Phillips 66 Acquires 50% Stake in WRB Refining for $14 Billion

Phillips 66, a leading U.S. refiner, has announced the acquisition of the remaining 50% stake in WRB Refining from Cenovus Energy for 14 billion dollars. This strategic move will grant Phillips 66 full ownership of two major refineries in the United States: the Wood River refinery in Illinois and the Borger refinery in Texas. These refineries boast a combined daily crude oil processing capacity of 495,000 barrels, significantly enhancing Phillips 66's refining capabilities.

The acquisition will add approximately 250,000 barrels per day of net refining capacity to Phillips 66, enabling the processing of a diverse range of crude oils, including heavy and medium sour crude, as well as light low-sulfur crude. This expanded capacity will also allow for the production of a high proportion of transportation fuels, further solidifying Phillips 66's position in the refining industry.

This acquisition comes as part of Phillips 66's ongoing efforts to streamline its business and focus on refining after a protracted proxy battle with an activist investor. The investor had advocated for exploring the sale or spin-off of midstream businesses and other asset divestments to concentrate on refining. Earlier this year, Phillips 66 sold 65% of its fuel retailing business in Germany and Austria, demonstrating its commitment to this strategic shift.

The CEO of Phillips 66 emphasized that full ownership of the Wood River and Borger refineries would strengthen its integrated business layout and expand its market share in a region where it holds a leading industry position. This acquisition aligns with Phillips 66's strategy to enhance its refining capabilities and solidify its market presence.

Cenovus, a Canadian oil and gas producer, had previously reported underperforming results from some of its U.S. refineries. The company stated that selling its stake in WRB Refining would simplify its downstream operations and allow it to focus more on assets related to its heavy oil business. The transaction is expected to close between the third and fourth quarters of this year.

Upon completion, Cenovus's refining operations will include refineries in Lloydminster, Lima, Toledo, and Superior, with a total daily processing capacity of 472,800 barrels. Cenovus plans to use the proceeds from this transaction to reduce net debt and accelerate returns to shareholders through increased stock buybacks. This strategic move will enable Cenovus to focus on its core heavy oil business and improve its financial position.