Plains All American Pipeline, L.P. (NYSE: PAA)
today announced that it has entered into a definitive purchase and sale
agreement with Occidental Petroleum Corporation for the purchase by PAA
of Occidental's 50% interest in BridgeTex Pipeline Company LLC
("BridgeTex") for $1.075 billion.
BridgeTex owns the BridgeTex pipeline, which is a new 300,000
barrel-per-day crude oil pipeline system that extends from Colorado City
in West Texas to Texas City and is complementary to PAA's existing West
Texas assets. At Colorado City, the BridgeTex pipeline is connected to
PAA's Basin Pipeline System as well as PAA's Sunrise Pipeline. The
Sunrise Pipeline originates in Midland and is currently under
construction with an initial capacity of 250,000 barrels per day and is
expected to be placed into service in December 2014.
An affiliate of Occidental is the anchor shipper on the BridgeTex
pipeline. Approximately 80% of the pipeline's capacity is committed to
long term contracts with a volume weighted average tenor of 9.5 years
(13.5 years taking into account shipper extension options). The
remaining 50% interest in BridgeTex is owned by Magellan Midstream
Partners, L.P. ("MMP"); MMP is also the operator of the BridgeTex
pipeline.
Contemporaneous with the purchase by PAA, BridgeTex has agreed to sell
the southern leg of the pipeline system which runs from Houston to Texas
City (the "Texas City Leg") to MMP, and MMP has agreed to enter into a
long term capacity lease with BridgeTex pursuant to which BridgeTex
shippers will have access to capacity on the Texas City Leg.
In addition to customary closing conditions and the contemporaneous
consummation of the sale of the Texas City Leg by BridgeTex to MMP and
execution of the capacity lease, PAA's acquisition of Occidental's
interest in BridgeTex is subject to completion by Plains GP Holdings,
L.P. (NYSE: PAGP) of an underwritten secondary offering pursuant to
which Occidental would sell a portion of its equity interest in PAGP.
In order to facilitate such offering and the overall transaction, (i)
the board of directors of PAGP's general partner has agreed to an early
release of the 15-month lock-up arrangement that was originally imposed
on certain PAGP equity owners, including Occidental, in connection with
PAGP's initial public offering in October 2013, and (ii) certain
affiliates of Kayne Anderson Investment Management, Inc., The Energy &
Minerals Group and PAA Management, L.P. have agreed to waive their
participation rights in such offering, and (iii) Occidental, certain
affiliates of Kayne Anderson Investment Management, Inc., The Energy &
Minerals Group and PAA Management, L.P. have agreed to refrain from
selling any of their respective interests in PAGP for a period of up to
90 days following such offering. If an offering is not completed prior
to December 31, 2014, both PAA and Occidental have the right to
terminate the overall transaction.
"BridgeTex represents a very attractive and strategic addition to our
existing West Texas pipelines," said Greg Armstrong, Chairman and CEO of
Plains All American. "Given recent and projected increases in Permian
Basin production, we believe that BridgeTex will play an important role
in providing needed takeaway capacity out of the Permian Basin, will
provide additional flexibility for our customers and will expand PAA's
market access to the Gulf Coast."
"Upon achieving full operating capability, we anticipate PAA's share of
annualized EBITDA from BridgeTex LLC will range between $100 and $105
million. At that level, we expect the transaction to be approximately
1.5% accretive to PAA's targeted 2015 distribution per unit and 5%
accretive to PAGP's corresponding distribution per share for 2015."
This news release does not constitute an offer to sell or a solicitation
of an offer to buy the securities described herein, nor shall there be
any sale of these securities in any state or jurisdiction in which such
an offer, solicitation or sale would be unlawful prior to registration
or qualification under the securities laws of any such jurisdiction.
Plains All American Pipeline, L.P. is a publicly traded master limited
partnership that owns and operates midstream energy infrastructure and
provides logistics services for crude oil, natural gas liquids ("NGL"),
natural gas and refined products. PAA owns an extensive network of
pipeline transportation, terminalling, storage and gathering assets in
key crude oil and NGL producing basins and transportation corridors and
at major market hubs in the United States and Canada. On average, PAA
handles over 3.9 million barrels per day of crude oil and NGL on its
pipelines. PAA is headquartered in Houston, Texas.
Plains GP Holdings is a publicly traded entity that owns an interest in
the general partner and incentive distribution rights of Plains All
American Pipeline, L.P., one of the largest energy infrastructure and
logistics companies in North America. PAGP is headquartered in Houston,
Texas.
Forward Looking Statements
Except for the historical information contained herein, the matters
discussed in this release are forward-looking statements that involve
certain risks and uncertainties that could cause actual results or
outcomes to differ materially from results or outcomes anticipated in
the forward-looking statements. These risks and uncertainties include,
among other things, various factors, including stability of the capital
markets, that could frustrate or delay our ability to consummate the
transactions described herein; various factors that could adversely
impact our ability to complete ongoing or planned expansion projects,
including, among other things, shortages, cost increases or delays in
receipt of supplies, materials or labor; inability to obtain, delays in
the receipt of, or other issues associated with necessary licenses,
permits, approvals, consents, rights of way or other governmental or
third party requirements; weather interference with business operations
or project construction, including the impact of extreme weather events
or conditions; environmental liabilities, issues or events that result
in construction delays or otherwise impact targeted in-service dates;
the successful integration and future performance of the acquired assets
or businesses; the availability of adequate third-party production
volumes for transportation and marketing in the areas in which we
operate; declines in volumes shipped on existing and proposed pipelines,
whether due to declines in production from existing oil and gas reserves
or failure to develop, or slowdown in the development of, additional oil
and gas reserves; fluctuations in refinery capacity in areas served by
our mainlines and other factors affecting demand for various grades of
crude oil and resulting changes in pricing conditions or transportation
throughput requirements; our ability to obtain debt or equity financing
on satisfactory terms to fund our expansion and development projects;
the impact of current and future laws, rulings, governmental
regulations, accounting standards and statements and related
interpretations; the effects of competition; interruptions in service on
third-party pipelines; general economic, market or business conditions
and the amplification of other risks caused by volatile financial
markets, capital constraints and pervasive liquidity concerns; and other
factors and uncertainties inherent in the transportation, storage,
terminalling and marketing of crude oil as discussed in the PAA's
filings with the Securities and Exchange Commission.
Plains All American Pipeline, L.P. and
Plains GP Holdings
Ryan
Smith, (866) 809-1291
Director, Investor Relations
