The midstream company will acquire the assets from its parent company Valero Energy Corporation to expand its footprint in the Gulf Coast region.
Valero Energy Partners CEO Joe Gorder said: “This transaction, combined with our organic growth projects, and strong distribution coverage, positions the Partnership well to deliver its targeted distribution growth without the need for additional acquisitions.”
Valero Energy Partners expects the acquired operations to generate a total of approximately $24m and $60m of net income and earnings before interest, tax, depreciation and amortization (EBITDA), respectively in the first year of operation.
The Port Arthur terminal assets comprise 47 tanks with 8.5 million barrels of storage capacity for crude oil, intermediates, and refined petroleum products. These assets support Valero’s Port Arthur refinery.
The 141-mile 16-inch Parkway Pipeline links Valero’s St. Charles refinery with the Plantation and Colonial pipeline systems in Collins, Mississippi.
With a current capacity of 110,000 barrels per day, the Parkway petroleum products pipeline can be expanded to increase its capacity to more than 200,000 barrels per day.
Valero Energy Partners plans to finance the deal, which is expected to close on 01 November 2017, primarily with borrowings under its revolving credit facility, cash on hand, and the issuance of additional common units and general partner units to Valero subsidiaries.
Upon completion of the deal, Valero Energy Partners intends to sign a separate 10-year terminaling and transportation agreements with Valero Energy Corporation.
Valero said it aims to reach annual distribution growth of 25% for 2017 and a minimum of 20% for 2018.
