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Valero acquires Port Arthur terminal assets and Parkway pipeline

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World Pipelines,

Valero Energy Partners LP (the partnership) has announced that the board of directors of its general partner has approved the partnership’s acquisitions of the Port Arthur terminal assets and Parkway Pipeline LLC (Parkway Pipeline) from Valero Energy Corporation (Valero) for total consideration of US$508 million.

In the first 12 months of operation, the acquired operations are expected to contribute a total of approximately US$24 million and US$60 million of net income and EBITDA, respectively. The transaction is expected to close effective 1 November 2017.

The Port Arthur terminal assets consist of 47 tanks with 8.5 million bbls of storage capacity for crude oil, intermediates, and refined petroleum products, which support Valero’s Port Arthur refinery. The Parkway pipeline is a 141 mile, 16 in. refined petroleum products pipeline linking Valero’s St. Charles refinery with the Plantation and Colonial pipeline systems in Collins, Mississippi. The Parkway pipeline currently has 110 000 bpd of capacity, with the ability to expand to more than 200 000 bpd.

The partnership expects to finance the acquisitions primarily with borrowings under its revolving credit facility, cash on hand, and the issuance of additional common units and general partner units to Valero subsidiaries. The newly issued units will be allocated in a proportion allowing the general partner to maintain its 2% general partner interest.

“We are pleased to continue growing VLP’s footprint in the Gulf Coast region,” said Joe Gorder, Chief Executive Officer of VLP’s general partner. “This transaction, combined with our organic growth projects, and strong distribution coverage, positions the partnership well to deliver its targeted distribution growth without the need for additional acquisitions.”

The partnership continues to target annual distribution growth of 25% for 2017 and at least 20% for 2018.

Upon closing, the partnership plans to enter into separate 10 year terminaling and transportation agreements with Valero. The agreements are each expected to include minimum volume commitments covering approximately 85% of expected throughput.

The terms of the transaction were approved, subject to the execution of definitive documentation, by the board of directors of VLP’s general partner, following the approval and recommendation of the board’s conflicts committee. The conflicts committee is composed of independent directors and was advised by Evercore Group L.L.C., its financial advisor, and Akin Gump Straus Hauer & Feld LLP, its legal counsel.

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