Fitch Ratings Affirms Premcor.

Business Editors

CHICAGO--(BUSINESS WIRE)--Dec. 2, 2002

On Nov. 26, 2002, Premcor Inc. announced that it has entered into an agreement with the Williams Companies (Williams) to acquire the 170,000 barrel per day (bpd) Memphis refinery from Williams for $315 million plus the value of inventory. The agreement also includes potential earn-out payments for Williams of up to $75 million if industry margins exceed certain levels during the next seven years. The transaction is expected to close in the first quarter of 2003. Fitch Ratings has affirmed the ratings of Premcor USA (PUSA), Premcor Refining Group (PRG) and Port Arthur Finance Corp. (PAFC). The Rating Outlook for the debt of PUSA, PRG and PAFC remains Positive.

The debt ratings of PUSA, PRG and PAFC are as follows:

PUSA

--Senior subordinated notes 'B'.

PRG

--$650 million secured credit facility 'BB';

--Senior floating-rate unsecured term loan 'BB-';

--Senior notes 'BB-';

--Senior subordinated notes 'B'.

PAFC

--Senior secured notes 'BB'.

Premcor plans to finance the acquisition with roughly 50% debt and 50% equity. Premcor's two principal shareholders, the Blackstone Group and Occidental Petroleum Corporation, will each participate in the equity offering. The conservative financing supports management's strategy of growing the company's operating base while working towards investment grade debt ratings.

The Memphis refinery has a niche position, processing light sweet crudes into refined products for local markets and delivery via barge on the Mississippi River. The refinery, however, has been unable to process up to its full 190,000-bpd crude capacity due to constraints with downstream units in the plant. Due to the light crude slate, the refinery converts almost 100% of its feed into light products. The addition of Memphis will provide needed stability for Premcor's operations since the company closed the Hartford, Illinois refinery in September. Premcor currently operates only two refineries.

Like other refiners, Premcor has suffered through four successive quarters at the bottom of the industry cycle. Premcor, however, significantly improved its capital structure earlier this year and completed an initial public offering which raised $482 million. Total consolidated debt for Premcor Inc. has been reduced by $650 million this year to $925 million at Sept. 30, 2002.

Premcor is a large independent refiner of petroleum products in the United States. With the closure of the Hartford refinery in October, Premcor now operates two refineries with a combined capacity to process 420,000-bpd of crude oil. The Blackstone Group continues to hold approximately 48% or Premcor's common stock with Occidental Petroleum Corporation holding a 13% interest.