Investing.com -- Shares in PBF Energy surged more than 4.5% on Wednesday after the New Jersey-based company agreed to purchase a 155,000 barrel per day refinery in Torrance, Calif. from XOM for $537.5 million.
The purchase includes a lubricants distribution center at a refinery in Vernon, just south of downtown Los Angeles, proprietary terminals at the Vernon and Atwood refineries, associated pipelines throughout California and related logistics assets. With the acquisition, PBF Energy will increase its total capacity to approximately 900,000 bpd.
The deal is expected to be accretive immediately to PBF Energy's earnings and is expected to close by the end of the second quarter of fiscal year 2016, PBF Energy said on Wednesday in a statement. Located on a 750 acre campus in Southern California, PBF Energy believes the Torrance refinery offers distinct raw material and product distribution opportunities to the California, Las Vegas and Phoenix markets.
"Southern California is a very attractive market and we are excited to become a supplier in the region," PBF Energy chairman Tom O'Malley said in a statement. "PBF’s management team has extensive experience operating in California and we are entering at a very attractive purchase price for the Torrance refinery.”
The transaction also includes a 171-mile pipeline which transports oil from numerous fields in the San Joaquin Valley directly to the refinery.
“The Torrance Refinery acquisition is another significant step in the continued growth of PBF Energy. Coupled with the previously announced Chalmette acquisition, we will have increased our refining capacity by over 60 percent and added meaningful Gulf and West Coast assets to our refining system," PDF Energy CEO Tom Nimbley said in a statement.
"We are excited to be adding a refinery with Torrance’s complexity and we look forward to entering the West Coast market. Upon completion of these two pending transactions, we will have operations spanning four PADDs and have diversified and increased our commercial footprint and flexibility."
Earlier, this month the reopening of a portion of the refinery was delayed after a California air quality board delayed a regulatory hearing on carbon emissions caused by outdated equipment inside the refinery. In February, four contractors outside of the refinery suffered minor injuries after a malfunction with an old piece of equipment, known as an electrostatic precipitator (ESP), triggered an explosion in the area. Until recently, the refinery had only been operating at 20% capacity.
“The sale results from a strategic assessment of the site and how it fits with our refining portfolio,” ExxonMobil (NYSE:XOM) president of Refining & Supply Jerry Wascom said in a statement.
Shares in ExxonMobil inched up 0.08 or 0.11% to 74.25 on Wednesday in after-hours trading.