EL PASO, Texas -- Western Refining Inc. has announced that its board of directors has authorized and directed management to explore the formation and initial public offering (IPO) of a traditional master limited partnership (MLP) and begin preparation of a registration statement.
If Western Refining determines to further pursue an IPO of an MLP, the issuer would be a wholly owned subsidiary; Western Refining would contribute a portion of its midstream and logistics assets to the MLP and sell a minority interest in the MLP in an IPO. At the closing of any IPO, Western Refining would own the general partner of the MLP, which would own all of the incentive distribution rights of the MLP, as well as a substantial portion of the MLP's limited partner interests.
The company's retail group operates approximately 200 convenience stores and gas stations located in Arizona, Colorado, New Mexico and Texas. It markets under the brands of Giant, Mustang, Sundial and Howdy's.Western Refining spokesperson Gary Hanson declined to comment specifically on what such a move would mean for Western Refining's retail side, but he told CSP Daily News that "MLPs traditionally are focused on midstream business and would not impact retail at all."
If it pursues this course, the company would expect to file a registration statement relating to the common units to be sold in a potential IPO with the U.S. Securities & Exchange Commission (SEC) later this year, it said, subject to final board approval and prevailing market conditions. The company said that there can be no assurance that the evaluation process will lead to an IPO of an MLP or any other transaction, or that if any transaction is further pursued, that it will be consummated.
Western Refining reported fourth-quarter 2012 net income of $207.6 million, compared to a net loss of $64.6 million for fourth-quarter 2011. For the year ended Dec. 31, 2012, the company reported net income of $398.9 million compared to full-year 2011 net income of $132.7 million.
Jeff Stevens, Western's president and CEO, said, "In 2012, Western Refining realized its highest fourth quarter and full year adjusted EBITDA in company history. We undertook a number of strategic actions to capitalize on the strong margin environment, strengthen our balance sheet and invest in the business. Over the last two years, we believe we have demonstrated our ability to capture these positive market conditions and dramatically transform the earnings power of the company."
Western Refining is an independent refining and marketing company based in El Paso, Texas. It operates refineries in El Paso, and Gallup, N.M. The company's asset portfolio also includes standalone refined products terminals in Albuquerque and Bloomfield, N.M., asphalt terminals in Albuquerque, El Paso, and Phoenix and Tucson, Ariz., retail gas stations and convenience stores in Arizona, Colorado, New Mexico and Texas, a fleet of crude oil and finished product truck transports, and wholesale petroleum products operations in Arizona, California, Colorado, Maryland, Nevada, New Mexico, Texas and Virginia.