Comprehensive M&A data with integrated detailed company information
HEP turns two pipeline operators into wholly-owned subsidiaries
Posted on Friday, 11 August 2017 13:46
Holly Energy Partners (HEP) is taking full control of both the Frontier Aspen and Salt Lake City pipelines, which span Wyoming and Utah, for a total USD 250.00 million in cash from Plains All American Pipeline (PAA).
The deal marks an end to a ten-year tie-up which started in 2007 when the two agreed on a joint venture to construct and operate a new 95-mile intrastate system to provide transportation services to refiners in the area.
At the time, HEP was to acquire its minority interest in this project for between USD 22.00 million and USD 25.50 million, depending on the actual cost of building the pipeline.
They set up SLC Pipeline to transport crude oil into the Salt Lake City area from the Utah terminus of the Frontier system and crude oil from Wahsatch station, which is currently flowing on Plains’ Rocky Mountain pipeline.
HEP currently owns 25.0 per cent of the venture and 50.0 per cent of Frontier, and will acquire the remaining 75.0 per cent and 50.0 per cent, respectively, from midstream energy infrastructure partner PAA.
The Texan petroleum and crude oil services provider first bought half of the transportation system formerly known as Frontier Pipeline in August 2015 from Enbridge for USD 54.60 million in cash.
Frontier owns and manages the 289-mile crude oil system running from Casper, Wyoming to Frontier Station, Utah, which supplies Canadian and Rocky Mountain crudes to Salt Lake City area refiners through a connection to the SLC Pipeline.
PAA has been following a non-core asset sale programme, partially to help fund its expansion capital strategy as it had a long-term debt to capitalisation ratio of 48.0 per cent as at 31st March 2017.
© Zephus Ltd