement: “This world-scale refinery and related assets complement our current geographic footprint and align well with our strategic initiative of growing in existing and contiguous markets to enhance our portfolio.”