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Valero & Plains All American Abandon Asset Purchase Plan

An independent refiner, Valero Energy Corporation VLO and Texas-based Plains All American Pipeline, LP PAA, a master limited partnership (MLP), have jointly decided to call off the agreement relating to the acquisition of two petroleum storage and distribution terminals located in Martinez and Richmond, CA. Per the agreement, a subsidiary of Valero had agreed to purchase the assets from a subsidiary of Plains All American.

The Federal Trade Commission (“FTC”) had opted to not pursue any regulatory action relating to the proposed transaction following a widespread survey.  However, on completion of the FTC’s examination, the Office of the Attorney General for the State of California filed a suit in the United States District Court for the Northern District of California, to check the transaction.

Both companies decided not to move ahead with this transaction as they found it detrimental, regardless of the fact that the court overruled the Attorney General’s motion for a temporary restraining order and its motion for a preliminary injunction.

Valero and Plains All American thought that the constant uncertainty attached to an extensive trial would produce insecurity for the California-based employees and customers of the terminals. Also, the significant cost related to defending a taxpayer-funded lawsuit would put a big hole in their finances, which is already a concern amid the ongoing commodity price volatility.   

About Valero

Texas-based Valero is the largest independent refiner and marketer of petroleum products in the United States. It has a refining capacity of 3.1 million barrels per day across 15 refineries located throughout the United States, Canada and the Caribbean. Valero is also a leading ethanol producer with 11 plants in the Midwest that have a combined capacity of 1.4 billion gallons per year. The company has a 50-megawatt wind farm and renewable diesel production from a joint venture.

About Plains All American Pipeline

Texas-based Plains All American Pipeline is involved in the transportation, storage, terminalling and marketing of crude oil, natural gas, natural gas liquids (NGL) and refined products in the United States and Canada. The partnership has operations in the Permian Basin, South Texas/Eagle Ford area, Rocky Mountain and Gulf Coast in the U.S., and Manito, South Saskatchewan, Rainbow in Canada.

Price Movement

The company’s shares have increased 10% compared with the industry’s gain of 8.8% over the last three months.

Zacks Rank & Key Picks

Currently, Valero carries a Zacks Rank #3 (Hold). A few better-ranked players in the energy sector include Transmontaigne Partners LP TLP and Range Resources Corporation RRC. Both these stocks sport a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here

Transmontaigne, headquartered in Denver, CO, involves in transporting and storing refined petroleum products. The firm delivered an average positive earnings surprise of 6.60% over the last four quarters.

Based in Fort Worth, TX, Range Resources is an independent oil and gas company, engaged in the exploration, development and acquisition of U.S. oil and gas resources. The company’s 2017 earnings are estimated to grow 1587.17%.

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Plains All American Pipeline, L.P. (PAA) : Free Stock Analysis Report
Valero Energy Corporation (VLO) : Free Stock Analysis Report
TransMontaigne Partners L.P. (TLP) : Free Stock Analysis Report
Range Resources Corporation (RRC) : Free Stock Analysis Report
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