The acquisition will establish Husky Energy's position as one of the leading gas retailers in the competitive southern Ontario market, it said. The company said that it sees value for its integrated strategy in increasing its presence and brand recognition in the densely populated [image-nocss] region.
Under the purchase agreement, Husky Energy will acquire 68 stations that are branded Sunoco and 30 stations that are branded Petro-Canada. Husky's station count will grow from approximately 1.8% to 7.9% of the overall Ontario market. These stations are located in an approximate 640 kilometers (400 miles) distance of Husky's U.S.-based refining assets in Toledo and Lima, Ohio.
The purchase is subject to approval by the Commissioner of Competition.
As part of its due diligence, Husky conducted extensive environmental evaluations of the sites. Suncor conducted subsurface and groundwater tests at all locations, and Husky Energy is confident in the current and future operational integrity, it said.
Husky said that it intends to begin the process of converting stations to Husky signage in the second quarter of 2010 and implementing Husky products and services.
This acquisition will increase the total Husky Energy Canadian site count to 571 and improves Husky's expected efficiencies by spreading fixed costs. It provides an excellent base for further retail expansion in the largest Canadian petroleum market, the company added.
"This is an exciting development for Husky Energy," said John C.S. Lau, president and CEO of Husky Energy. "These facilities are in proximity to our U.S. refining assets and the downstream integration grows our presence in the highly urbanized and densely populated Ontario market from 30 stations to 128. It represents an attractive opportunity for our shareholders and further strengthens the Company's strategy of being a fully integrated oil and gas business."
He added, "This acquisition represents a tremendous synergy between our production and refining assets and our goal to grow the Husky brand in the Canadian market."
Suncor agreed to divest the retail gas stations under an agreement with the Commissioner of Competition in July as part of its merger with Petro-Canada. The Commissioner required the divestitures in order to maintain a competitive retail market in Southern Ontario. The sale of these stations to Husky is subject to the approval of the Commissioner. (Click here for previous CSP Daily News coverage.)
Husky Energy is an integrated energy and energy-related company headquartered in Calgary, Alberta. In addition to being active in the exploration for oil and natural gas in Canada, the United States, offshore Greenland and Southeast Asia, Husky has extensive midstream and downstream assets supplying refined products to consumers. The company operates a heavy oil upgrader and asphalt refinery in Saskatchewan and Alberta, a Canadian refinery in Prince George, B.C., and U.S. refineries in Toledo, Ohio (50% working interest) and Lima, Ohio. Husky is also Western Canada's largest producer of ethanol, which is used for blending into cleaner burning fuels at facilities in Saskatchewan and Manitoba.
It has served the Ontario market for more than 30 years, through its 30 retail sites, including 18 full feature travel centers located on Ontario's major highways.
Members help make our journalism possible. Become a CSP member today and unlock exclusive benefits, including unlimited access to all of our content. Sign up here.