Vertex Energy Buys Alabama Refinery from Shell
May 26 2021 - 5:37PM
Dow Jones News
By Kimberly Chin
Vertex Energy Inc. on Wednesday agreed to acquire the Mobile,
Ala., refinery from a subsidiary of Royal Dutch Shell PLC for $75
million, part of the company's ambitions to become a pure-play
producer of renewable and conventional products.
The specialty refiner will become the sole owner and operator of
the Alabama refinery, Vertex said.
After the deal closes, Vertex expects to start an $85 million
renewable diesel fuel capital project that will convert the
refinery's hydrocracking unit to renewable diesel fuel production
by the end of 2022, the company said. As such, Vertex projects the
refinery will generate at least $3 billion in sales and $400
million in gross profit annually, beginning in 2023, Vertex
said.
"Not only will this project fundamentally transform the
profitability profile of the Mobile refinery, it also positions
Vertex to further its objective of developing high-purity refined
products and alternative feedstocks that support the global
transition toward low-carbon energy alternatives," said Chief
Executive and President Benjamin Cowart in prepared remarks.
Vertex will also enter into a multi-year crude supply and
product offtake contract with several companies, including Shell
and Bunker Holding. Both companies will buy 100% of the refinery's
conventional fuels production, the company said.
This follows a Dutch court ruling on Wednesday that found Shell
must curb its carbon emissions by 45% by 2030, compared with 2019
levels. The first-of-its-kind ruling holds the energy company
partially responsible for climate change, adding fresh pressure on
oil-and-gas companies over their carbon emissions.
Idemitsu Apollo Corp., a subsidiary of Idemitsu Kosan Co. Ltd.,
will buy 100% of the refinery's renewable diesel fuel production,
Vertex said.
Vertex will finance the transaction and the renewable diesel
capital project using a $125 million debt facility, cash through
potential asset divestitures and potentially the sale of shares,
the company said.
Vertex will also acquire the refinery's existing hydrocarbon
inventory through funding provided by Bunker, it said.
The company expects the deal to close in the fourth quarter.
Write to Kimberly Chin at kimberly.chin@wsj.com
(END) Dow Jones Newswires
May 26, 2021 18:22 ET (22:22 GMT)
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