Shell Midstream Partners, L.P. (NYSE: SHLX) entered into a purchase
and sale agreement to acquire from wholly owned subsidiaries of
Shell a 100% interest in five products terminals and partial
interest in two Gulf of Mexico corridor pipelines and in two
strategic onshore pipelines for $825 million.
The acquisition price reflects an approximate
7.9 times multiple of the assets’ forecasted 2018 adjusted earnings
before interest, taxes, depreciation and amortization and is
expected to be immediately accretive to unitholders. Shell
Midstream Partners intends to fund the acquisition with borrowings
under new and existing credit facilities. The acquisition is
expected to close on or around December 1, 2017, subject to
customary closing conditions.
Highlights of the assets to be acquired:
- A 100% interest in Triton West LLC which owns the Anacortes,
Colex, Des Plaines, Portland, and Seattle products terminals.
The terminals are strategically located with take-or-pay contracts
with wholly owned subsidiaries of Shell. Each contract has an
initial term of 10 years with options to extend up to 20
years. The acquisition of the products terminals builds upon
Shell Midstream Partners’ strategy to access assets across Shell’s
broad asset base.
- A 22.9% interest in Mars Oil Pipeline Company LLC (Mars) and a
22% interest in Odyssey Pipeline LLC (Odyssey). Both Mars and
Odyssey serve high growth areas of the Gulf of Mexico.
Following the closing of the transaction, Shell Midstream Partners
will own 71.5% of Mars and 71% of Odyssey.
- A 10% interest in Explorer Pipeline Company (Explorer) and a
41.48% interest in LOCAP LLC (LOCAP). Explorer owns a
1,830-mile products pipeline extending from Gulf Coast refineries
to the upper Midwest. LOCAP owns a 55-mile common carrier
crude pipeline from the LOOP Clovelly Salt Dome facility to the
active trading hub of St. James, Louisiana.
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 comprised entirely of
independent directors. This committee was advised by Tudor,
Pickering, Holt & Co. as to financial matters and Akin Gump
Strauss Hauer & Feld LLP as to legal matters.
# # #
ABOUT SHELL MIDSTREAM PARTNERS, L.P.
Shell Midstream Partners, headquartered in
Houston, Texas, is a fee-based, growth-oriented midstream master
limited partnership formed by Royal Dutch Shell plc to own,
operate, develop and acquire pipelines and other midstream assets.
Shell Midstream Partners' assets consist of interests in entities
that own crude oil and refined products pipelines serving as key
infrastructure to transport onshore and offshore crude oil
production to Gulf Coast and Midwest refining markets and to
deliver refined products from those markets to major demand
centers, as well as interests in entities that own natural gas and
refinery gas pipelines which transport offshore natural gas to
market hubs and deliver refinery gas from refineries and plants to
chemical sites along the Gulf Coast.
For more information on Shell Midstream Partners and the assets
owned by the partnership, please visit
www.shellmidstreampartners.com.
INQUIRIES:
Investor Relations: +1 (832) 337-2034 Media Relations: +1 (832)
337-4355
FORWARD LOOKING STATEMENTS
This press release includes various “forward-looking
statements.” within the meaning of the Securities Act of 1933,as
amended, and the Securities Exchange Act of 1934, as amended. All
statements other than statements ofhistorical fact are, or may be
deemed to be, forward-looking statements. Forward-looking
statements are statementsof future expectations that are based on
management’s current expectations and assumptions and involve
knownand unknown risks and uncertainties that could cause actual
results, performance or events to differ materially fromthose
expressed or implied in these statements. Forward-looking
statements include, among other things, statementsrelating to
expected EBITDA, future cash flows and future growth, financing of
the transaction, closing of thetransaction, and statements
expressing management’s expectations, beliefs, estimates,
forecasts, projections andassumptions. You can identify our
forward-looking statements by words such as “anticipate”,
“believe”,“estimate”, “expect”, “forecast”, “goals”, “objectives”,
“outlook”, “intend”, “plan”, “predict”, “project”,“risks”,
“schedule”, “seek”, “target”, “could”, “may”, “should” or “would”
or other similar expressions thatconvey the uncertainty of future
events or outcomes. These statements are accompanied by cautionary
languageidentifying important factors, though not necessarily all
such factors, which could cause future outcomes to differmaterially
from those set forth in forward-looking statements. In particular,
expressed or implied statementsconcerning future growth, future
actions, closing and funding of acquisitions, future drop downs,
volumes, capitalrequirements, conditions or events, future impact
of prior acquisitions, future operating results or the ability
togenerate sales, income or cash flow or the amount of
distributions are forward-looking statements.Forward-looking
statements are not guarantees of performance. They involve risks,
uncertainties and assumptions.Future actions, conditions or events
and future results of operations may differ materially from those
expressed inthese forward-looking statements. Forward-looking
statements speak only as of the date of this press release,
November 28, 2017 and we disclaim any obligation to update such
statements for any reason, except as required by law. All
forward-looking statements contained in this document are expressly
qualified in their entirety by the cautionary statements contained
or referred to in this paragraph. Many of the factors that will
determine these results are beyond our ability to control or
predict. These factors include the risk factors described in Part
I, Item 1A. “Risk Factors” in our Annual Report on Form 10-K for
the year ended December 31, 2016, as updated by the information in
our other filings with the SEC. If any of those risks occur, it
could cause our actual results to differ materially from those
contained in any forward-looking statement. Because of these risks
and uncertainties, you should not place undue reliance on any
forward-looking statement.
This press release shall not constitute an offer to sell or the
solicitation of an offer to buy any securities, nor shallthere be
any sale of these securities in any state in which such offer,
solicitation, or sale would be unlawful prior toregistration or
qualification under the securities laws of such states.
NON-GAAP FINANCIAL MEASURES
This press release includes the term Adjusted EBITDA. We believe
that the presentation of Adjusted EBITDA provides useful
information to investors in assessing our financial condition and
results of operations. Adjusted EBITDA is a non-GAAP supplemental
financial measure that management and external users of our
condensed consolidated financial statements, such as industry
analysts, investors, lenders and rating agencies, may use to
assess:
- our operating performance as compared to other publicly traded
partnerships in the midstream energy industry, without regard to
historical cost basis or financing methods;
- the ability of our business to generate sufficient cash to
support our decision to make distributions to our unitholders;
- our ability to incur and service debt and fund capital
expenditures; and
- the viability of acquisitions and other capital expenditure
projects and the returns on investment of various investment
opportunities.
The GAAP measure most directly comparable to Adjusted EBITDA is
net income. This non-GAAP measure should not be considered as an
alternative to GAAP net income. Adjusted EBITDA has important
limitations as an analytical tool because it excludes some but not
all items that affect net income. It should not be considered in
isolation or as a substitute for analysis of our results as
reported under GAAP. Additionally, because Adjusted EBITDA may be
defined differently by other companies in our industry, our
definition of Adjusted EBITDA may not be comparable to similarly
titled measures of other companies, thereby diminishing its
utility.
References in this press release to Adjusted EBITDA refer to net
income before income taxes, net interest expense, gain or loss from
disposition of fixed assets, allowance oil reduction to net
realizable value, and depreciation, amortization and accretion,
plus cash distributed to Shell Midstream Partners, L.P. from equity
investments for the applicable period, less income from equity
investments. We define Adjusted EBITDA attributable to Shell
Midstream Partners as Adjusted EBITDA less Adjusted EBITDA
attributable to noncontrolling interests.
November 28, 2017
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