Buckeye Partners LP (NYSE: BPL) has signed a definitive agreement to acquire an 80% interest in a company that will be owned jointly with Trafigura AG for $860 million. The company (Buckeye Texas Partners) and its subsidiaries will own and operate a vertically integrated system of midstream assets including a deep-water, high volume marine terminal located on the Corpus Christi Ship Channel, a condensate splitter and LPG storage complex in Corpus Christi, Texas, and three crude oil and condensate gathering facilities in the Eagle Ford Shale. All of the assets are supported by 7- to 10-year minimum volume throughput, storage and tolling agreements with Trafigura. This transaction is expected to close later in September 2014, subject to regulatory approvals and customary closing conditions.
Upon completion of initial development phase, the assets will form an integrated system with connectivity from the production in the field to the marine terminal infrastructure in Corpus Christi, creating a premier logistics platform with significant flexibility and optionality. The Corpus Christi facilities have five vessel berths including three deep-water docks, and upon completion of initial development phase, will offer approximately 5.6 million barrels of liquid petroleum products storage capacity along with rail and truck loading/unloading capability. A 50,000 barrel per day condensate splitter is currently under construction and is anticipated to be completed by mid-2015, after which Buckeye Texas Partners will commence operations under a 7-year fixed-fee tolling agreement with Trafigura. In addition, three field gathering facilities with associated storage and pipeline connectivity will allow Buckeye Texas Partners to move Eagle Ford crude and condensate production directly to the terminalling complex in Corpus Christi.
Buckeye Texas Partners expects to invest approximately $240-$270 million through the first quarter of 2016 relating to these growth capital initiatives that we anticipate will be operational over the next nine to 18 months. Importantly, 100% of the cash flows associated with all of these assets are supported by fee-based take-or-pay revenue commitments under 7- to 10-year commercial agreements with Trafigura.
Barclays provided a fairness opinion to the board of directors of Buckeye GP LLC, the general partner of Buckeye, in connection with this transaction.
Buckeye is based in Houston.
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