Western Refining Inc. (WNR) and Western Refining Logistics LP (WNRL) have announced that WNRL has acquired WNR’s 375-mile segment of the TexNew Mex pipeline that extends from WNRL’s crude oil station in Star Lake, New Mexico in the Four Corners region to WNRL’s T Station in Eddy County, New Mexico. WNRL also acquired an 80 000 bbl crude oil storage tank located at its crude oil pumping station in Star Lake, New Mexico.
The primary consideration for the assets consisted of US$180 million comprised of US$25 million in cash, US$145 million in revolver borrowings and US$10 million in WNRL common units issued to WNR. In connection with the closing, WNR and WNRL amended certain commercial agreements. As part of these amendments, WNR will provide minimum volume commitments for ten years of 13 000 bpd on the TexNew Mex pipeline and approximately 80 000 bbl of crude oil storage. WNRL also issued to WNR a new class of WNRL partnership interests in connection with the acquisition that entitle WNR to 80% of the economics resulting from crude oil throughput on the TexNew Mex pipeline above 13 000 bpd. WNRL will be entitled to 20% of the economics resulting from crude oil throughput above this minimum volume commitment.
“The purchase of the TexNew Mex pipeline by WNRL is the next step of our strategy to grow the asset base and distributions of WNRL,” said Jeff Stevens, President and CEO of both WNR and WNRL. Stevens added: “Today, this pipeline supplies WNR’s El Paso refinery with cost-advantaged crude oil, and as crude oil production grows in the Four Corners, this pipeline will also provide a potential outlet for crude oil shipments to Midland and the US Gulf Coast.”
The TexNew Mex pipeline and crude oil storage tank are expected to generate 2016 EBITDA in a range of US$18.5 to US$19.0 million.
Stevens continued: “WNR’s long-term strategy is to continue to develop newly-constructed logistics assets in the Delaware and San Juan basins, which will enhance the crude oil advantage of our refineries and, as WNR sells these assets to WNRL, provide continued cash distribution growth and diversification for WNRL.”
The terms of the transaction were approved by WNR’s Board of Directors and the Conflict Committee of the Board of Directors of the general partner of WNRL which is composed of independent directors.
Non-GAAP Financial Measures
This press release includes the non-GAAP measure earnings before interest, taxes, depreciation and amortization (EBITDA). We believe certain investors and financial analysts use EBITDA to evaluate WNRL’s financial performance and compare WNRL’s performance to certain competitors. EBITDA is also included to help facilitate comparisons of the forecasted operating performance of the acquired assets with other companies in our industry. The GAAP measure most directly comparable to EBITDA is net income. This non-GAAP measure should not be considered as an alternative to net income or any other measure of financial performance presented in accordance with GAAP. EBITDA excludes some, but not all, items that affect net income. Additionally, because EBITDA may be defined differently by other companies in our industry, our definition of EBITDA may not be comparable to similarly titled measures of other companies, thereby diminishing its utility.
Edited from press release by Angharad Lock
Read the article online at: https://www.worldpipelines.com/business-news/02112015/western-refining-logistics-acquires-texnew-mex-pipeline-430/