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Marathon will buy $ 23 billion Andeavor Top US refinery



(Reuters) – Marathon Petroleum Corp. ( MPC.N ) has agreed to rival Andeavor ( ANDV.N ) for more than $ 23 billion in the largest ever-closed relationship between US refineries, giving the combined company a nationwide presence and better access to growing export markets.

FILE PHOTO: US President Donald Trump comments on his proposed changes to tax legislation at a meeting with energy workers at the Andeavor refinery in Mandan, North Dakota, US on September 6, 2017. REUTERS / Jonathan Ernst / File Photo [19659003] The deal gives Marathon more clout for the booming US shale oil sector, thanks to Andeavor's existing logistics and terminal operations in the slate areas of Texas and North Dakota. Perm's rising output from western Texas has pushed US crude oil production to a record level of more than 10.5 million barrels a day (bpd).

"The combination of the two companies allows us to look for ways to create a greater presence in the Perm," said Marathon Chief Executive Gary Heminger, who will lead the combined companies.

The company would make Valero Energy Corp. ( VLO.N ) the largest US refiner that could process 3.1 million barrels of crude oil into gasoline, diesel and other fuels.

The deal also gives Marathon a line in the fast-growing Mexican fuel markets. Andeavor expands its service station network in the country. The dilapidated refineries of Mexico can not satisfy the increasing demand of the population for gasoline and other products. US fuel exports to Mexico have risen to 1.4 million barrels a day since January, more than 85 percent from two years earlier.

The deal rates Andeavor, formerly known as Tesoro, at about $ 152 a share, or about 24 percent more than Friday's closing price of $ 122.38.

"For Andeavor, we think that's pretty good," said Scotia Howard Weil analysts in a note. "Not many saw that this came."

Ohio-based Marathon shares fell $ 3.76, or 4.6 percent, to $ 77.71 a share, even after the board approved an additional $ 5 billion share repurchase. Also, the Wall Street forecasts for the quarterly profit were missed significantly on Monday with rising expenditure.

Andeavor, headquartered in San Antonio, grew 16 percent to $ 141.30.

Including Andeavour's debts, Marathon pays $ 35.6 billion on Friday night to hold 66 percent of a $ 58 billion combined company.

Andeavor operates 10 refineries in the United States, mainly in the western part of the country. It has pipelines, trucking and terminal operations in the Perm, along with North Dakota Bakken region, the second most productive state for oil production in the country after Texas.

Marathon's six refineries are located mostly in the Midwest, with a location in Texas City, Texas. Analysts at Tudor Pickering Holt said they expect the two companies to be located to avoid cartel barriers.

"Despite the size of Marathon-Andevor, we see no regulatory issues," they wrote in a note.

Companies that can refine light crude like Andeavor will be better positioned to benefit from the production boom.

Andeavor is developing a motor vehicle filling station network under the ARCO brand in the Mexican states of Baja California and Sonora.

U.S. The refineries in the Gulf Coast are increasingly integrated into the energy industry of the region. This will reduce bottlenecks caused by underinvestment in refineries throughout Latin America.

"There is no question that the new company will have greater resources in Mexico," said Andeavor Chief Executive Gregory Goff in a conference call with analysts.

The companies did not explain Goff's role, but the Andeavor manager said he was likely to be involved in the operation and the technology.

The transaction is expected to close in the second half of this year.

Reporting by John Benny and Shubham Kalia in Bengaluru, Gary McWilliams in Houston; Arrangement by Patrick Graham, Anil D & # 39; Silva and Susan Thomas


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