Valero closes New Jersey refinery deal for $707 million

HOUSTON (BestGrowthStock) – Valero Energy Corp (VLO.N: ) on Friday closed a $707-million deal to sell its 160,000 barrel per day refinery in Paulsboro, New Jersey, to PBF Holding Company, with the final price boosted by high crude prices.

The deal consists of $547 million in cash and a note for $160 million from PBF Holding Company LLC. The net sales price for the refinery was raised from $360 million because of changes in crude oil prices, the San Antonio refining company said.

The Paulsboro sale, combined with sales of other assets, has pumped up the company’s coffers.

“This increase in our cash balance improves our ability to internally fund our high-return growth projects and any potential acquisitions,” Valero Chief Executive Bill Klesse said in a statement.

The Paulsboro deal will result in a non-cash, pre-tax charge of $938 million in the fourth quarter, Valero said.

The Paulsboro acquisition catapults PBF into a leading position in the U.S. East Coast market, which is led by Sunoco Inc (SUN.N: ) and ConocoPhillips (COP.N: ).

Earlier this year, PBR purchased Valero’s shuttered 182,000 barrel per day Delaware City, Delaware, refinery, which is being prepared to restart in 2011.

PBF Chief Executive Tom O’Malley is considered a legend among independent refiners.

With the Tosco and then Premcor ventures, O’Malley twice reaped huge profits buying up unwanted refineries at a fraction of their replacement cost during downturns and them selling them when motor fuel demand was rising.

The Paulsboro deal was worth $4,419 a barrel in refining capacity, a fraction of the $10,000 to $20,000 per barrel of production capacity that building a new plant would cost.

(Reporting by Anna Driver. Editing by Robert MacMillan)

Valero closes New Jersey refinery deal for $707 million