Shell Midstream Partners, L.P. (NYSE: SHLX) today announced it has
acquired 10% interest in Proteus Oil Pipeline Company, LLC
(“Proteus”), 10% interest in Endymion Oil Pipeline Company, LLC
(“Endymion”), and a 1% interest in Cleopatra Gas Gathering Company,
LLC (“Cleopatra”) from BP.
“This acquisition builds on our corridor
pipeline strategy in the Gulf of Mexico. Our sponsor, Shell
Pipeline Company is currently building the Mattox pipeline to serve
the recently sanctioned Appomattox platform. Proteus and
Endymion will connect the Mattox pipeline to onshore markets,
creating a new corridor line, which will transport all of
Appomattox’s volumes once it comes online toward the end of the
decade,” said John Hollowell, CEO of Shell Midstream
Partners. “Proteus also connects to the Thunder Horse
platform which is a key development field for BP and
ExxonMobil. In addition to Thunder Horse, Proteus is also
currently connected to the Noble Energy, Inc. operated Thunder Hawk
platform. This acquisition will deepen our footprint in the
Eastern Gulf of Mexico, an active area with a number of discoveries
currently under appraisal.”
The acquisition price reflects an approximate
7.7 times multiple of Shell’s forecasted annual average Adjusted
EBITDA attributable to the purchased interests over 2017 and
2018. The acquisition was funded with borrowings under Shell
Midstream Partners’ revolving credit facilities and is expected to
be immediately accretive to unitholders.
Highlights of Acquired Pipeline Interest:
- Proteus is a 71-mile crude oil pipeline with a 425,000 bpd
capacity. The pipeline provides access to the Mississippi
Canyon area of the Gulf of Mexico from the Thunder Horse and
Thunder Hawk platform to the Proteus SP 89E Platform. Noble
Energy’s Big Bend and Dantzler fields are tied back to the Thunder
Hawk platform.
- Endymion is an 89-mile crude oil pipeline with a 425,000 bpd
capacity. The pipeline provides access to the Mississippi
Canyon area of the Gulf of Mexico. It is connected to LOOP Clovelly
storage with access to multiple markets.
- Cleopatra is a 115-mile gas gathering pipeline in Southern
Green Canyon, with access to Atwater Valley, Walker Ridge, and Lund
areas in the Gulf of Mexico. Cleopatra is currently connected to
the Holstein, Atlantis, Neptune, Shenzi and Mad Dog
platforms. The system will transport new volumes from the Mad
Dog 2 field once it comes online.
The terms of the acquisition were approved by
the Board of Directors of the General Partner of Shell Midstream
Partners.
# # #
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 to
own, operate, develop and acquire pipelines and other midstream
assets. Shell Midstream Partners’ assets consist of pipelines,
crude tank storage and terminal systems that serve as key
infrastructure to transport and store onshore and offshore crude
oil production to Gulf Coast and Midwest refining markets and to
deliver refined products from Gulf Coast markets to major demand
centers.
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FORWARD-LOOKING STATEMENTS
This press release includes various “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. All statements other than statements of historical fact
are, or may be deemed to be, forward-looking statements.
Forward-looking statements are statements of future expectations
that are based on management’s current expectations and assumptions
and involve known and unknown risks and uncertainties that could
cause actual results, performance or events to differ materially
from those expressed or implied in these statements.
Forward-looking statements include statements expressing
management’s expectations, beliefs, estimates, forecasts,
projections and assumptions, including statements regarding the
benefits of the transaction, the prospects for and financial
performance of the acquired assets, the financing and closing of
the transaction and projected Adjusted EBITDA. 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”, “will,” “should” or
“would” or other similar expressions that convey the uncertainty of
future events or outcomes. In accordance with “safe harbor”
provisions of the Private Securities Litigation Reform Act of 1995,
these statements are accompanied by cautionary language identifying
important factors, though not necessarily all such factors, which
could cause future outcomes to differ materially from those set
forth in forward-looking statements. In particular, expressed or
implied statements concerning future actions, future drop downs,
volumes, capital requirements, conditions or events, future impact
of prior acquisitions, future operating results or the ability to
generate 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 in
these forward-looking statements. Forward-looking statements speak
only as of the date of this press release, December 28, 2016, 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, 2015, as updated by 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.
NON-GAAP FINANCIAL MEASURES
This press release includes the term Adjusted EBITDA[1]. 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, in the case of Adjusted EBITDA, 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 their
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.
[1] NTD: References to “cash available for distribution” not
necessary.
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