Murphy Oil sells Hankinson, ND, plant to Guardian

By Susanne Retka Schill | January 10, 2014

A group of cooperatively organized ethanol producers have joined forces to purchase a third ethanol plant for the group, this time in Hankinson, N.D.

Murphy USA Inc. announced before Christmas that it had completed the sale of its wholly owned subsidiary Hankinson Renewable Energy LLC to Guardian Hankinson LLC. Guardian acquired the 132 MMgy facility in an all-cash transaction through a membership purchase agreement, according to the Murphy Oil announcement. The purchase price for the transaction was $170 million plus estimated inventory and net working capital at closing of approximately $3 million. Murphy Oil purchased the idled former VeraSun plant in Hankinson in 2010.

"This is a major step in executing our strategy to exit noncore businesses while realizing significant value for our shareholders. The proceeds provide additional financial flexibility to continue our growth plans while reducing our long-term debt," said Andrew Clyde, president and CEO of Murphy USA. Clyde added, "I am confident that Guardian Hankinson LLC will continue to be a great employer of the plant's staff, support the town of Hankinson and the surrounding communities, while maintaining strong relationships with the plant's vendors and suppliers."

The Guardian group first organized in 2009 to purchase another idled VeraSun plant, the 110 MMgy facility in Janesville, Minn. Many of the same cooperatives joined together in November of 2010 to buy a majority stake in the 54 MMgy Lima, Ohio, plant from the original sole owners, Paladin Capital Group.  

The Hankinson facility is the third investment by many of those in the Guardian group.  A year ago, the Guardian group announced it would acquire the Heron Lake, Minn., plant, an arrangement that later fell through.   

Each plant owned by the Guardian group has different participating parties, and representatives from each of those participating serve on the boards of directors. A general manager is hired to manage the facility and all are expected to participate in the first venture organized by the Guardian group, Renewable Products Marketing Group for joint marketing of ethanol and coproducts.

Ethanol producers participating in the Hankinson purchase included Chippewa Valley Ethanol Co., Heartland Corn Products, Dakota Ethanol and KAPPA Ethanol. Additional cooperatives investing in previous purchases included  Golden Grain Energy, Al-Corn Clean Fuels and Central Minnesota Ethanol Co-op. Members of CMEC have approved the sale of the plant to U.K.-based biochemical producer Green Biologics Inc., in a transaction is expected to be completed later this year.