Irving Oil conducting strategic review that may include possible sale of business

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Irving Oil Ltd., owner of Canada’s largest refinery, may put itself up for sale after it completes a strategic review of the 99-year-old family-controlled company that dominates the fuel business in the Atlantic provinces.

In a statement on Wednesday, Saint John-based Irving said it is studying a number of options for the future of the company, which operates in Atlantic Canada, the United States and Europe. It gave no indication of the family’s reasons for considering a multibillion-dollar sale or restructuring that would vastly alter the business landscape in Eastern Canada.

“No decisions have been made about where this strategic review may lead. Consideration will be given to a new ownership structure, a full or partial sale, or a change in the portfolio of our assets and how we operate them,” said the statement, which was signed by 93-year-old company chairman and billionaire Arthur Irving, Irving Oil president Ian Whitcomb and vice-president Sarah Irving.

Irving Oil did not respond to a request for more details.

The company is one of New Brunswick’s largest employers. It runs the 320,000-barrel-a-day Saint John refinery, as well as a 75,000-barrel-a-day plant in Cork County, Ireland, which supplies 40 per cent of that country’s fuel.

It has a chain of more than 1,000 gas stations in Eastern Canada, New England and Ireland as well as wholesale and fuel-trading businesses. It also operates the Canaport deep-water oil terminal on the north shore of the Bay of Fundy.

Because it is a privately held company that offers few financial details, it is difficult to place a value on the entire operation. Travis Wood, energy analyst at National Bank Financial, said the Saint John refinery could be worth in the ballpark of $2-billion to $3-billion, and the Irish refinery $200-million to $500-million, given today’s robust industry conditions.

Mr. Wood said he could only speculate on the motivation to consider a sale. The long-term future of fossil-fuel transport is in question as the world moves to electric vehicles and other zero-emission cars and trucks. Any changes to the mix of feedstock to produce renewable fuels will come with capital expenditures to retool refineries.

“Value right now is pretty strong. Margins are strong, free cash for the buyer is strong. It could just be that it’s a healthy market where you have pretty good depth of potential buyers,” Mr. Wood said. “I think they are involved enough to know that the EV pathway is slower than some people expect in terms of disrupting demand.”

A major question is who would be on the list of would-be buyers. Several oil companies, including Imperial Oil Ltd., Chevron Corp. and Cenovus Energy Inc., have sold Canadian retail networks to companies that concentrate on that segment, including Parkland Corp. and Alimentation Couche-Tard. Both have been active acquirers. Last year, Suncor Energy Inc. studied a possible sale of its Petro-Canada gas-station chain but ultimately opted to keep the brand.

Arthur Irving, third generation of the Irving family dynasty, lives in Saint John. He’s the sole owner of Irving Oil. His grandfather, James Dergavel Irving, started the business in the late 1800s. Arthur Irving’s father, Kenneth Colin, or K.C., Irving opened his first garage and service station in his hometown of Bouctouche, N.B. in 1924, later moving to Saint John to operate the city’s Ford car dealership. His son joined the business in 1951.

After K.C. Irving’s death in 1992, Mr. Irving and his two brothers divvied up the company. James Irving owns the shipbuilding and forestry parts of the empire. Arthur Irving split the oil operations with his brother John Irving, and bought his share in 2018.

Mr. Irving’s net worth is estimated at US$5.3-billion and he’s No. 445 on Forbes’ list of billionaires. His wealth recently rebounded after plummeting to US$1.9-billion in 2021, according to Forbes.

Irving Oil, meanwhile, has expanded within the past decade. It bought the Irish refinery in 2016, and three years later, purchased a fuel-distribution and marketing company in that country. In May, 2020, Irving announced a deal to buy the Come-by-Chance refinery in Newfoundland, but that transaction was scrapped later in the year.

Rob Moir, an economist at the University of New Brunswick in Saint John, said Irving’s decades of energy expertise gives it deep insight into the future of fossil fuels as climate considerations drive investment decisions. It has embarked on a number of projects in recent years to reduce greenhouse-gas emissions.

“We know every major car manufacturer has announced a plan to move away from the internal-combustion engine into some sort of battery-based vehicle. Every single car manufacturer has said, ‘We’ve got a timeline, we’re looking at 2035 or 2050,” Prof. Moir said. “The company has to ask itself: ‘What’s our role in that new landscape?’”

With a report from Lindsay Jones in Halifax