Global conflicts have reduced fuel-making capacity; refiners benefit from wide margins
CVR Energy, the oil refiner controlled by investor Carl Icahn, is near a deal to buy refineries from Marathon Petroleum for over $4 billion, according to people familiar with the matter. The companies are set to announce the deal Tuesday morning, the people said, assuming the talks don’t fall apart.
Carl Icahn owns roughly 71% of CVR’s shares and has been a major investor in the company over the years. His son, Brett Icahn, sits on CVR’s board.
The market snapshot in The Wall Street Journal’s report showed CVR Energy (CVI) down 4.20% and Marathon Petroleum (MPC) down 3.22%. The report put CVR’s market value at close to $6 billion and Marathon’s at around $125 billion. CVR’s stock was up roughly 120% so far this year through Monday, as it and peers benefited from wide refining margins for diesel, gasoline and jet fuel.
CVR is currently the seventh-biggest publicly traded refiner in the U.S., behind giants including Marathon Petroleum, Valero Energy and Phillips 66 that are about 20 times larger.
The potential acquisition comes as global conflicts have boosted sales for U.S. refiners by reducing global fuel-making capacity. Sales at CVR’s existing plants in Kansas and Oklahoma are high as the Russia-Ukraine war and conflicts in the Middle East have taken out a large portion of the world’s fuel-making capacity.
Other people familiar with the matter said companies of all sizes have been trying to acquire refineries to build bigger fuel-making businesses, given “almost intractable constraints in global capacity.”
ExxonMobil and Chevron are investing more in the sector and have taken steps to squeeze more fuel out of their existing plants on the Gulf Coast.
Last week, Valero Energy announced that it is buying a closed oil refinery in Houston once owned by LyondellBasell for $320 million. The company plans to restart the plant at 165,000 barrels a day of capacity by the end of 2027.