By Michael Hirtzer
Nov 2 (Reuters) – Green Plains Inc has bought its
second ethanol plant in a week in a $93.8 million deal for a
facility in Hereford, Texas, owned by Murphy USA Inc,
it said on Monday.
The sale of the plant, with an annual production capacity of
100 million gallons, was expected to close this month and
follows an announcement last week that Green Plains bought
Virginia’s sole ethanol plant. The earlier deal, for $18.25
million, was for a plant with an annual capacity of 62 million
gallons that had been idled.
Both plants are located far from the Midwestern crop belt,
where most of the corn used to make ethanol is grown, and
typically result in higher costs to make the gasoline additive.
Murphy USA earlier this year told Reuters that the plant was for
sale due to the industry’s “difficult environment.”
Green Plains said $78.5 million was for the ethanol
production facility and the balance for working capital. The
company touted as an advantage the Texas facility’s proximity to
a large concentration of cattle feedyards, a top market for the
ethanol byproduct dried distillers’ grains (DDGs), a
protein-rich animal feed.
Overall low crude oil and gasoline prices have
weighed on demand for ethanol, pressuring profit margins
at a time when U.S. production was expected to be nearly
record-large. Further industry consolidation is likely, analysts
and traders have said.
CHS Inc, the largest farmer-owned cooperative in
the United States, bought two ethanol plants in Illinois during
the past year, including one located near the Mississippi River
for $196 million.
Pacific Ethanol Inc closed its $184 million
acquisition of ethanol maker Aventine Renewable Energy Holdings
earlier this year.
Green Plains is expected to release third-quarter earnings
early on Tuesday.
(Reporting by Michael Hirtzer in Chicago; Editing by Lisa
Shumaker)