Divesting 50% Interest in Superior Pipeline
Unit Corporation (ticker: UNT) has agreed to sell a fifty percent equity interest in its wholly owned subsidiary, Superior Pipeline Company, LLC for cash proceeds of $300 million. The purchaser, SP Investor Holdings, LLC, is jointly owned by OPTrust and funds managed by Partners Group, a global private markets investment manager.
The sale is expected to close April 3, 2018. Before closing, Superior’s employees will become employees of Superior Midstream Operating LLC, a wholly owned subsidiary of Unit, and will operate Superior after the closing.
Proceeds from the sale will be used to accelerate the drilling program of Unit’s upstream subsidiary, Unit Petroleum Company, make additional capital investments in the jointly owned Superior, reduce corporate debt and for general working capital purposes.
Superior buys, sells, gathers, processes and treats natural gas for third parties and Unit. It operates three natural gas treatment plants, 13 processing plants, 22 active gathering systems and approximately 1,455 miles of pipeline. Its processing capacity is 340 MMcf/d. Superior and its subsidiaries operate in Oklahoma, Texas, Kansas, Pennsylvania and West Virginia.
CEO and President Larry Pinkston said, “We are very pleased to announce this transaction with OPTrust and Partners Group. The transaction, which implies a value for the midstream segment of $600 million, not only recognizes the significant value that Unit has already created with Superior but gives our partners and Unit the opportunity to continue to expand Superior.
“Additionally, the structure allows Unit to retain day-to-day operational control, a feature that provides economic and technical support to Unit’s ongoing exploration and production segment. Our goal at Unit is to focus on growing our various business segments while maintaining a capital expenditures program in-line with our available cash. Through this transaction, we now have significant capital partners invested with us in our midstream business with the objective of accelerating Superior’s growth.
“Also, the increased drilling pace of our exploration segment will enhance our production and reserve growth and the throughput on some of Superior’s existing systems. We believe that this transitional transaction is a key step to help accelerate the growth of our business while continuing to maintain the capital discipline our shareholders expect,” Pinkston said.
