(Updates with details, stock up)
* Marathon to purchase refinery for $598 million * Inventory worth around $1.2 billion * Marathon could pay up to another $700 mln over 6 years
Oct 8 (Reuters) - Marathon Petroleum Corp said on Monday it has signed a definitive agreement to purchase BP's
Texas City refinery, three intrastate natural gas pipelines and other assets in a deal worth up to $2.5 billion.
Marathon Petroleum's shares rose to $56.38 in pre-market trading, after closing on Friday on the New York Stock Exchange at $54.87.
The U.S. company said it will also acquire an allocation of BP's Colonial Pipeline Co shipper history, four terminals, retail marketing contract assignments for approximately 1,200 branded sites, and a 1,040 megawatt cogeneration facility.
The refinery has capacity of 451,000 barrels per calendar day and 475,000 barrels per stream day.
The base purchase price is $598 million, plus inventories estimated at $1.2 billion, Marathon Petroleum said.
The agreement also contains an earnout provision under which MPC could pay up to an additional $700 million over six years, subject to certain conditions.
The transaction, which is expected to boost earnings in the first year of operation, is expected to be funded with cash on hand and is anticipated to close early in 2013, Marathon Petroleum said.
(Reporting by Steve James; Editing by Leslie Adler)