Tesoro Logistics (TLLP) has completed the acquisition of The Northern California Terminalling and Storage Assets located in Martinez, California, US, from Tesoro.
These assets consist of 5.8 million barrels of crude oil, feedstock and refined product storage capacity at Tesoro's Martinez Refinery.
It also includes a marine terminal capable of handling up to 35,000 barrels per day (bpd) of feedstock and refined product throughput.
TLLP acquired the assets at a consideration of $400m, including $360m of cash financed with borrowings on TLLP's revolving credit facility and $40m of common and general partner units to Tesoro.
The equity consideration was calculated on the basis of average daily closing price of TLLP's common units for the ten trading days prior to closing.
The common units carried a value of $45.53 per unit with 860,933 units in the form of common units and 17,570 units in the form of general partner units.
With regards to this transaction, Tesoro and TLLP entered into long-term, fee-based storage and throughput and use agreements that are expected to deliver stable cash flows to the latter.
TLLP also announced its decision to acquire crude oil, natural gas and produced water gathering systems and two natural gas processing facilities located in North Dakota from Whiting Oil and Gas, GBK Investments and WBI Energy Midstream.
This acquisition will cost TLLP nearly $700m.
Tesoro chairman and CEO Greg Goff said: “These two acquisitions strengthen TLLP's portfolio of logistics assets that provide full-service capabilities to both downstream and upstream customers.
“TLLP is on target to achieve its 2017 goal of $820m in operating income and $1bn of annual EBITDA. Furthermore, these assets provide optimisation and organic investment opportunities that support future growth."
Tesoro has also agreed to waive $100m of general partner incentive distributions with respect to 2017 and 2018.
It will facilitate balanced growth of the general and limited partners' interests and maintain strong financial metrics.
Image: Tesoro Headquarters. Photo: Courtesy of uniquebuildings / Wikipedia