MDU Sells Dakota Prairie Refining To Tesoro -- Press Release -- June 28, 2016; For One Day, MDU Owned The Whole Refinery

Updates

Later, 6:10 p.m. Central Time: by now, everyone who has wanted has done their own back-of-the-envelope calculations on this deal. Everyone who has written me seems to agree that Tesoro got this little refinery that cost $430 million (way over budget) for about $77 million. And considering that most of that may be debt, there may be some tax advantages. Regardless. I am thrilled that the Dickinson folks got a world-class refiner to take over this refinery. I sincerely hope it all works out for all involved. Now ... upward and onward to that $4 billion ethane processing plant. Or in the words of Buzz Lightyear, "to infinity and beyond!"

Later, 9:18 a.m. Central Time: from the AP:

Texas-based Tesoro Corp. has bought an oil refinery in southwestern North Dakota that has struggled to turn a profit.

North Dakota-based MDU Resources Group Inc. and Indianapolis-based Calumet Specialty Products Partners LP spent $430 million on the Dakota Prairie Refinery in Dickinson. It began selling fuel last year but hasn't been profitable due to the slumping oil industry and low diesel prices.

The plant lost $7.2 million in the first three months of the year, and officials in May announced plans to operate it at only 75 percent capacity. The developers also had considered a similar plant in Minot but late last year delayed those plans because of the red ink at the Dickinson plant, which currently totals about $66 million.

Tesoro will assume the $66 million in debt and contribute about $10 million toward working capital, the company said.

Later, 9:05 a.m. Central Time: from SeekingAlpha --

• Calumet Specialty Products Partners sells its 50% equity interest in the Dakota Prairie Refining joint venture to MDU Resources Group, which then sells the entire JV to Tesoro
• TSO winds up acquiring Dakota Prairie Refining in exchange for the continued servicing of DPR's $66M term loan debt and ~$10M towards working capital
• DPR's refinery has a crude oil capacity of 20K bbl/day and produces ultra-low sulfur diesel, naphtha and resid; TSO says it will continue to market the ultra-low sulfur diesel to local customers and utilize the naphtha and resid in its integrated value chain system 

Original Post

 

For one day, MDU owned the whole refinery.

From the press release:

MDU Resources Group, Inc. announced today that its subsidiary, WBI Energy, Inc., has sold Dakota Prairie Refining LLC to Tesoro Refining & Marketing Company LLC, an affiliate of Tesoro Corporation.

WBI Energy had been equal partners in building and operating the refinery with Calumet North Dakota LLC, a subsidiary of Calumet Specialty Products Partners LP.

To effect the sale of the refinery to Tesoro, WBI Energy on June 27 acquired Calumet North Dakota’s 50 percent membership interests.

Dakota Prairie Refining is capable of processing up to 20,000 barrels per day of Bakken crude oil and can produce approximately 8,000 barrels per day of diesel fuel, as well as the byproducts naphtha and atmospheric tower bottoms. Located just west of Dickinson, North Dakota, the refinery began operating in May 2015 and employs approximately 75 people.

That was easy.