Shell Midstream Partners, L.P. Announces Largest Acquisition to Date
Houston, (GLOBE NEWSWIRE) -- Shell Midstream Partners, L.P. entered into a purchase and sale agreement to acquire Shell’s ownership interest in Amberjack Pipeline Company LLC, which is comprised of 75% of Amberjack Series A and 50% of Amberjack Series B for $1.22 billion.
“I’m pleased to announce our largest acquisition to date. This is a significant milestone for Shell Midstream Partners,” said Kevin Nichols, Chief Executive Officer.
“The Amberjack pipeline is strategically located to capture value in a prolific area in the Gulf of Mexico and represents another key corridor that is set to benefit from organic growth.” “This acquisition, combined with our equity raise earlier in the year, further demonstrates our ability to deliver against our promises and positions us well for the future.”
Shell Midstream Partners’ share of Amberjack’s annualized net income estimated using the second quarter of 2018 forecast is nearly $120 million with the second quarter dividend estimated to be about $34 million.
Following the completion of anticipated growth projects, our share of Amberjack’s net income is expected to increase to an annual run rate of approximately $145 million by the end of 2018 with an associated quarterly dividend of approximately $40 million.
Shell Midstream Partners plans to fund this acquisition with borrowings under existing credit facilities. The acquisition is expected to close on or around May 11, 2018, subject to customary closing conditions.
The key benefits of Amberjack can be categorized into three value drivers:
• Sustained Growth: The pipeline currently transports roughly 300,000 barrels per day due to the success of Jack St. Malo and Tahiti. The pipeline is forecasted to transport approximately 400,000 barrels per day by the end of 2019 from continued in-field development, as well as new projects expected to come online.
• Connectivity: The pipeline has exceptional connectivity in the Gulf of Mexico with delivery options along the Texas and Louisiana Gulf Coast.
• Market Optionality: Shippers on Amberjack can deliver into multiple pipelines allowing for the transportation of four different crude grades. This optionality is a significant value driver for shippers as they can leverage arbitrage opportunities between crude grades and delivery locations.
The terms of the acquisition were approved by the conflicts committee of the Board of Directors of the General Partner of Shell Midstream Partners, which is composed entirely of independent directors. This committee was advised by Tudor Pickering Holt & Co. Advisors LP as to financial matters and Akin Gump Strauss Hauer & Feld LLP as to legal matters.
As discussed in the HPI Market Data 2019 report, published in November by Gas Processing & LNG’s sister publication, Hydrocarbon Processing, rising propane and ethane supplies in the US have been enabled by greater production of shale gas.
Industry Trends: Norway targets global LNG market
Norway aims to become a leading player in the global LNG market during the next several years through the establishment of new, large-scale LNG terminals.
Regional Focus: Challenges of scaling up Africa’s LNG production
Several gas projects are underway in Africa, but they continue to be constrained by inadequate infrastructure, slow finance mobilization, lack of security and uncertainty over hydrocarbon regulations that are casting doubt on the outcome of the continent’s drive to meet its anticipated 128% gas demand increase by 2040.
GasPro 2.0: A Webcast Symposium
The global LNG industry is becoming increasingly interconnected as grassroots export projects get off the ground. Another technology route for processing gas into fuels—GTL—is attracting renewed attention due to improving economics. Small-scale solutions for both LNG and GTL are at the forefront of new technological developments, while major projects using more conventional technologies continue to start up around the world.
During this webcast, we will focus on LNG, GTL, gas processing technology developments and deployments, operations, small-scale solutions, transportation, trading, distribution, safety, regulatory affairs, business analysis and more.
October 25, 2018 08:30 AM CDT