Pipeline interconnection to provide crude-by-rail market outlet
BOE Midstream has signed an interconnection agreement with the Tesoro High Plains Pipeline (THPP) that will create additional crude oil end-user markets for producers throughout the Williston Basin. Located at BOE's LL Terminals facility in Killdeer, ND, the new connection with Tesoro Logistics' 700-mile crude oil gathering system and pipeline is scheduled to commence commercial operations in the late fourth quarter, 2014. The new connection will provide producers and other shippers with crude-by-rail market outlets via pipeline inbound access to BOE's Bakken Oil Express Rail Terminal in Dickinson, ND.
QEP Resources completes sale of midstream business
QEP Resources Inc.'s wholly owned subsidiary, QEP Field Services Co., completed the sale of its midstream business, including the company's ownership interest in QEP Midstream Partners LP to Tesoro Logistics LP in a cash transaction valued at $2.5 billion, including $230 million to refinance debt at QEPM. The company repaid its $600 million term loan and all borrowings under its revolving credit facility, including $230 million that was borrowed to refinance QEPM's outstanding indebtedness. QEP also has amended and extended its corporate revolving credit facility. Commitments under the credit facility were increased to $1.8 billion and the facility contains a $500 million accordion feature. The maturity date was extended to December 2019. Wells Fargo Bank NA served as administrative agent.
ONEOK completes acquisition of NGL assets in Permian Basin
ONEOK Partners LP has completed the acquisition of natural gas liquids (NGL) pipelines and related assets from affiliates of Chevron Corp. for $800 million. ONEOK Partners now owns an 80% interest in the West Texas LPG Pipeline LP and a 100% interest in the Mesquite Pipeline, which collectively consist of 2,600 miles of NGL gathering pipelines extending from the Permian Basin in southeastern New Mexico to East Texas and Mont Belvieu, Texas. ONEOK Partners is the operator of both pipelines. The remaining 20% of West Texas LPG is owned by Martin Midstream Partners LP. ONEOK Partners noted recently that its 2015 adjusted EBITDA is expected to be in the range of $1.77 billion to $1.99 billion, compared with the 2014 earnings guidance range of approximately $1.55 billion to $1.61 billion posted Nov. 4, 2014.
Crestwood sells Tres Palacios LNG storage, pipeline facility
Crestwood Equity has completed the sale of Tres Palacios Gas Storage LLC to the newly formed joint venture between Crestwood Midstream and an affiliate of Brookfield Infrastructure Group for a total cash consideration of $130 million. Crestwood Midstream will own 50.01% of Tres Palacios Holdings LLC and will be the operator of Tres Palacios and its assets. As part of the transaction, Brookfield Infrastructure has entered into five-year, fixed-fee contracts with Tres Palacios for 15 billion cubic feet of firm storage capacity and 150,000 dekatherms per day of enhanced interruptible wheeling services, effective Nov. 1. The contracts will add $16 million/yr in incremental revenue to Tres Palacios. Crestwood Midstream funded its $65 million portion of the purchase price utilizing its $1 billion revolving credit facility. Crestwood Equity utilized the total cash received from the sale to repay $130 million of outstanding borrowings under its revolving credit facility. Evercore Partners advised the conflicts committee of the board of directors of Crestwood Equity's general partner, and Tudor, Pickering, Holt & Co. advised the conflicts committee of the board of directors of Crestwood Midstream's general partner. Notably, the transaction does not impact Tres Palacios' FERC application to reduce the facility's working storage capacity.
Apache to sell Wheatstone, Kitimat LNG projects to Woodside
Apache Corp. as agreed to sell its interest in two LNG projects, Wheatstone LNG and Kitimat LNG, along with accompanying upstream oil and gas reserves, to Woodside Petroleum Ltd. for $2.75 billion. Apache will also be reimbursed for its net expenditure in the Wheatstone and Kitimat LNG projects between June 30 and closing, which is estimated to be $1 billion. Under the terms of the agreement, Apache will sell its equity ownership in its Australian subsidiary, Apache Julimar Pty Ltd, which owns a 13% interest in the Wheatstone LNG project, along with a 65% interest in the WA-49-L block, which includes the Julimar/Brunello offshore gas fields and the Balnaves oil development. The transaction, which has an effective date of June 30, 2014, will also include Apache's 50% interest in the Kitimat LNG project and related upstream acreage in the Horn River and Liard natural gas basins in British Columbia, Canada. Based on current estimates, Apache's net proceeds at closing are expected to be $3.7 billion. Receipt of proceeds from the transaction will trigger an estimated $650 million cash tax liability, $600 million of which is associated with the income tax due on Apache's Overall Foreign Loss account balance. Upon incurring the liability, Apache estimates it will have the flexibility to repatriate cash generated from foreign operations and/or future international strategic transactions with minimal US cash tax impact. Upon completion of the transaction, Apache will continue to hold upstream acreage offshore Western Australia in the Carnarvon, Exmouth, and Canning basins, along with related reserves and production. Apache will retain its 49% ownership interest in Yara Holdings Nitrates Pty Ltd and a 10% interest in the related ammonium nitrate plant. The transaction is expected to close in 1Q15, subject to government and regulatory approvals and customary post-closing adjustments. The sale of the Kitimat project is subject to certain operator consents. "APA exits the LNG business in an efficient manner selling both Kitimat and Wheatstone to Woodside in a single transaction. The price received by APA comps well vs. Shell's $1.1B Wheatstone sale earlier this year and Chevron's ~$1.3B Kitimat purchase from EOG and ECA in 2012 for a 50% stake. APA has been very transparent about its desire to sell both projects and refocus on its efforts on NAM resource plays, so this sale comes as no surprise and should likely be received well in light of an environment with a tough commodity backdrop," noted analysts at Global Hunter Securities.
Enbridge considers restructuring
Calgary-based Enbridge Inc. is reviewing a potential restructuring plan that would see the pipeline company transfer its Canadian Liquids Pipelines business, comprised of Enbridge Pipelines Inc. (EPI) and Enbridge Pipelines (Athabasca) Inc. (EPA), and including certain renewable energy assets, to its Canadian affiliate, Enbridge Income Fund (EIF or the Fund). The assets are valued at approximately $17 billion. To fund the transaction, the plan contemplates the issuance by EIFH of $600 million to $800 million of public equity per year from 2015 through 2018 in one or more tranches to fund its increasing investment in the Canadian Liquids Pipelines assets through EIF. Under review is a potential parallel US restructuring plan which would transfer its directly held US liquids pipeline business assets to Enbridge Energy Partners. The review has not yet progressed to conclusion. An independent committee of the board of EEP is considering the terms of the previously announced proposed transfer to EEP of Enbridge's 67% interest in the US segment of the Alberta Clipper pipeline.
NGL acquires Grand Mesa Pipeline interest from Rimrock
NGL Energy Partners LP has executed a definitive membership interest purchase agreement with Rimrock Midstream LLC for Rimrock's 50% interest in Grand Mesa Pipeline LLC. NGL now owns 100% of the pipeline system. Grand Mesa Pipeline completed an open season in October, securing multiple long-term shipper commitments. The system will include over 550 miles of new crude oil transportation pipeline, multiple truck injection bays, over 1 million barrels of operational storage, and at least two origination points located near Lucerne and Kersey (Riverside Station) in Weld County, CO. The system is in development and is scheduled to commence service in Q416. Rimrock will construct and operate the pipeline system.
