Followers | 241 |
Posts | 12150 |
Boards Moderated | 3 |
Alias Born | 04/05/2009 |
Tuesday, September 25, 2018 1:35:28 PM
NEW YORK (Reuters) - Delta Air Lines has hired two investment banks to offer a stake in its Monroe Energy refining subsidiary, signaling it wants a partner to shoulder the risk of running an energy business.
The Atlanta-based airline acquired the 185,000-barrels-per-day refinery in 2012 for $150 million in a bet that it could lower its cost of jet fuel, among the highest expenses for any airline. The refinery also makes gasoline and diesel for profit.
The U.S refining industry has been consolidating into larger players that can use scale to lower their cost of buying raw materials and paying for regular overhauls. In the U.S. East Coast, four refineries closed in the past decade due to the rising costs of acquiring crude.
Ed Hirs, a professor of energy economics at the University of Houston, said the attempt to recruit a joint venture partner is no sure thing.
“It was a boneheaded decision then, and they are still paying for it. It is going to be tough to sell a refinery that has faced closure several times due to bad economics,” he said.
Delta defended its effort to bring in a partner.
It is planning to invest $120 million in Monroe Energy’s Trainer, Pennsylvania, plant next quarter on maintenance and improvements. That overhaul will curb production for two months.
“After several years of ownership it is natural for Delta to seek other opportunities that might exist to optimize the benefits to Delta and maximize the value of other aspects of the refinery for a potential joint venture partner,” Paul Jacobson, Delta’s finance chief, said in a statement.
Delta has said the refinery’s purchase was more than a way to make a profit from the subsidiary, arguing that if the facility had closed it would have sent jet fuel prices higher across the Northeast, hurting the airline’s results.
But more recently Delta has run the plant like a traditional refinery, choosing to make more of whatever refined product offered the highest margin.
The company has hired investment banks Barclays and Jefferies to manage the sale process. The banks have already begun talking with potential suitors, according to sources familiar with the matter. It was not immediately clear what valuation the company has put on the stake offered.
Delta has grappled with the best way to manage Monroe.
Last year, it hired a consultant to evaluate the impact on jet fuel prices of any sale or closure of the refinery. The company downplayed the evaluation’s significance at the time, calling it routine.
East Coast refiners got a lifeline from the Bakken shale boom in North Dakota earlier this decade. Production there outpaced pipeline capacity, forcing producers to offer steep discounts to East Coast refiners like Monroe.
However, the discounts have vanished in recent years as more pipeline capacity came online in the upper U.S. Midwest. That forced Monroe and other U.S. East Coast refineries once again to buy higher priced crudes for their plants, reverting back to the poor economics that hurt them a few years earlier.
Reporting by Jessica Resnick-Ault and Jarrett Rensaw in New York; Writing by Gary McWilliams; Editing by Leslie Adler
https://www.reuters.com/article/us-delta-air-m-a-refinery/delta-air-lines-seeks-buyers-for-a-stake-in-its-refining-subsidiary-idUSKCN1LM02U
"Someone said it takes 30 years to be an instant success" - Gabriel Barbier-Mueller, CEO of Harwood International
Recent DAL News
- Nike Shares Surge 7% Pre-Market as Elliott Hill Becomes CEO; FedEx Shares Tumble 13% After Profit Miss • IH Market News • 09/20/2024 10:02:58 AM
- Delta Air Lines Declares Quarterly Dividend • PR Newswire (US) • 09/19/2024 08:30:00 PM
- REGISTRATION OPENS SOON FOR AIRLINE DISTRIBUTION® 2025 • PR Newswire (US) • 09/17/2024 12:00:00 PM
- Intel Secures $3.5 Billion Subsidy, Stellantis Backs EU Emissions Targets, BP and Apollo Reach $1 Billion Deal • IH Market News • 09/16/2024 10:03:27 AM
- OpenAI Unveils Strawberry AI Model Series; Boeing Stock Falls 4% Amid Strike; HR Surges 20% on Growth Forecast • IH Market News • 09/13/2024 10:12:55 AM
- Form 8-K - Current report • Edgar (US Regulatory) • 09/12/2024 01:00:09 PM
- GameStop plunges 11% on stock offering, DJT drops post-debate, GSK fails shingles vaccine trial • IH Market News • 09/11/2024 10:25:41 AM
- Klarna partners with UATP to tap the $1 trillion air travel industry • PR Newswire (US) • 09/10/2024 12:00:00 PM
- Broadcom Down 10% Post-Earnings, UiPath Up 8%; Qualcomm Eyes Intel Assets; Salesforce Acquires Own Company • IH Market News • 09/06/2024 11:59:00 AM
- Delta Air Lines to Present at the Morgan Stanley Laguna Conference • PR Newswire (US) • 09/05/2024 01:00:00 PM
- Form N-PX - Annual Report of proxy voting record of management investment companies • Edgar (US Regulatory) • 08/30/2024 08:30:03 PM
- High Volatility Expected in Nvidia Report, Ambarella Soars 20%, Hertz Strengthens Board, Apple Cuts Jobs • IH Market News • 08/28/2024 09:50:36 AM
- W2 by GO7 joins the UATP Network as its Newest Issuer • PR Newswire (US) • 08/27/2024 12:00:00 PM
- IBM Closes China Research Division, Uber Fined $324M, Starliner to Return Without Astronauts • IH Market News • 08/26/2024 12:58:21 PM
- Form 8-K - Current report • Edgar (US Regulatory) • 08/23/2024 01:15:08 PM
- Wego Joins UATP Network, Enhancing Supplier Relationships in MENA Region • PR Newswire (US) • 08/13/2024 12:00:00 PM
- TSMC July Revenue Surges 45%, Nasdaq Accelerates Penny Stock Delistings, Moody’s Downgrades Intel to BAA1, and More • IH Market News • 08/09/2024 09:44:44 AM
- Form 8-K - Current report • Edgar (US Regulatory) • 08/08/2024 07:00:37 PM
- Intel Sued by Shareholders; JPMorgan Raises Chance of Recession; Roblox Blocked in Turkey; Micron Resumes Share Buyback • IH Market News • 08/08/2024 09:48:43 AM
- Joby Aviation Seeks Australian Certification, Arcadium Lithium Projects Suspended Due to Oversupply, and More • IH Market News • 08/07/2024 09:47:32 AM
- CLEAR announces 4,000,000 block share repurchase agreement with Delta Airlines and $100 million increase to share repurchase authorization • PR Newswire (US) • 08/05/2024 10:00:00 AM
- Nvidia AI Chip Delays, Mars Eyes Kellanova Acquisition, Berkshire Hathaway’s Cash Surge to $277 Billion • IH Market News • 08/05/2024 09:43:55 AM
- Toyota Reports Another Global Production Decline, Delta Sues CrowdStrike, Meta Launches AI Studio for Custom Chatbots • IH Market News • 07/30/2024 10:00:51 AM
- Johnson Controls Division Sold for $8 Billion; Alphabet’s Offer Rejected by Wiz; AMD President Announces Retirement • IH Market News • 07/23/2024 10:00:52 AM
VHAI - Vocodia Partners with Leading Political Super PACs to Revolutionize Fundraising Efforts • VHAI • Sep 19, 2024 11:48 AM
Dear Cashmere Group Holding Co. AKA Swifty Global Signs Binding Letter of Intent to be Acquired by Signing Day Sports • DRCR • Sep 19, 2024 10:26 AM
HealthLynked Launches Virtual Urgent Care Through Partnership with Lyric Health. • HLYK • Sep 19, 2024 8:00 AM
Element79 Gold Corp. Appoints Kevin Arias as Advisor to the Board of Directors, Strengthening Strategic Leadership • ELMGF • Sep 18, 2024 10:29 AM
Mawson Finland Limited Further Expands the Known Mineralized Zones at Rajapalot: Palokas step-out drills 7 metres @ 9.1 g/t gold & 706 ppm cobalt • MFL • Sep 17, 2024 9:02 AM
PickleJar Announces Integration With OptCulture to Deliver Holistic Fan Experiences at Venue Point of Sale • PKLE • Sep 17, 2024 8:00 AM