Murphy USA to sell Texas ethanol plant for nearly $94 million

Murphy USA continues to streamline its retail operations with Monday’s announcement that it plans to sell its ethanol production facility in Hereford, Texas to Green Plains Inc. of Omaha, Neb.

Under terms of the deal, Green Plains will acquire Hereford Renewable Energy LLC for approximately $93.8 million, subject to customary closing adjustments. The transaction value includes $78.5 million for the ethanol production facility with the balance for working capital. The transaction is expected to close later this month, Murphy USA officials said, subject to customary closing conditions and regulatory approvals.

Murphy USA’s recently built ethanol plant in Texas cattle country produces 110 million gallon of corn-based ethanol a year. It began at the end of the first quarter of 2011 when it was part of Murphy Oil Corp., which split off Murphy USA in September 2013.

“The Hereford facility has become a high-performing facility and we want to recognize the commitment of the Hereford employees who executed the two-year turnaround plan and established a track record of consistent, strong performance,” said Murphy USA President and CEO Andrew Clyde. “Their commitment created the opportunity for us to attract a prominent, long-term focused buyer such as Green Plains who can build on the progress demonstrated to date at Hereford. This transaction reinforces Murphy USA’s strategic intent of selling our non-core assets in a manner that captures the most value for our shareholders.”

The Hereford ethanol plant includes a shuttle facility that can unload 40,000 bushels of corn per hour, a double-loop track that holds two unit trains at a time and a grain handling system with over 4.8 million bushels of storage. The plant also has 4.5 million gallons of ethanol storage capacity.

Green Plains produces more than one billion gallons of ethanol year, approximately 2.9 million tons of livestock feed and 250 million pounds of industrial grade corn oil at full capacity. The ethanol producer owns a 62.5% limited partner interest and a 2.0% general partner stake in Green Plains Partners LP, a publicly-traded master limited partnership.

“The Hereford facility has many strategic and financial advantages over other destination plants because of its location, leading to both export and domestic market opportunities for ethanol and distillers grains,” said Green Plains CEO Todd Becker. “Because it is located near the largest concentration of cattle in the world, with over a million head of cattle fed within a 50-mile radius, the plant can produce a low carbon intensity fuel which is typically sold for a premium to ethanol produced at most other plants.”

Last week, Murphy USA Inc. announced that it entered into a five-year supply agreement with West Coast retailer marketer Core-Mark to be the primary non-fuel wholesale distributor to the Arkansas company’s retail locations across 23 states.

The El Dorado retail and convenience store operator is expected to release its third quarter earnings on Wednesday after the close of market.