Midstream energy company Genesis Energy has completed the divestment of a 36% minority equity stake in its Cameron Highway Oil Pipeline System (CHOPS) to an undisclosed buyer for around $418m.

The company will use the proceeds from the deal to repay its $300m outstanding under its term loan.

With a 64% stake in CHOPS, Genesis will continue to operate the pipeline. The company’s sold stake in the pipeline system at an 8/8ths valuation of $1.16bn.

Designed to deliver crude oil from major deepwater oil fields to markets on the Texas Gulf Coast, the 380 mile (611km) 24 and 30in pipeline system expands along the Outer Continental Shelf (OCS) of the Gulf of Mexico.

The pipeline, which was first announced in February 2002, has dedications from the Holstein, Mad Dog, Atlantis, K2, Constitution and Ticonderoga fields. All fields are situated in the deepwater Green Canyon area offshore Louisiana.

Originating at the Ship Shoal 332 A/B Hub as a 30″ diameter pipeline, the system expands cross the GB 72 platform and then splits into two 24″ diameter pipelines at the High Island A5-C platform.

One 24″ leg ends in Texas City, and the second terminates in Port Arthur of Texas.

Genesis Energy CEO Grant Sims said: “This transaction confirms the significant value and longevity of our midstream assets focused on moving the low-carbon footprint crude oil produced in the deepwater areas of the central Gulf of Mexico, and importantly knocks off over a full half turn from our bank leverage ratio calculated on a pro forma basis.

“The transaction also provides Genesis with significant financial flexibility to use our increasing levels of free cash flow to continue to reduce debt and/or pursue the highest return projects in our portfolio.”

The company has finalised to gather capital from its asset level preferred security for its Granger expansion project over and above the minimum of $250m Genesis is required to draw from its asset level preferred security.

Citi acted as financial to Genesis in connection with the transction, while Akin Gump Strauss Hauer & Feld served as its legal advisor.