From San Antonio Business Journal:
A subsidiary of Valero Energy Partners LP acquired a 40 percent stake in a new 138-mile segment of a pipeline in Oklahoma for about $70 million, according to a news release.
Valero Partners Wynnewood LLC, described as an indirect wholly owned subsidiary of Valero Energy Partners (NYSE: VLP), bought a piece of what’s called the Hewitt segment of the Red River Pipeline from Plains All American Pipeline LP.
The Hewitt segment — a 16-inch crude oil pipeline with a capacity to move 150,000 barrels per day — runs between Plains Marketing LP’s terminal in Cushing, Oklahoma, and Hewitt Station in Hewitt, Oklahoma. The pipeline began supplying crude oil to Valero Energy Corp.’s (NYSE: VLO) refinery in Ardmore, Oklahoma, in January.
The purchase, which was funded with cash on hand, also includes a 40 percent stake in two 150,000-shell-barrel tanks at Hewitt Station.
Also, concurrent with the acquisition, Valero Energy Partners entered into a 10-year throughput agreement with a subsidiary of Valero Energy Corp. The agreement includes a minimum volume commitment, a five-year renewal term and no direct commodity price exposure, according to the news release.
Valero CEO Joe Gorder described the deal as fitting the companies growth strategy.
“We focus on acquisitions that are strategic to Valero’s core business or that provide third-party revenue,” Gorder said. The deal “also demonstrates our measured approach to growing the partnership while preserving our stable, fee-based cash flow profile.”
