After doing a little research this morning, I am convinced that CVE got a great deal from BP for the Toledo Refinery. BP's efforts to pare down their fossil fuel footprint allows CVE to get a great deal on an asset that BP couldn't dispose of easily to other potential buyers - due to CVE in the JV.
My benchmark is the cost to acquire or build a new refinery today - assuming one could get the needed approvals to build one. We have no further to look than CVE's own Superior refinery.
The Superior refinery was obtained by CVE as part of the Husky acquisition back in 2021. The Superior refinery was heavily damaged during a 2018 fire and had to be rebuilt. Just take a look at the cost to rebuild the Superior refinery, as compared to CVE's price paid to BP for the remaining 50% of Toledo.
160,000 bbls/d capacity
80,000 bbls/d purchased from BP at $300 million
Purchase price of $3750/bbl of additional capacity.
50,000 bbls/d capacity (100% owned)
$1,300,000,000 total cost to rebuild ($1.1 Billion of that covered by insurance)
Capital cost of $26,000/bbl to build
CVE ends up with 80,000 bbls/d of capacity for roughly 15% of the price to build new. That is OK with me every day of the week. Even though CVE is getting re-imbursed for CAPEX related to the Superior rebuild, they have been detailing a quarterly expenditure of between $250 and $300 million a quarter on the rebuild - which is now essentially completed.
I won't get into the benefits CVE gains in directing feedstocks, synergies with it's nearby, wholly owned, Lima Refinery.
Finally, the Toledo refinery just completed a multi-month turnaround. The recent turnaround greatly reduces the cost and time involved in spring/fall turnarounds for the next five years.