Tesoro Corporation Contributes Martinez Crude Oil Marine Terminal To Tesoro Logistics

abarrelfullabarrelfull wrote on 02 Apr 2012 15:05
Tags: n-america storage tesoro usa

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Tesoro Corporation (NYSE:TSO) and Tesoro Logistics LP (NYSE:TLLP) today announced that Tesoro Corporation ("Tesoro") has contributed the Martinez Crude Oil Marine Terminal located in Martinez, California to Tesoro Logistics LP ("the Partnership") for total consideration of $75 million, effective April 1, 2012.

"The contribution of the Martinez Crude Oil Marine Terminal marks Tesoro's first drop-down to the Partnership and demonstrates Tesoro's commitment to capturing the full value of our logistics assets and helping the Partnership expand its portfolio," said Greg Goff, Tesoro Corporation's President and Chief Executive Officer and Tesoro Logistics' Chairman and Chief Executive Officer. "We are committed to growing the Partnership's distributions and expect this transaction to be immediately accretive."

The Martinez Crude Oil Marine Terminal is located on the Sacramento River near Tesoro's Martinez refinery and consists of a single-berth dock, five crude oil storage tanks with a combined 425,000 barrels of capacity and related pipelines. The terminal receives crude oil through marine vessels for delivery to Tesoro's Martinez refinery. Total throughput capacity for the terminal is approximately 145,000 barrels per day.

The purchase price of $75 million included cash of $67.5 million and Tesoro Logistics equity valued at approximately $7.5 million. The cash consideration was financed with borrowings under Tesoro Logistics' revolving credit facility. The equity consideration was based on the average daily closing price for the 10 trading days prior to the effective date of April 1, 2012, or $35.62 per unit, with 98% in the form of common units and 2% in the form of general partner units.

In connection with the closing of the proposed transaction, Tesoro and the Partnership have entered into a 10-year terminalling agreement with a minimum throughput commitment. Tesoro Logistics expects that this contribution will result in an estimated $15 million of incremental revenue, of which more than 90% is based on minimum committed throughput, and $8 million of incremental annual EBITDA.

On March 30, 2012, the Partnership amended its senior secured revolving credit agreement (the "Credit Agreement") with Bank of America, N.A, as administrative agent and a syndicate of banks and financial institutions and lenders. Concurrent with the execution of the amendment, the Partnership exercised its option to increase the size of the loan commitments to an aggregate of $300 million. Additionally, the Partnership is permitted to request that the loan commitments under the Credit Agreement be increased up to an aggregate of $450 million, subject to receiving increased commitments from the lenders. The Credit Agreement is guaranteed by all of the Partnership's subsidiaries and secured by substantially all of the assets of the Partnership and its subsidiaries. The Credit Agreement is scheduled to mature on April 25, 2014.

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