Petroleos de Venezuela SA is seeking a buyer for Citgo Petroleum Corp., its U.S. refining and marketing company, in a deal that may be worth as much as $15 billion. PDVSA, as the state-owned oil company is known, "is currently seeking to monetize its ownership interest in us," Citgo said in a July 29 bond prospectus document. "There can be no assurance as to whether a transaction will occur or as to the nature or timing of any potential transaction."
Citgo owns three refineries capable of handling about 749,000 barrels a day in Louisiana, Texas and Illinois. The company sells gasoline through 5,600 branded stations. It could fetch $15 billion because its midstream storage terminals and docks are eligible for tax advantages, said Sam Margolin, a New York-based analyst for Cowen & Co. Potential buyers include Gulf Coast refiners looking to capitalize on the region's rising crude supply, and those operators seeking entry, Margolin said.
Citgo had sales of $42.3 billion last year and earnings before interest, taxes, depreciation and amortization of $1.8 billion. A call and e-mail to Citgo's Houston office weren't immediately returned. Argus Media reported July 24 that the company had received three offers of $10 billion to $15 billion for Citgo.
The government of President Nicolas Maduro probably is looking to sell offshore refineries to boost hydrocarbons exports to China, raise cash and reduce the risk of having assets seized as part of PDVSA lawsuits abroad, GlobalSource Partners' Ruth de Krivoy and Tamara Herrera said today in an e-mailed report to clients. |