Tesoro Logistics to acquire crude oil and pipeline assets in California for $500m

US-based Tesoro Logistics (TLLP) has signed an agreement to acquire crude oil and refined product storage and pipeline assets in Los Angeles, California, that are owned by subsidiaries of Tesoro in a transaction worth $500m.

As part of the acquisition, the company will acquire 97 crude oil, feedstock and refined product storage tanks, which have a combined capacity of 6.6 million barrels, in addition to a 50% interest in Line 88.

The 16-mile pipeline is used to transport jet fuel from Tesoro’s Los Angeles Refinery to the International Airport with average throughput of 25,000 barrels a day.

According to Tesoro, the refinery storage and handling assets have an expected annual earnings before interest, tax, depreciation and amortisation (EBITDA) of $60m.

The acquisition price will include cash of about $250m as well as the issuance of common and general partner units to Tesoro, valued at about $250m.

TLLP general partner chairman and CEO Greg Goff said: "The acquisition of these storage and pipeline assets should expand our network of integrated crude oil and refined product infrastructure in Southern California and demonstrates our commitment to growing a full-service logistics business with a focus on stable, fee-based revenues.

"We expect this transaction to be immediately accretive to unit holder distributions."

In connection with the closing of the transaction, which is expected to close later this week, Tesoro and TLLP propose to sign a ten-year storage capacity commitment agreement.

Under the agreement, Tesoro is required to pay a monthly fee to retain the existing shell capacity of the dedicated storage tanks.

Tesoro through its subsidiaries operates six refineries in the western US with a combined capacity of over 850,000 barrels per day.