Par Petroleum Forges Aloha State Deal

Buys Tesoro Hawaii refinery, 31 stations, for $75 million plus net working capital value

SAN ANTONIO -- Tesoro Corp.--which announced in January 2012 that its refining and retail network in Hawaii was "no longer in line with the company's strategic focus"--has announced that it has signed an agreement with a wholly owned subsidiary of Par Petroleum Corp. to sell all of its interest in Tesoro Hawaii LLC, which operates the Kapolei refinery, 31 gas stations and associated logistical assets.

As part of the agreement, Par Petroleum intends to operate the assets as an integrated refining, logistics and retail system.

As reported in a Raymond James/CSP Daily News Flash on Monday, the sales price of the Hawaii operations is $75 million, plus the market value of net working capital, which the companies expect to be approximately $225 million to $275 million.

"We are pleased to have reached this positive outcome for the company," said Greg Goff, president and CEO. "While the Hawaii operations do not align with our strategic focus, we believe they offer a great opportunity for Par Petroleum."

The new refining subsidiary will operate as a separate wholly owned subsidiary of Par Petroleum and also will be headquartered in Houston.

Par Petroleum said that following the closing, the retail stations will remain under the Tesoro brand.

Under the terms of the agreement, Par Petroleum, through a wholly owned subsidiary, will purchase all outstanding membership interests of Tesoro Hawaii for the $75 million in cash, plus net working capital and the market value of inventory at closing. The companies also included in the purchase price an earn-out arrangement of up to $40 million payable over three years contingent on certain performance metrics.

The transaction has been unanimously approved by the board of directors of Par Petroleum. The acquisition is subject to certain closing conditions, including the successful restart of the refinery and the receipt of required governmental approvals. The companies said that they expect to complete the transaction in third-quarter 2013.

"This is a great fit for Par Petroleum, and we are pleased to make a long-term investment in Hawaii's economy," said Will Monteleone, chairman and CEO of Par Petroleum. "We have found in Tesoro Hawaii a great company with outstanding assets and a superb management team and employee base. We aim to serve customers through operational excellence and enhance value for the communities we serve with a focus on safety, environmental stewardship and employee commitment."

Par Petroleum said that it intends to appoint William Haywood as president of its new refining subsidiary. Haywood has more than 30 years of experience in domestic and international energy, and was most recently senior vice president of refining for Tesoro. Also, Par Petroleum has named Peter Coxon as its COO. Coxon has nearly 30 years of experience in the transportation and energy industries. He currently serves as president of Texadian Energy.

Based in Honolulu, Tesoro Hawaii is an integrated refined productions business serving Hawaii and its population of approximately 1.4 million residents and 8 million annual visitors. The refinery has approximately 94,000 barrels per day of throughput capacity, 2.4 million barrels of crude oil and feedstock storage and 2.5 million barrels of refined products storage. The refinery produces ultra-low sulfur diesel, gasoline, jet fuel, marine fuel and other associated refined products. Tesoro Hawaii's logistics assets include five refined products terminals, 27 miles of pipelines, a single point mooring terminal and other associated logistics assets. In addition, Tesoro Hawaii owns 31 retail outlets located across the islands of Oahu, Maui and Hawaii.

Par Petroleum manages and maintains interests in a variety of energy-related assets, including natural gas assets located in the Piceance Basin, and a crude oil sourcing, marketing, transportation and logistics business in Houston through its Texadian Energy Inc. subsidiary. Its primary oil and gas asset is a 33.34% minority ownership interest in a joint venture entity called Piceance Energy LLC. The remaining ownership interest is held by Laramie Energy II, LLC, which manages the day-to-day operations of the joint venture. Texadian sources, markets, transports and distributes crude petroleum-based energy products.

San Antonio-based Tesoro is an independent refiner and marketer of petroleum products. Tesoro, through its subsidiaries, operates six refineries in the western United States with a combined capacity of more than 845,000 barrels per day. Tesoro's retail-marketing system includes more than 2,200 retail stations under the Tesoro, Shell, ARCO and USA Gasoline brands, of which 595 are company operated.