Shell Midstream Partners acquired a 36% interest in Poseidon Oil Pipeline Co. for $350 million from Equilon Enterprises LLC, a subsidiary of Shell Oil Products US. The acquisition price, including a proportional share of Poseidon debt, reflects a 9.5-times multiple of the asset's forecasted future 12-months adjusted earnings before interest, taxes, depreciation and amortization, plus capacity reserve payments. The acquisition is expected to be immediately accretive to unitholders.
In addition to the acquisition, Shell Midstream Partners entered into a new one-year revolving credit facility with $100 million of initial availability with an affiliate, increasing total borrowing capacity to $500 million. The acquisition was funded with borrowings under Shell Midstream Partners' revolving credit facilities.
"This marks the second acquisition by Shell Midstream Partners following the initial public offering,” says Peggy Montana, a member of the board of directors of the general partner. “As previously communicated, we have begun to introduce new assets into the MLP (master limited partnership) in order to diversify our cash flow base and highlight the sizeable inventory of assets at our sponsor. Poseidon is a key corridor pipeline for producers with close proximity to existing and future developments in the central and western Gulf of Mexico to serve both Texas and Louisiana markets. Poseidon's strong growth profile makes the asset a highly valuable addition to Shell Midstream Partners' portfolio."
Poseidon is a 367-mile offshore crude oil pipeline with 350,000 b/d capacity with access to major crude trading hubs via connecting carriers such as the Gibson/Houma line to St James and Clovelly, Louisiana, and via the Cameron Highway Oil Pipeline System to Texas hubs at Texas City and Port Arthur, Texas.
Shell Midstream Partners is a fee-based, growth-oriented midstream MLP, formed by Royal Dutch Shell, to own, operate, develop and acquire pipelines and other midstream assets.
Image: Poseidon map / Poseidon Oil Pipeline