Plains All American Pipeline, L.P. Enters into Agreement to Acquire 50% Interest in BridgeTex Pipeline Company from Occidenta...
November 06 2014 - 06:28AM
Business Wire
Plains All American Pipeline, L.P. (NYSE: PAA) today announced
that it has entered into a definitive purchase and sale agreement
with Occidental Petroleum Corporation for the purchase by PAA of
Occidental’s 50% interest in BridgeTex Pipeline Company LLC
(“BridgeTex”) for $1.075 billion.
BridgeTex owns the BridgeTex pipeline, which is a new 300,000
barrel-per-day crude oil pipeline system that extends from Colorado
City in West Texas to Texas City and is complementary to PAA’s
existing West Texas assets. At Colorado City, the BridgeTex
pipeline is connected to PAA’s Basin Pipeline System as well as
PAA’s Sunrise Pipeline. The Sunrise Pipeline originates in Midland
and is currently under construction with an initial capacity of
250,000 barrels per day and is expected to be placed into service
in December 2014.
An affiliate of Occidental is the anchor shipper on the
BridgeTex pipeline. Approximately 80% of the pipeline’s capacity is
committed to long term contracts with a volume weighted average
tenor of 9.5 years (13.5 years taking into account shipper
extension options). The remaining 50% interest in BridgeTex is
owned by Magellan Midstream Partners, L.P. (“MMP”); MMP is also the
operator of the BridgeTex pipeline.
Contemporaneous with the purchase by PAA, BridgeTex has agreed
to sell the southern leg of the pipeline system which runs from
Houston to Texas City (the “Texas City Leg”) to MMP, and MMP has
agreed to enter into a long term capacity lease with BridgeTex
pursuant to which BridgeTex shippers will have access to capacity
on the Texas City Leg.
In addition to customary closing conditions and the
contemporaneous consummation of the sale of the Texas City Leg by
BridgeTex to MMP and execution of the capacity lease, PAA’s
acquisition of Occidental’s interest in BridgeTex is subject to
completion by Plains GP Holdings, L.P. (NYSE: PAGP) of an
underwritten secondary offering pursuant to which Occidental would
sell a portion of its equity interest in PAGP.
In order to facilitate such offering and the overall
transaction, (i) the board of directors of PAGP’s general partner
has agreed to an early release of the 15-month lock-up arrangement
that was originally imposed on certain PAGP equity owners,
including Occidental, in connection with PAGP’s initial public
offering in October 2013, and (ii) certain affiliates of Kayne
Anderson Investment Management, Inc., The Energy & Minerals
Group and PAA Management, L.P. have agreed to waive their
participation rights in such offering, and (iii) Occidental,
certain affiliates of Kayne Anderson Investment Management, Inc.,
The Energy & Minerals Group and PAA Management, L.P. have
agreed to refrain from selling any of their respective interests in
PAGP for a period of up to 90 days following such offering. If an
offering is not completed prior to December 31, 2014, both PAA and
Occidental have the right to terminate the overall transaction.
“BridgeTex represents a very attractive and strategic addition
to our existing West Texas pipelines,” said Greg Armstrong,
Chairman and CEO of Plains All American. “Given recent and
projected increases in Permian Basin production, we believe that
BridgeTex will play an important role in providing needed takeaway
capacity out of the Permian Basin, will provide additional
flexibility for our customers and will expand PAA’s market access
to the Gulf Coast.”
“Upon achieving full operating capability, we anticipate PAA’s
share of annualized EBITDA from BridgeTex LLC will range between
$100 and $105 million. At that level, we expect the transaction to
be approximately 1.5% accretive to PAA’s targeted 2015 distribution
per unit and 5% accretive to PAGP’s corresponding distribution per
share for 2015.”
This news release does not constitute an offer to sell or a
solicitation of an offer to buy the securities described herein,
nor shall there be any sale of these securities in any state or
jurisdiction in which such an offer, solicitation or sale would be
unlawful prior to registration or qualification under the
securities laws of any such jurisdiction.
Plains All American Pipeline, L.P. is a publicly traded master
limited partnership that owns and operates midstream energy
infrastructure and provides logistics services for crude oil,
natural gas liquids ("NGL"), natural gas and refined products. PAA
owns an extensive network of pipeline transportation, terminalling,
storage and gathering assets in key crude oil and NGL producing
basins and transportation corridors and at major market hubs in the
United States and Canada. On average, PAA handles over 3.9 million
barrels per day of crude oil and NGL on its pipelines. PAA is
headquartered in Houston, Texas.
Plains GP Holdings is a publicly traded entity that owns an
interest in the general partner and incentive distribution rights
of Plains All American Pipeline, L.P., one of the largest energy
infrastructure and logistics companies in North America. PAGP is
headquartered in Houston, Texas.
Forward Looking Statements
Except for the historical information contained herein, the
matters discussed in this release are forward-looking statements
that involve certain risks and uncertainties that could cause
actual results or outcomes to differ materially from results or
outcomes anticipated in the forward-looking statements. These risks
and uncertainties include, among other things, various factors,
including stability of the capital markets, that could frustrate or
delay our ability to consummate the transactions described herein;
various factors that could adversely impact our ability to complete
ongoing or planned expansion projects, including, among other
things, shortages, cost increases or delays in receipt of supplies,
materials or labor; inability to obtain, delays in the receipt of,
or other issues associated with necessary licenses, permits,
approvals, consents, rights of way or other governmental or third
party requirements; weather interference with business operations
or project construction, including the impact of extreme weather
events or conditions; environmental liabilities, issues or events
that result in construction delays or otherwise impact targeted
in-service dates; the successful integration and future performance
of the acquired assets or businesses; the availability of adequate
third-party production volumes for transportation and marketing in
the areas in which we operate; declines in volumes shipped on
existing and proposed pipelines, whether due to declines in
production from existing oil and gas reserves or failure to
develop, or slowdown in the development of, additional oil and gas
reserves; fluctuations in refinery capacity in areas served by our
mainlines and other factors affecting demand for various grades of
crude oil and resulting changes in pricing conditions or
transportation throughput requirements; our ability to obtain debt
or equity financing on satisfactory terms to fund our expansion and
development projects; the impact of current and future laws,
rulings, governmental regulations, accounting standards and
statements and related interpretations; the effects of competition;
interruptions in service on third-party pipelines; general
economic, market or business conditions and the amplification of
other risks caused by volatile financial markets, capital
constraints and pervasive liquidity concerns; and other factors and
uncertainties inherent in the transportation, storage, terminalling
and marketing of crude oil as discussed in the PAA's filings with
the Securities and Exchange Commission.
Plains All American Pipeline, L.P. andPlains GP HoldingsRyan
Smith, (866) 809-1291Director, Investor Relations
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