Island Energy Services Shifting Strategic Focus To Logistics And Retail Operations, Selling Select Refinery Assets To Par Pacific Holdings, Inc.
News release from IES
KAPOLEI, Hawaii, Aug. 29, 2018 -- Island Energy Services ("IES") today announced a shift in its strategic focus to dedicated logistics and retail operations while ceasing its refining operations.
In addition, IES has reached an agreement to sell select refinery assets to Par Pacific Holdings, Inc. ("Par"). Par intends to utilize the acquired assets for continued refining operations to supply fuel to IES, which will allow IES to fulfill certain utility fuel supply contracts in Hawaii. In connection with the transaction, IES has agreed to enter into a long-term agreement with Par to provide fuel storage and throughput services.
To supply its customers, including IES's 56 Texaco®-branded stations, IES plans to continue to source petroleum products from its current network of local and global suppliers and does not expect any disruption to Hawaii's supply of petroleum products as a result of this transaction.
IES also expects to reinvest net sale proceeds in Hawaii to further expand its logistics infrastructure, which includes a network of tank farms, pipelines, and other distribution assets. These planned investments are intended to ensure IES remains well-positioned as a long-term valued supplier of fuel products in Hawaii. In addition, IES plans to expand its retail operations with the opening of a new Texaco®-branded station in Kapolei in early 2019 as well as other new locations throughout Hawaii.
"We recognize the impact this transaction will have on all of our employees and we are committed to supporting each of them during this transformation of the business," IES CEO Jon Mauer said. "Our immediate and long-term focus is to continue to reliably service our customers, both through this transition and beyond."
Mauer added, "This shift in operations better positions IES as an integrated logistics provider, anchored by our large-scale Kapolei import terminal. We look forward to maintaining our role as a trusted local fuel supplier for the state as we respond to changing market conditions, industry regulations and Hawaii's long-term energy mandate."
Closing of the transaction is subject to the satisfaction of customary closing conditions, including certain regulatory and compliance matters, and is expected to close before the end of the fourth quarter of 2018. Following the transaction, IES and Par will continue to operate as independent competitors.
ABOUT ISLAND ENERGY SERVICES, LLC
Island Energy Services, LLC is a Hawaii-based fuels marketing and logistics business providing premier petroleum products for the State of Hawaii. The company reliably serves retail, industrial, aviation, and utility customers throughout the state through a network of key storage and distribution assets comprising fuels terminals and pipelines. Assets include an import terminal in Kapolei, product distribution terminals in Honolulu and on Maui, Kauai and Hawaii Island, pipeline distribution systems and additional related logistics infrastructure throughout the state. In addition, IES's retail network includes 56 Texaco®-branded gas stations. Island Energy is headquartered in Kapolei and managed locally.
Texaco® is a registered trademark of Chevron Intellectual Property LLC used under license by IES.
For more information, visit www.islandenergyservices.com and www.texacoinhawaii.com.
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Par Pacific to Buy Select Refining Assets from Island Energy Services Following IES' Announcement of Cessation of their Refining Operations
Par Pacific to supply petroleum products to IES to assure continued fuel supply to local utilities
Approximately 65 IES employees to be hired by Par Hawaii
Par Pacific to assist in supplying Hawaii's energy needs and support the state's transition to its clean energy goals
Par Pacific to host conference call and webcast at 9 a.m. ET on August 30, 2018
News Release from Par Pacific Holdings, Inc.
HONOLULU, Aug. 29, 2018 -- Par Pacific Holdings, Inc. (NYSE: PARR) ("Par Pacific") today announced that through an indirect subsidiary, it entered into an agreement with Island Energy Services ("IES") to acquire certain refining units for $45 million plus additional amounts for certain hydrocarbon and non-hydrocarbon inventory following IES' announcement to cease its refining operations. The units, which are located near Par's current Kapolei refinery, will be utilized by Par Pacific to supplement its existing operations in supplying IES so that IES may fulfill its existing contractual obligations with Hawaiian Electric Company, Maui Electric Company, Hawaii Electric Light Company, and Kauai Island Utility Cooperative. Par Pacific has agreed to enter into a long-term agreement with IES to utilize IES' retained logistics assets for the storage and throughput of crude oil and related products necessary for the operation of these newly acquired assets.
"We believe this transaction will prevent any disruption to the supply of fuel to meet Hawaii's electric generation needs," said William Pate, President and CEO, Par Pacific. "The closure of one of Hawaii's refineries was anticipated in 2014 by the governor's Hawaii Refinery Task Force. As the owner and operator of Hawaii's remaining refinery, we recognize our role in meeting the essential demand for petroleum products today and to ensure continuity and a smooth and practical transition to Hawaii's clean energy future."
Par Pacific expects to hire approximately 65 IES employees in connection with the acquisition. New employees will receive benefits comparable to those provided to Par Pacific's existing employees. Par Pacific anticipates hiring another 20 employees at its Kapolei refinery in conjunction with the new investment.
"We look forward to expanding our team and keeping high-quality energy jobs available in Hawaii," said Jim Yates, President, Par Hawaii, Inc. "With deep local roots and longstanding commitments to Hawaii, our priority has always been to take care of our employees and support our community. We believe this transition represents a best-case scenario for a 'soft landing' for all constituents in the state's transition to a renewable energy future."
With IES' announced shift to operations of a large-scale open access import terminal, Par Pacific anticipates continued strong competition from the existing market participants, as well as from potential new entrants.
The transaction is expected to close before the end of the fourth quarter and is subject to certain closing conditions.
A conference call to discuss this acquisition is scheduled for Thursday, August 30, 2018 at 8:00 a.m. Central Time (9:00 a.m. Eastern Time). To access the call, please dial 1-877-404-9648 inside the U.S. or 1-412-902-0030 outside the U.S. and ask for the Par Pacific call. The webcast may be accessed online through the company's website at http://www.parpacific.com on the Investor Relations page. Please log on at least 10 minutes early to register. A telephone replay will be available through September 6, 2018 and may be accessible by calling 1-877-660-6853 inside the U.S. or 1-201-612-7415 outside the U.S. and using the conference ID 13682841#. Also, an archive of the webcast will be available shortly after the call on the company's website at www.parpacific.com and will be accessible for approximately 90 days.
About Par Pacific
Par Pacific Holdings, Inc. (NYSE: PARR), headquartered in Houston, Texas, owns and operates market-leading energy and infrastructure businesses. Par Pacific's strategy is to acquire and develop energy and infrastructure businesses in logistically complex markets. Par Pacific owns and operates one of the largest energy networks in Hawaii with a 94,000-bpd refinery, a logistics system supplying the major islands of the state and 91 retail locations. In the Pacific Northwest and the Rockies, Par Pacific owns and operates an 18,000-bpd refinery, a logistics system and 33 retail locations. Par Pacific also owns 39.1% of Laramie Energy, LLC, a natural gas production company with operations and assets concentrated in Western Colorado.
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