Page 12 - NorthAmOil Week 40

NorthAmOil
NEWS IN BRIEF
NorthAmOil
first quarter of 2021. Long-term commercial agreements have been entered into to support the joint venture assets.
The joint venture will contract with an affiliate of HEP to manage the construction and operation of the Pipeline and with an affiliate of Plains to manage the operation
of the JV terminal. The total joint venture investment will be shared proportionately among the partners and is estimated to total approximately $130mn, including the existing JV Terminal contributed by Plains valued
at approximately $40mn. The joint venture
is expected to generate an initial annual EBITDA multiple of approximately 8x to 9x once the JV terminal and pipeline are placed into joint venture service.
“The new joint venture will provide growth to HEP by insourcing logistics spend and provide the capability to supply 100%
of HFC’s Tulsa Refinery crude throughput,” commented George Damiris, chief executive officer of the general partner of Holly Energy Partners. “Our partnership with Plains generates HEP growth while providing HFC long-term control of a strategic asset.”
“This win-win joint venture aligns with our strategy of optimizing existing assets
to provide value-chain solutions for long- term industry partners in a capital efficient manner,” stated Jeremy Goebel, executive vice president – commercial, Plains All American. “This investment expands our relationship with a key operational hub service customer and provides additional long-term alignment on movements to the Tulsa refinery.”
HOLLY ENERGY PARTNERS AND PLAINS ALL AMERICAN PIPELINE, October 03, 2019
Tallgrass Energy announces binding open season for Pony Express pipeline expansion capacity to a refinery destination
Tallgrass Energy through its affiliate Tallgrass
Pony Express Pipeline, today announced
a binding open season soliciting shipper commitments for crude oil transportation for near-term expansion on the Pony Express system from origin points in Wyoming to the McPherson refinery destination in Kansas. The open season begins at noon on October 8, 2019.
TALLGRASS ENERGY, October 07, 2019
DOWNSTREAM
Tidewater Midstream and Infrastructure announces strategic expansion of its liquids value chain with the acquisition of Prince George refinery including a five-year investment grade product offtake agreement which results in over 50% accretion
Tidewater Midstream and Infrastructure is pleased to announce that it has entered into a purchase and sale agreement (PSA) to acquire Husky Energy’s light oil refinery located at Prince George, British Columbia, thereby expanding Tidewater’s liquids value chain.
The Prince George Refinery (PGR) is a 12.0 Mbbl/d light oil refinery that predominantly produces low sulphur diesel and gasoline,
in addition to other products, to supply
the greater Prince George region. PGR has significant onsite storage capacity of greater than 1.0 MMbbl and flexible logistics, with pipeline, rail and truck connectivity in place. The Prince George region is generally in short supply of refined products. The PGR’s location within the Prince George region
makes it a critical piece of infrastructure with a significant logistical advantage to address the demand for these products.
The acquisition purchase price is CAD215mn (subject to closing adjustments) plus acquired inventory (estimated at approximately CAD62mn, primarily related to light oil feedstock, line fill and refined product in storage). Transaction costs and taxes are estimated at CAD11mn. The purchase price
is also subject to contingency payments as further described below.
Tidewater intends to finance the acquisition through an increase of its existing credit facility up to CAD600mn and a CAD100mn second lien term loan.
PGR reported adjusted EBITDA of approximately CAD100mn in 2018 and Tidewater management estimates PGR 2020 Adjusted EBITDA of CAD75mn, which implies an attractive acquisition multiple of 2.9x adjusted EBITDA prior to synergies. Tidewater expects this transaction to be
over 50% accretive to distributable cash flow in the first full year of operations based on Tidewater management’s estimates. Overall the acquisition provides improved future distributable cash flow per share which is expected to reduce the company’s debt levels.
Tidewater has entered into a five-year offtake agreement with Husky for 90% of the nameplate capacity on diesel and gasoline volumes produced at PGR. The offtake agreement reflects certain take-or-pay characteristics relating to committed volumes that Husky has agreed to purchase and contains pricing review mechanisms. TIDEWATER MIDSTREAM, October 04, 2019
Annova LNG solidifies tax
agreement with Cameron
County
Annova LNG agreed to a 10-year tax abatement with Cameron County today. During construction, Annova LNG will make direct payments to the county of $5.5mn for community projects, in addition to property taxes. During operations, Annova LNG will pay $500,000 annually in a payment in lieu
of taxes (PILOT) for a total of $5mn over 10 years.
Annova LNG included a regional
resident employment commitment to meet a minimum 35% of full-time employees and an assurance to staff the facility with a minimum of 100 full-time employees to demonstrate the organisation’s commitment to bringing jobs to the region.
The community benefits payment will
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Week 40 08•October•2019