Chapter 1698： 10th largest refinery

The tax reform proposed by Donald did not actually cause shock to the entire American business community. Most companies tend not to discuss how much they can benefit from the tax reform, because the terms of the tax reform have been changing, and companies need to understand the zheng policy. For the meaning, we must carefully try to figure out the differences in subtle adjustments. Almost every leader will make a fuss about the tax reform plan. Everyone is not surprised.

Only this time, it is the turn of energy and airlines to benefit, why not mention banks? Because Wall Street is always the beneficiary, no matter who comes to power, Wall Street’s support is inseparable, and their benefits are naturally indispensable.

The most likely to be adjusted is the corporate tax, and of course, the corresponding tax reduction after the overseas cash of multinational companies repatriates to the United States.

In this regard, Yang Cheng is most concerned about tax changes in the energy sector, because the actual tax rate of oil and gas companies ranks second among all industries. If corporate tax can be met, the profits of the energy industry will be greatly improved.

The other is the transportation industry. After the tax cuts, the transportation industry will have more funds to upgrade equipment and services. The aviation industry will undoubtedly benefit the most. The large amount of money saved will be used to purchase more aircraft to realize old equipment. Update.

This is undoubtedly the top priority for Delta Air Lines. In order to save its life, Delta Air Lines purchased a large number of second-hand aircraft, but thanks to advanced refurbishment technology, the aircraft does not look so bad, but the parts It is an indisputable fact that the replacement of new aircraft has long been on the agenda, which coincides with the tax reform. If this expenditure can be deducted from the tax deduction, the financial pressure of the group will be greatly reduced. This is undoubtedly a A good thing.

Not only that, but oil refineries will also benefit. If the tax reform is successfully promoted, it is not a bad thing to invest in oil refineries now. At least in the past few years of Donald’s reign, he will not overturn his proposal and slap himself in the face, but Who knows, this guy is moody, he can do anything, and he doesn't turn around once or twice.

However, the intention is okay, but the target is not easy to find. After entering the 1980s, with technological progress, intensified market competition, and increasing environmental protection requirements, the refining industry has entered an era of meager profit, and the industry has begun to carry out continuous structural adjustments.

In recent decades, the U.S. refining capacity has ceased to expand on a large scale, and there have been frequent mergers and reorganizations between companies. Up to now, there are only more than 130 refining companies in the U.S., which can provide Delta Air Lines with potential targets for acquisition. One part.

"Do you have a good acquisition target?" Yang Cheng asked.

Bastian also made full preparations, "Our first choice must be on the East Coast, not too far from Pennsylvania."

"Why is it on the east coast, not in the middle?"

"It's not impossible, but as a whole, the number of refineries in the East Coast region is relatively small, mostly concentrated near Washington and New York, and the scale is relatively small.

There are currently 9 refineries with a capacity of 62 million tons/year, accounting for only 7% of the total production capacity in the United States. Among them, there are only 3 refineries above 10 million tons, with an average size of 7 million tons/year.

More than half of the refineries only have simple refining processes, and the east coast is a crude oil-poor area, lacking large oil fields, and the total output is only 1% of the United States. The oil used by the refineries mainly depends on imported resources, from Europe, North Africa and the Middle East through waterways. Imports from other places have poor logistics conditions.

Moreover, affected by the longitudinal partition of the Appalachian Mountains, it is difficult for the refineries on the entire east coast to obtain crude oil and pipelines from the oil-producing regions in the Midwest, and the export of refined oil is mainly carried out by railways and ships.

But it must be said that the East Coast has the largest market capacity in the United States and is the region with the largest oil consumption in the United States. Last year, the consumption of oil products reached 250 million tons, accounting for more than 30% of the total US consumption.

Investing in the East Coast Oil Refinery, the refined oil produced can not only be used by us, but also can be supplied to large areas of cities, and we have North Sea Oil to supply crude oil, so there is no need to worry about the situation where there is no oil to refine. "

Yang Cheng tilted Erlang's legs and asked, "I remember that refineries in the East Coast area are priced with Brent crude oil, right? Compared with refineries priced with WTI crude oil, the gross profit is too small."

"Yes, when the broad East Coast market will fill the gap."

"Well, do you have specific goals?"

"Yes, also in Pennsylvania, the oldest and largest oil refinery on the East Coast of the United States-Philadelphia Energy Solutions' Philadelphia Refinery.

I have received news that the Philadelphia Oil Refinery is on the verge of bankruptcy, and they cannot afford to pay the US$800 million to meet the US Environmental Protection Agency's renewable fuel standards.

According to the requirements of the U.S. Environmental Protection Agency, refineries must mix crude oil with renewable fuels or purchase quotas, which will significantly increase the production and operation costs of refineries. "

Yang Cheng was surprised, "Wait? Is this environmental protection standard uniform? Or is it only for certain companies that exceed pollution standards?"

"It is a unified boss. Over the past 10 years, the U.S. refining industry has invested about 47 billion US dollars in environmental protection projects, mainly for the production of low-sulfur unleaded gasoline that is more conducive to environmental protection.

In order to prevent enterprises from discharging pollutants at will, the Environmental Protection Agency has also formulated very strict and harsh environmental laws and clean air laws. The relevant laws and regulations on air quality, water quality, waste and automobile exhaust emissions are updated every year. In addition, refineries It is also necessary to produce gasoline and diesel with different standards in accordance with federal standards, state ZF standards, and local ZF standards. Under such internal and external environmental constraints, many petroleum refining companies have high input and low output, while some refineries are unable to To adapt to the increasingly fierce industry competition was forced to close.

The Philadelphia Oil Refinery was among the victims. "Bastien looked calm, as if he had anticipated Yang Cheng's problem.

After a brief pause, he explained, “Boss, what we need is high-quality aviation fuel. The requirements for the refinery are already high. In order to meet the requirements of the Environmental Protection Agency, the Philadelphia refinery has performed equipment updates several times, but the profit continues to decline. Under the circumstances, it is difficult to recover the funds invested in upgrading equipment, which is an important reason for their bankruptcy. The US$800 million required by the Environmental Protection Agency is the last straw that crushes the camel.

However, after our acquisition, the refinery will switch to producing high-quality jet fuel, and we and our partners will pay for it. "

Yang Cheng nodded to express understanding~

Bastian took a sip of coffee to moisturize his throat and continued, "The Philadelphia Refinery is headquartered in Philadelphia, which is conducive to the joint management of the small refinery we previously acquired.

At present, the Philadelphia Oil Refinery is mainly engaged in the business of petroleum refining and refined oil sales. It has 1,300 acres of land and the current crude oil processing capacity is 335,000 barrels per day, approximately 15 million tons per year.

The Philadelphia Refinery is the largest petroleum refining company in Pennsylvania and the 10th largest refining company in the United States. It has more than 1,100 full-time employees. They provide more than a quarter of the refining capacity of the East Coast of the United States and serve the New York Port gasoline and diesel market. ’S largest refinery~"

Yang Orange interrupted and asked, "Who is the controlling party?"

"It's the Carlyle Group and its consortium, the boss can rest assured, they have made it clear that they are going to sell~"

Yang Cheng tapped his fingers on the armrest of the leather sofa rhythmically, "It sounds like the situation is not too complicated, and the location and scale are good."

Bastian immediately echoed, "Indeed, the Philadelphia Oil Refinery is located in the developed eastern part of the United States The transportation is very convenient, and the crude oil suppliers previously cooperated with them are also many yuan, including crude oil from Canada and others from Imported crude oil from Latin America, the Middle East and Africa can save us from relying on North Sea oil."

Yang Cheng said, “Due to the recent plunge in oil prices in the Bakken shale oil and gas field, the oil supply has been much lower than in previous years. If you do a careful calculation, it may be more expensive than importing oil from Bakken.”

"That's right, and the Philadelphia Oil Refinery invested in the construction of a new crude oil railway unloading terminal last year. The construction is temporarily suspended due to funding problems. If we can take over and make up for the operating funds, when the project is completed and put into use, 4 units of crude oil can be loaded and unloaded daily. , Roughly equivalent to a daily throughput of 280,000 barrels, enough to ensure the company's production of raw materials.

To be honest, we were lucky. Were it not for the EPA's sudden move, it would be difficult for us to acquire the Philadelphia refinery. "

Yang Cheng pondered for a long time, and finally made a final decision, "Since you have made such a thorough preparation, your efforts should not be wasted. Let’s talk about it. If the price is right, buying it will be harmless to us, but you must pay attention to the labor. With more than 1,000 employees, this is not a small expense. The labor costs are still rising every year. If it is not controlled, it will bring down the refinery sooner or later."

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