Genesis Energy agrees to buy the offshore Gulf of Mexico pipeline and service business of Enterprise Products Partners LP for about $1.5 billion in cash.
(Bloomberg) -- Genesis Energy LP agreed to buy the offshore Gulf of Mexico pipeline and service business of Enterprise Products Partners LP for about $1.5 billion in cash, consolidating its ownership of lines where volume is growing.
The assets include about 2,350 miles (3,800 kilometers) of oil and natural gas pipelines and six offshore hub platforms, Houston-based Genesis said in a statement Thursday. The transaction will make Genesis the 64 percent owner of the Poseidon Oil Pipeline System and full owner of the Southeast Keathley Canon Oil Pipeline and the Cameron Highway Oil Pipeline systems.
The Gulf of Mexico is forecast to account for 17 percent of U.S. crude production in 2016, up from about 15 percent last year as drilling intensifies, according to the Energy Department in Washington. Five deepwater projects began in the last three months of 2014, the department said.
“The acquisition will be immediately accretive to our cash available for distribution per common unit and will improve our credit metrics over time,” Genesis Chief Executive Officer Grant E. Sims said in the statement.
Separately, Genesis announced plans to sell 9 million common units, worth about $418 million at yesterday’s closing price, and $750 million in senior unsecured notes due in 2022, to finance the transaction.
Genesis is buying a 36 percent interest in the Poseidon system, a 50 percent interest in the Southeast Keathley Canyon system and a 50 percent interest in the Cameron Highway system. The Enterprise unit serves deepwater fields in the Gulf of Mexico off the coast of Texas, Louisiana, Mississippi and Alabama.
The acquisition is expected to close this month. The Enterprise business generates most of its cash flow under long- term, fee-based contracts with customers, according to the statement.
Enterprise, the largest U.S. pipeline partnership, will use the proceeds to finance its acquisition of EFS Midstream LLC in the Eagle Ford Basin of Texas and other onshore assets, Chief Executive Office Mike Creel said in a statement.
To contact the reporter on this story: Jim Polson in New York at email@example.com To contact the editors responsible for this story: Lynn Doan at firstname.lastname@example.org Jim Efstathiou Jr., Simon Casey.
Copyright 2017 Bloomberg News.
WHAT DO YOU THINK?
Click on the button below to add a comment.
Generated by readers, the comments included herein do not reflect the views and opinions of Rigzone. All comments are subject to editorial review. Off-topic, inappropriate or insulting comments will be removed.
Most Popular Articles
From the Career Center
Jobs that may interest you