Genesis Energy is a diversified midstream energy master limited partnership headquartered in Houston, Texas
Genesis Energy exits legacy CO2 pipeline business. (Credit: LoggaWiggler from Pixabay.)
Genesis Energy, L.P. (NYSE: GEL) announced today that it has executed agreements with a subsidiary of Denbury Inc. (“Denbury”) to sell 100% of the Free State CO2 pipeline and to accelerate remaining payments owed under the NEJD financing lease. During the 4th quarter Genesis received proceeds of $22.5 million for the Free State CO2 pipeline and is scheduled to receive an additional $70 million in cash, to be paid over four equal quarterly installments of $17.5 million, starting in the first quarter of 2021 for the remaining amounts owed under the NEJD financing lease.
As previously disclosed, we received approximately $41 million in cash from Denbury which will be included in segment margin and Adjusted Consolidated EBITDA in the third quarter. When combined with the transactions announced today, we will receive a total of approximately $134 million in cash from Denbury, all of which will be used to reduce the outstanding indebtedness of the partnership.
Grant Sims, CEO of Genesis Energy, said, “This transaction will allow Genesis to exit our non-core CO2 pipeline business that would have otherwise materially ended in 2026. We will use all proceeds to pay down amounts outstanding under our senior secured credit facility or opportunistically repurchase certain unsecured notes in the open market. All of the proceeds from these transactions will be recognized as Adjusted Consolidated EBITDA under our senior secured credit facility and will provide us additional cushion under our covenants as we effectively manage through the near-term effects of the COVID-19 pandemic and the disruptions experienced from one of the most active hurricane seasons on record.”
Source: Company Press Release