Energy Risk: Shell completes sale of refined products pipelines: “Houston, Texas: Shell Oil Products US has sold its major refined oil products pipeline systems to asset acquisition companies for $1 billion” (ShellNews.net)

Posted 8 Oct 04

Houston, Texas: Shell Oil Products US has sold its major refined oil products pipeline systems to asset acquisition companies for $1 billion. Oklahoma-based Magellan Midstream Partners has paid $490 million for the mid-continent system, while Pennsylvania-based Buckeye Partners has bought the Midwest system for $517 million.

The mid-continent system comprises pipeline and storage assets in Texas, Oklahoma, Kansas and Colorado, and carries refined products from the US Gulf Coast refineries to West Texas and the Great Plains region in the central US. Its major markets include Dallas, El Paso and Denver.

The Midwest system comprises pipeline and storage assets in Illinois, Indiana, Ohio, Michigan and Wisconsin, and carries refined products from mainly US mid-continent refineries to points throughout the Midwest region. Its major markets include Chicago, St Louis, Cleveland, Indianapolis and Cincinnati.

Magellan initially financed its deal with $180 million of cash, a $300 million loan under a short-term acquisition facility and $50 million under an existing revolving credit facility. It plans to sell 2.6 million common units in a registered offering to repay part of that debt.

Buckeye funded its purchase with an existing five-year revolving credit facility and a new $300 million bridge loan, which is due on September 30, 2005. Depending on market conditions, the partnership plans to later finance the deal on a permanent basis through the issuance of public debt and equity.

Lynn Elsenhans, chief executive of Shell Oil Products US, said: “The sale of these assets represents one of several strategic decisions we have made to streamline our businesses.”

Joe Marsh

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