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Shell Midstream Partners LP announces acquisition of Lockport Crude terminal

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World Pipelines,

Shell Midstream Partners LP has announced the execution of a Contribution Agreement to acquire Pecten Midstream LLC, which owns Lockport Crude Terminal (Lockport) and Auger Pipeline System (Auger), for US$390 million from Shell Pipeline Company LP. Shell Pipeline Company is a wholly owned subsidiary of Royal Dutch Shell plc.

The acquisition price mirrors an approximate 8.6 times multiple of the assets’ forecasted 2016 adjusted earnings before interest, taxes, depreciation and amortization. The acquisition is expected to be immediately accretive to unitholders. The acquisition will be effective 1 October 2015.

In connection with the acquisition, Shell Midstream Partners has increased its total borrowing capacity under its revolving credit facilities to US$580 million. The acquisition is expected to close on or about 17 November 2015, and will be subject to customary closing conditions. Shell Midstream Partners plans to fund the acquisition with proceeds from a capital markets transaction, borrowings under existing revolving credit facilities, cash on hand, or a combination thereof.

Highlights of the acquired assets:

  • Auger is a 174 mile offshore Gulf of Mexico pipeline system, which transports crude from producers in eastern Garden Banks and Keathley Canyon blocks. It shares a complementary strategic connection to Poseidon through SMI 205.
  • Lockport is a crude storage terminal facility located southwest of Chicago with two million barrels of storage capacity that feeds regional refineries, while also offering strategic trading opportunities.
  • 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 Evercore Group, L.L.C. as to financial matters and Andrews Kurth LLP as to legal matters.
Edited from press release by

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