SemGroup® Corporation (NYSE:SEMG) today announced the closing
of its acquisition of Houston Fuel Oil Terminal Company (“HFOTCO”)
from investment funds managed by Alinda Capital Partners
(“Alinda”). HFOTCO, one of the largest oil terminals in the U.S.,
establishes SemGroup’s position in the premier energy market, the
Houston Ship Channel, and provides a strategic platform to
refinery-facing growth.
“As planned, this acquisition helps fulfill our long-term
strategy to further de-risk our business by adding secure,
downstream cash flow to our portfolio mix,” said SemGroup President
and CEO Carlin Conner. “In addition to generating stable earnings
for SemGroup on day one, this remarkably versatile asset provides
an entirely new growth platform to capture opportunities within the
Houston Ship Channel’s massive processing, trading and
import/export complex. HFOTCO provides strong and consistent cash
flows regardless of commodity price fluctuations, which further
underscores the timeliness of this acquisition and the long-term
value proposition it creates for our shareholders.”
The 16.8-million-barrel terminal is strategically located on the
U.S. Gulf Coast with crude pipeline delivery connectivity to the
local refining complex, deep water marine access and inbound crude
receipt pipeline connectivity, as well as rail/truck loading and
unloading capabilities from major producing basins. The assets are
located on 330 acres on the Houston Ship Channel, one of the
world’s most active trading centers for residual fuel oil, clean
products, LPGs and crude oil. The business is supported by
take-or-pay contracts with primarily investment-grade
counterparties that have been customers for an average of 15 years.
HFOTCO is currently executing on contractually supported growth
projects, including a new ship dock, a new pipeline and
connections, as well as an additional 1.45 million barrels of crude
oil storage, expected to be in service mid-2018.
In conjunction with the closing of the transaction, SemGroup
completed the initial payment, which consisted of a $301 million
cash payment, funded from SemGroup’s revolving credit facility,
issuance of 12.4 million common shares to Alinda, at a
predetermined price of $32.30 per share, and the assumption of $761
million of existing HFOTCO net debt, subject to customary
post-closing adjustments. SemGroup will fund the second
payment of $600 million in cash before the end of 2018.
About SemGroupBased in Tulsa, Okla.,
SemGroup® Corporation is a publicly traded midstream service
company providing the energy industry the means to move products
from the wellhead to the wholesale marketplace. SemGroup provides
diversified services for end users and consumers of crude oil,
natural gas, natural gas liquids, refined products and asphalt.
Services include purchasing, selling, processing, transporting,
terminalling and storing energy.
SemGroup uses its Investor Relations website and social media
outlets as channels of distribution of material company
information. Such information is routinely posted and accessible on
our Investor Relations website at www.semgroupcorp.com, our Twitter
account and LinkedIn account.
About Houston Fuel Oil Terminal Company Houston
Fuel Oil Terminal Company stores, blends and transports residual
fuel and crude oil via pipeline, ship, barge, rail and truck for
major oil companies, refiners, international trading firms and
other energy companies. Storage is divided among 144 tanks ranging
in size from 10 thousand barrels to 400 thousand barrels. The
facility also includes multiple receipt and delivery pipelines,
four ship docks with a fifth under construction, as well as seven
barge docks able to accommodate 23 barges simultaneously.
About Alinda Capital Partners Alinda
Capital Partners is one of the world’s largest and most
experienced infrastructure investment firms. Alinda is a long-term
investor in infrastructure assets that provide essential services
to communities. Alinda has $10 billion of assets under
management and has invested in infrastructure businesses that
operate in 33 states in the United States as well as in Canada, the
United Kingdom, the Netherlands, Belgium and Poland. These
businesses serve over 100 million customers annually in more than
550 cities globally, and are run by a workforce of over 80,000
people.
Forward-Looking Statements Certain matters
contained in this Press Release include “forward-looking
statements” within the meaning of Section 27A of the Securities Act
of 1933, as amended, and Section 21E of the Securities Exchange Act
of 1934, as amended. We make these forward-looking statements
in reliance on the safe harbor protections provided under the
Private Securities Litigation Reform Act of 1995.
All statements, other than statements of historical fact,
included in this Press Release including the prospects of our
industry, our anticipated financial performance, our anticipated
annual dividend growth rate, management's plans and objectives for
future operations, planned capital expenditures, business
prospects, outcome of regulatory proceedings, market conditions and
other matters, may constitute forward-looking statements. Although
we believe that the expectations reflected in these forward-looking
statements are reasonable, we cannot assure you that these
expectations will prove to be correct. These forward-looking
statements are subject to certain known and unknown risks and
uncertainties, as well as assumptions that could cause actual
results to differ materially from those reflected in these
forward-looking statements. Factors that might cause actual results
to differ include, but are not limited to, the failure to realize
the anticipated benefits of our acquisition of HFOTCO; our ability
to pay the deferred consideration and the consequences of our
failing to do so; the amount and timing of transaction expenses
associated with our acquisition of HFOTCO, and the impact of our
management team spending a significant portion of its time focusing
on completing and integrating our acquisition of HFOTCO; the impact
of the completion of our acquisition of HFOTCO on the credit
ratings assigned to any of our indebtedness or the
indebtedness of HFOTCO; the financial and operating performance of
HFOTCO; our ability to generate sufficient cash flow from
operations to enable us to pay our debt obligations and our current
and expected dividends or to fund our other liquidity needs; any
sustained reduction in demand for, or supply of, the petroleum
products we gather, transport, process, market and store; the
effect of our debt level on our future financial and operating
flexibility, including our ability to obtain additional capital on
terms that are favorable to us; our ability to access the debt and
equity markets, which will depend on general market conditions and
the credit ratings for our debt obligations and equity; the loss
of, or a material nonpayment or nonperformance by, any of our key
customers; the amount of cash distributions, capital requirements
and performance of our investments and joint ventures; the amount
of collateral required to be posted from time to time in our
commodity purchase, sale or derivative transactions; the impact of
operational and developmental hazards and unforeseen interruptions;
our ability to obtain new sources of supply of petroleum products;
competition from other midstream energy companies; our ability to
comply with the covenants contained in our credit agreement and the
indentures governing our senior notes, including requirements under
our credit agreement to maintain certain financial ratios; our
ability to renew or replace expiring storage, transportation and
related contracts; the overall forward markets for crude oil,
natural gas and natural gas liquids; the possibility that the
construction or acquisition of new assets may not result in the
corresponding anticipated revenue increases; changes in currency
exchange rates; weather and other natural phenomena, including
climate conditions; a cyber attack involving our information
systems and related infrastructure, or that of our business
associates; the risks and uncertainties of doing business outside
of the U.S., including political and economic instability and
changes in local governmental laws, regulations and policies; costs
of, or changes in, laws and regulations and our failure to comply
with new or existing laws or regulations, particularly with regard
to taxes, safety and protection of the environment; the possibility
that our hedging activities may result in losses or may have a
negative impact on our financial results; general economic, market
and business conditions; as well as other risk factors discussed
from time to time in each of our documents and reports filed with
the U.S. Securities and Exchange Commission.
Readers are cautioned not to place undue reliance on any
forward-looking statements contained in this press release, which
reflect management’s opinions only as of the date hereof. Except as
required by law, we undertake no obligation to revise or publicly
release the results of any revision to any forward-looking
statements.
Contacts:
Investor Relations:
Alisa Perkins
918-524-8081
investor.relations@semgroupcorp.com
Media:
Tom Droege
918-524-8560
tdroege@semgroupcorp.com
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