Calumet to sell its Wisconsin refinery for $435 million

Indianapolis-based Calumet Specialty Products Partners LP announced plans Monday to sell its Superior, Wisconsin, crude oil refinery for $435 million in cash—another move in its ongoing strategy to concentrate on its core business.

Calumet said it has signed agreements to sell the refinery to Calgary, Alberta-based Husky Superior Refining Holding Corp. The deal is expected to close in the fourth quarter.

As part of the deal, Husky will also pay a yet-to-be determined additional amount for net working capital, inventories and reimbursement for certain capital spending. As an example of a possible amount, Calumet said the additional cost would have been $61.5 million if the deal had closed June 30.

Calumet shares rose 10 percent Monday morning after the announcement, to $6 each.

The Wisconsin refinery has been in operation since 1951. Calumet acquired it in September 2011 from Murphy Oil Co. for $442 million, a price that also included product inventories.

The refinery holds permits to produce up to 50,000 barrels per day. The facility processes oil from the Bakken oilfields in North Dakota and western Canada and turns it into fuel products and asphalt. 

The move fits in with Calumet’s previously stated goals of refocusing on its specialty products business while also lowering its leverage and improving its balance sheet.

“As part of this strategy, we are in the process of evaluating our portfolio to identify potential divestiture candidates that are non-core to our business and which are worth more to a strategic buyer than to us, while seeking to maximize our return on invested capital,” Calumet said in its latest annual report, filed in March.

Calumet produces about 3,500 specialty products, including lubricating oils, waxes and solvents. It also produces fuel products such as gasoline, diesel, jet fuel and heavy fuel oils.

In 2016, the company’s specialty products segment accounted for 34.8 percent of total sales, but 82.8 percent of gross profit. In comparison, fuel products accounted for 61.7 percent of sales, but only 11.8 percent of gross profit.

The company also has an oilfield services segment that makes up the remaining 3.5 percent of sales and 5.4 percent of gross profit.

Husky said it intends to retain the refinery’s 180 or so employees. The company has about 5,200 employees, with operations in Canada, the United States and Asia.  

In its second-quarter financial report, released earlier this month, Calumet posted a profit of $9.6 million, or 12 cents per share. It marked the first time in two years that the company had turned a profit.