Marathon Petroleum to acquire Andeavor

15 May 2018

Marathon Petroleum has planned an approximate $23 billion buyout merger to buyout fellow refiner Andeavor, which will allow Marathon to capitalize on major trends in the energy sector. This buyout will make the combined company (Marathon-Andeavor) one of the biggest operators of U.S. gas station convenience stores. It would also assemble a portfolio of refining assets that stretches from the West Coast to the Midwest at a time when profit margins for refiners are booming. The deal also gives Marathon access to infrastructure in the nation's hottest oil-producing region and expands its presence in Mexico, where U.S. energy exports have surged in recent years. The combined company will also be in a better position to produce fuel for the shipping industry just as new emissions rules for seaborne vessels take effect.

Importantly, while Marathon's refineries and transportation infrastructure are focused around the Gulf Coast and Midwest, Andeavor's assets are spread around the Western United States, specifically in the Permian Basin, the epicenter of the U.S. drilling rebound in western Texas and New Mexico. Andeavor operates gathering facilities in West Texas and has a 25-percent stake in a new pipeline called Gray Oak that will transport crude oil across the state to the Gulf Coast refining hub. That gives Marathon's refinery in Galveston Bay, one of the nation's largest, access to cheap oil from the region.

Photo caption: A Marathon gas station in Chicago. 

Photo courtesy of Getty Images