Cenovus Energy to buy remaining stake in Toledo refinery from BP for $300 million

Cenovus Energy Inc. has signed a US$300-million deal that it says marks another step forward in its long-term strategy to integrate its heavy oil production with refining capability.

The Calgary-based oil company announced Monday it has reached a deal with British energy giant BP to buy the remaining 50 per cent stake in the BP-Husky Toledo Refinery in Ohio. The two companies have also signed a multi-year product supply agreement.

Cenovus has owned the other 50 per cent of the Toledo refinery since its combination with Husky Energy in 2021.

When the transaction closes before the end of the year, Cenovus will take over operations of the refinery, which is currently operated by BP. The more than 580 employees at the Toledo refinery will become employees of Cenovus.

“This refinery is a strategic addition to our Downstream business,” said Keith Chiasson, Cenovus’s executive vice-president, Downstream, in a release.

“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.”

The BP-Husky Toledo refinery can process up to 160,000 barrels of crude oil each day, and provides the U.S. Midwest with gasoline, diesel, jet fuel, propane, asphalt and other products.

The Toledo Refinery recently completed a major, once-in five-years turnaround, Cenovus said, which was funded through the joint venture and aimed at improving operational reliability. Cenovus said assuming full ownership of the facility will provide the company with opportunities to optimize its heavy oil value chain by integrating it with its upstream assets.

The transaction will bring Cenovus‘ total refining capacity to 740,000 barrels per day, and also brings with it the longer-term potential to connect the Toledo Refinery with Cenovus‘ U.S. refining network, the company said.

“This acquisition is consistent with (Cenovus‘) strategy and was completed at an attractive price,” said Scotiabank analyst Jason Bouvier in a note to clients. “This transaction also includes a supply agreement for BP’s retail locations.”

Monday’s announcement comes on the heels of a separate, previously announced deal between Cenovus and BP. In June, BP said it would sell its interest in the Sunrise oilsands project in Alberta to Cenovus and would acquire Cenovus‘ interest in the Bay du Nord project offshore Newfoundland and Labrador.

Following the close of that deal, also expected in 2022, the British energy company will no longer have interests in oilsands production and will shift its focus to future potential offshore growth in Canada.

This report by The Canadian Press was first published Aug. 8, 2022.

Companies in this story: (TSX:CVE)