Tesoro Gets Green Light to Buy Chevron Assets

on Jun 18, 2013

US oil refiner Tesoro Corporation (NYSE:TSO) yesterday won regulatory approval for the purchase of Northwest Products Pipeline system and related assets from Chevron Corp (NYSE:CVX) but will have to sell a petroleum terminal in Idaho to comply with anti-trust regulations.

Chevron’s share price closed less than one percent higher on the NYSE yesterday. Tesoro’s share price also closed higher but was marginally down in after-hours trading.
**Tesoro Gets FTC’s Nod to Buy Pipeline System from Chevron**
Tesoro struck the deal with Chevron last December. It bought the 760-mile long interstate Northwest Products Pipeline system and Chevron’s associated terminals, including one terminal in Boise, Idaho, for $400 million (£255.4 million). Following a renegotiation, the price was lowered to $355 million (£226.7 million) last month, Reuters has reported.

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The US Federal Trade Commission (FTC) said in a statement yesterday that Tesoro would have to sell its light petroleum products terminal in Boise to an FTC-approved buyer within six months after closing the deal with Chevron, which Tesoro was allowed to do immediately. The FTC noted that Tesoro Corp owned several petroleum products terminals, including the one in Boise, receiving light petroleum from the

Northwest Products Pipeline, which carries petroleum products from Salt Lake City to Idaho and Washington.
“Without the divestitures required by the FTC, the deal would have given Tesoro ownership of two of the three full service light petroleum terminals in Boise, significantly reducing competition for local terminal services,” the anti-trust regulator said.

“The sale of Tesoro’s terminal will preserve the competitive conditions that exist today for terminal customers in Boise,” Richard Feinstein, Director of the Commission’s Bureau of Competition, said in the statement.
**Deal for BP Refinery**
Last month, Tesoro won FTC’s approval to buy a refinery in southern California from UK energy giant BP in a deal worth about $2.5 billion without being required to sell any assets. The FTC said at the time that the acquisition was unlikely to substantially lessen competition, adding that there was also evidence that the combination of Tesoro’s southern California refinery and the adjacent BP refinery was likely to reduce the cost of manufacturing the special, low-carbon type of petrol which state law requires to be sold in California.

**Tesoro’s Quarterly Net Income Rises**
!m[Tesoro’s Share Price Declines in After-Hours Trading in New York](/uploads/story/3164/thumbs/pic1_inline.png)
Last month, Tesoro reported a rise in net income to $93 million, or $0.67 per diluted share, for the first quarter of 2013, up from net income of $56 million, or $0.39 per diluted share for the first quarter of 2012. Segment operating income was $300 million, compared to $187 million in the first quarter of 2012.
**Tesoro’s share price closed 0.79 percent higher at $57.61 in New York on 17 June 2013, but was 0.28 percent down at $57.45 in after-hours trading. Chevron’s share price closed 0.78 percent higher at $121.22.**


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