Tesoro Logistics LP to Acquire Chevron Pipe Line Company's Northwest Products System

abarrelfullabarrelfull wrote on 12 Dec 2012 07:57
Tags: chevron n-america pipeline tesoro usa

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Tesoro Corporation (NYSE:TSO) today announced that its affiliate, Tesoro Logistics LP (NYSE:TLLP) ("TLLP" or the "Partnership"), has executed a definitive agreement to purchase Chevron Pipe Line Company's Northwest Products System for $400 million. The transaction is subject to regulatory approval and is expected to close during the first quarter of 2013.

The Northwest Products System consists of the Northwest Product Pipeline, a 760-mile Federal Energy Regulatory Commission (FERC)-regulated common carrier products pipeline which extends from Salt Lake City, Utah to Spokane, Washington, a separate five-mile jet fuel pipeline to the Salt Lake City International Airport and the Northwest Terminalling Company consisting of the Boise and Pocatello, Idaho and Pasco, Washington refined products terminals, which are not subject to FERC regulation.

"The purchase of the Northwest Products System is a unique opportunity to grow TLLP's portfolio of well positioned, fee-based logistics assets in the western US. The system allows the Partnership to capture operational synergies with its existing terminal assets in the region as well as significantly increase third-party revenue," said Greg Goff, President and CEO. "This transaction is expected to generate annual EBITDA of about $33 million in the first twelve months post closing and be immediately accretive to distributable cash flow per unit."

The pipeline receives product from five refineries and one pipeline in the Salt Lake City area and is the primary transportation option from Salt Lake City to Pocatello, Boise, Pasco and Spokane. Delivery volumes on the system averaged approximately 84,000 barrels per day in 2011. The terminals have a total storage capacity of 1.3 million barrels and delivered approximately 51,000 barrels per day in 2011.

"This transaction is consistent with Tesoro's strategic priority of value-driven growth as we use the Partnership's low cost of capital to expand our logistics business," said Goff. "These assets support our integrated value chain, capture third-party revenue and EBITDA growth and greatly expand the value of the general partnership which means significant value creation for Tesoro shareholders."

On Friday, December 7, 2012, TLLP launched an amendment and upsizing of its $300 million revolving credit facility to $500 million to support this and future growth opportunities. TLLP expects to maintain an appropriate balance of debt and equity financing in connection with this transaction.

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