The company ("Buckeye Texas Partners") and its subsidiaries will own and operate a vertically integrated system of midstream assets including a deep-water, high volume marine terminal located on the Corpus Christi Ship Channel, a condensate splitter and LPG storage complex in Corpus Christi, and three crude oil and condensate gathering facilities in the Eagle Ford shale. All of the assets are supported by 7- to 10-year minimum volume throughput, storage and tolling agreements with Trafigura. This transaction (the "Trafigura Transaction") is expected to close later in September 2014, subject to regulatory approvals and customary closing conditions.
"This transaction allows Buckeye to acquire and further develop a midstream platform in the Gulf Coast with long-term committed revenues and significant potential for further growth," stated Clark C. Smith, Chairman and Chief Executive Officer. "We expect this unique integrated system of assets will allow us to capitalize on the rapidly growing production in the Eagle Ford shale. This acquisition complements our portfolio of marine terminal assets in strategic energy hubs and further enhances the logistical solutions we can provide across these key energy markets," continued Mr. Smith. "Substantial fee-based cash flows are expected to be generated by this investment as all of the assets are fully contracted under long-term commercial agreements with Trafigura. We expect to achieve a very attractive Adjusted EBITDA investment multiple of approximately 8.5x after the completion of the growth capital projects currently underway, and we expect this investment to be highly accretive to our distributable cash flow per limited partner unit in 2016 and beyond."
Upon completion of initial development phase, the assets will form an integrated system with connectivity from the production in the field to the marine terminal infrastructure in Corpus Christi, creating a premier logistics platform with significant flexibility and optionality. The Corpus Christi facilities have five vessel berths including three deep-water docks, and upon completion of initial development phase, will offer approximately 5.6 million barrels of liquid petroleum products storage capacity along with rail and truck loading/unloading capability. A 50,000 barrel per day condensate splitter is currently under construction and is anticipated to be completed by mid-2015, after which Buckeye Texas Partners will commence operations under a 7-year fixed-fee tolling agreement with Trafigura. In addition, three field gathering facilities with associated storage and pipeline connectivity will allow Buckeye Texas Partners to move Eagle Ford crude and condensate production directly to the terminalling complex in Corpus Christi.
We expect Buckeye Texas Partners to invest approximately $240-$270 million through the first quarter of 2016 relating to these growth capital initiatives that we anticipate will be operational over the next 9 to 18 months. Importantly, 100% of the cash flows associated with all of these assets are supported by fee-based take-or-pay revenue commitments under 7- to 10-year commercial agreements with Trafigura.
"We are excited about the opportunity to partner with Trafigura and to position ourselves with them in the rapidly growing Corpus Christi and Eagle Ford markets," stated Mr. Smith. "We believe this strategic partnership will provide significant opportunities for additional infrastructure expansion to support further expected growth in these markets. In addition, Trafigura’s extensive expertise in international commodities trading and logistics makes them an ideal partner and provides new opportunities to work with Trafigura on other energy infrastructure development projects."
"In Buckeye, we have found an ideal partner to manage the terminal and logistical operations, enabling us to focus on offering a complete solution for producers who seek to take their product to market?," said Jeff Kopp, Trafigura Head of Oil Trading for North America.
