By JIM POLSON
Petroleos de Venezuela SA is seeking a buyer for Citgo
Petroleum, its US refining
and marketing company, in
a deal that may be worth as much as $15 billion.
PDVSA, the state-owned oil company, 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
bpd 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.
By creating a master-limited partnership for those assets and
getting better-than-expected returns from the refineries, a
buyer could get a return on that price, Margolin
said in a telephone interview. Nobody should have a
problem getting financing even up to that $15 billion
Potential buyers include Gulf Coast refiners looking to
capitalize on the regions 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 Citgos Houston office
werent immediately returned.
Master-limited partnerships have proliferated because of
demand from investors for cash payouts that beat debt yields.
A buyer could reduce Citgos tax burden because
partnerships dont pay federal income tax.
The sale is in its early stages, the Wall Street Journal
reported, citing people familiar with the situation. Argus
Media reported July 24 the company had received three offers
of $10 billion to $15 billion.