Marathon completes acquisition of Andeavor

MOSCOW (MRC) -- Andeavor has announced the preliminary results of the stockholder election consideration related to the previously announced acquisition by Marathon Petroleum Corporation, as per the company's press release.

On April 29, 2018, Andeavor, Marathon, Mahi Inc. and Andeavor LLC entered into an Agreement and Plan of Merger (the "Merger Agreement") providing for the acquisition of Andeavor by Marathon through a merger of Mahi Inc. with and into Andeavor, with Andeavor surviving the merger as a wholly owned subsidiary of Marathon and the subsequent merger of Andeavor with and into Andeavor LLC, with Andeavor LLC surviving the merger as a wholly owned subsidiary of Marathon.

As previously announced, under the terms of the Merger Agreement, subject to the proration, allocation and other limitations set forth in the Merger Agreement and the election materials separately provided to the applicable stockholders, stockholders of Andeavor had the option to elect to receive (subject to completion of the Merger), for each share of Andeavor common stock held by them of record as of immediately prior to the effective time of the Merger (except for excluded shares as more particularly set forth in the Merger Agreement):

- 1.87 shares of Marathon common stock, including cash in lieu of any fractional share of Marathon common stock (the "Stock Consideration"); or USD152.27 in cash (the "Cash Consideration").

The election deadline for the foregoing election expired at 5:00 PM, Eastern Time, on September 27, 2018. Andeavor announced that, based on preliminary information received from the exchange agent for the Merger, election forms were received with respect to approximately 104,722,352 shares of Andeavor common stock in the aggregate and the cash election option was selected with respect to approximately 4,257,779 shares of Andeavor common stock, which is less than the Cash Election Number in the Merger Agreement, in each case, assuming that notices of guaranteed delivery are properly delivered pursuant to the terms of such notices of guaranteed delivery.

Following and subject to the completion of the Merger, the Andeavor stockholders will receive in the aggregate approximately 240 million shares of Marathon common stock (which excludes shares to be issued under certain Andeavor equity awards that vest as a result of the Merger) and approximately USD3.5 billion in cash. The final prorationing and the final calculation of the number of shares of Marathon common stock issued and the final cash consideration paid in connection with the merger will be made post-closing after the expiration of the notice of guaranteed delivery period applicable to the cash/stock election.

As MRC informed previously, Marathon Petroleum Corp "maximized" input of US crude in the third quarter, taking advantage of bottlenecks in key shale plays that have weakened domestic prices.

Andeavor is a premier, highly integrated marketing, logistics and refining company. Andeavor's retail-marketing system includes approximately 3,330 stations marketed under multiple well-known fuel brands, including ARCO, SUPERAMERICA, Shell, Exxon(TM), Mobil(TM), Tesoro, USA Gasoline(TM) and Giant. It also has ownership in Andeavor Logistics LP (NYSE:ANDX) and its non-economic general partner. Andeavor operates 10 refineries with a combined capacity of approximately 1.2 million barrels per day in the mid-continent and western United States.
MRC

MOSCOW (MRC) – Qatar Petroleum primed to boost LNG capacity with new train, said Hydrocarbonprocessing.

"Since announcing the lifting of its North Field moratorium, Qatar has gradually scaled up its development plans," said Giles Farrer, research director, global gas and LNG supply at international natural resources consultancy Wood Mackenzie, said.

"Its motivations for this latest move are likely to be informed by a number of considerations. "Firstly, costs. With worldwide activity in the oil and gas industry still low, now is a good time in the cost cycle to invest in a new project. And there are likely to be economies of scale from developing a bigger project, particularly in light of the promising appraisal results at the North Field, mentioned by Qatar Petroleum in its announcement today. These economies of scale will make what is already the most competitive new LNG project worldwide even cheaper."

Mr Farrer added: “Our estimate of capex for the three megatrains previously announced was around USD24 billion, encompassing both the upstream and liquefaction components of the project. Qatar could probably add an additional train without significant additions to capex.

"However, making sure megaprojects are delivered on time and on budget will be a huge undertaking."

"Another consideration is market share," he said. "Since Qatar announced its initial plan, the market environment has improved. Forecasts of future oil prices are higher and forecasts of future LNG demand have grown stronger, particularly in Europe and China. Having already taken the decision to compete for LNG market share, Qatar is doubling down, making sure that it will be fully able to benefit from LNG market upside.

"Further, one of Qatar’s major competitors for new supply development - US LNG - is currently engaged in a tariff war with China, the world’s largest growth market for LNG. Qatar could see this as an opportunity. It has recently signed a contract doubling the volumes that it will sell to PetroChina and is likely to be looking at further opportunities to supply the Chinese market."

Mr Farrer said: "As we have previously noted, by front-loading development of its huge hydrocarbon reserves now, Qatar is also responding to the growing pace of decarbonization, which represents a threat to long-term demand for oil and gas.
MRC

MOSCOW (MRC) -- US crude oil stockpiles rose last week as refineries sharply reduced output for seasonal maintenance, while gasoline stocks increased and distillate inventories fell, reported OilandGasInvestor with reference to the Energy Information Administration.

After five consecutive weeks of drawdowns to the lowest levels since February 2015, crude inventories rose 1.9 million barrels to 396 million barrels in the week to Sept. 21. The build was unexpected as analysts forecast a decrease of 1.3 million barrels.

Refinery crude runs fell by 901,000 barrels per day, EIA data showed. Refinery utilization rates fell by 5 percentage points to 90.4 percent, the lowest since May, driven by seasonal declines in Midwest and East Coast refining activity.

"The drop in refinery runs was pretty substantial, which shows maintenance season is kicking into high-gear. The drop in distillates is very supportive because that is the soft spot that people are focused on," said Phil Flynn, an analyst at Price Futures Group in Chicago.

Oil prices held relatively steady following the data. US crude oil futures were down 35 cents to UISD71.93 a barrel, while Brent dropped 27 cents to USD81.60 a barrel. The two benchmarks have been on the rise of late due to swifter-than-expected declines in Iranian exports and notable declines in U.S. crude inventories.

Distillate stockpiles, which include diesel and heating oil, fell 2.2 million barrels, versus expectations for a 752,000-barrel increase, the EIA data showed.

In response to the data showing the drawdown in diesel and heating oil stocks, distillate cracks, an indication of refining margins, rose 1 percent to USD15 a barrel.

Net US crude imports fell last week by 495,000 bpd.

Crude stocks at the Cushing, Oklahoma, delivery hub rose by 461,000 barrels, EIA said.

Gasoline stocks rose by 1.5 million barrels, compared with analyst expectations in a Reuters poll for a 788,000-barrel gain.
MRC

MOSCOW (MRC) - Mexican state-run oil company Pemex expects to begin importing light crude oil, likely from the United States, in late October and at least until the current administration of President Enrique Pena Nieto leaves office on Nov. 30, said Reuters.

"A hundred thousand barrels (per day) more or less is what we’re going to import to process and incorporate into our refineries, mostly at Salina Cruz," Pemex CEO Carlos Trevino said in an interview with Reuters on the sidelines of the Mexican Petroleum Congress in Acapulco.

Salina Cruz, like Pemex’s other five refineries, has recently been producing far below capacity due to accidents and operational problems, as well as Pemex’s focus on maximizing the value of its oil even if that means refining less domestically.

"We’re going to mix it with Mexican crude, with some of our mix to be able to process at the levels we want to get back to in refining. We should be around 800,000 barrels (per day of refining) by the end of the year," he added.

Mexico’s refining network can process up to 1.6 million bpd of crude. It has been working this year at around 40 percent. Trevino said he expects oil auctions scheduled for February, which include the selection of key partners for Pemex, will take place as planned.

"I think there is total certainty" that Mexico’s oil regulator, the National Hydrocarbons Commission (CNH), will carry out the auctions.

Mexican President-elect Andres Manuel Lopez Obrador has said that oil auctions are suspended until contracts already awarded over the past few years have been reviewed.

Pemex, whose oil production and refining volumes have continued declining this year amid the depletion of some of its main oilfields, will not meet its crude output target of 1.95 million barrels per day in 2018.

"We’re not going to meet the goal," Trevino said. He expects another year of production decline in 2019, even though Pemex had originally planned to stabilize output by then.
MRC

MOSCOW (MRC) -- McDermott International, Inc.announced that it has been awarded a sizeable technology contract for Map Ta Phut Olefins Co., Ltd.'s (MOC) petrochemical plant in Rayong Province, Thailand. MOC is a joint venture company of SCG Chemicals Company Limited, which is a wholly owned subsidiary of SCG, and the Dow Chemical Company, said the company.

McDermott will provide the basic engineering and license of Lummus' olefins technology and will design and supply the proprietary SRT® III heater for the MOC Debottleneck Project, a parallel gas cracker added to increase plant capacity which will utilize Lummus' side cracker technology, including a low pressure chilling train and enhanced binary refrigeration.

"We have worked with Map Ta Phut Olefins since their first project in 2005," said Daniel M. McCarthy, Executive Vice President of McDermott's Lummus Technology business. "This additional capacity will be realized by using our unique side cracker technology, which permits the cost effective expansion of a liquid feed plant that has already reached its maximum capacity using conventional technology."

McDermott's Lummus Technology is a leading licensor of proprietary petrochemicals, refining, gasification and gas processing technologies, and a supplier of proprietary catalysts and related engineering. With a heritage spanning more than 100 years, encompassing approximately 3,100 patents and patent applications, Lummus Technology provides one of the industry's most diversified technology portfolios to the hydrocarbon processing sector.

Portions of this award were booked in prior quarters. The heater supply will be reflected in McDermott's third quarter 2018 backlog.
MRC