TPH 09:27 AM EDT, 08/16/2022 (MT Newswires) -- Tudor, Pickering and Holt said Monday that the valuation read-through from Cenovus Energy Inc. (CVE.TO)'s purchase of the remaining 50% stake in the Toledo refinery from BP isn't a great one for the US independent refiners in its coverage.
At a 12.1 Nelson complexity level, TPH said the deal comes out to $310 per complexity-adj bbl, a hefty bargain compared to the average $1,149 per complexity-adj bbl for inland deals since 2016.
The deal value also represents a meaningful discount to the implied average of $547 per complexity-adj bbl for refiners under TPH's coverage. This figure includes both inland and coastal refiners, and is based on the implied market value for refining after stripping out the value from other business lines and net debt.
TPH said Cenovus' datapoint helps illustrate why US refining capacity growth projects are few and far between, and why every refiner in our coverage is pursing some sort of alternative fuel growth project funded by strong refining cash flows.