SemGroup has completed the acquisition of Houston Fuel Oil Terminal (HFOTCO) from investment funds managed by Alinda Capital Partners for around $2.1bn.
Under the deal, SemGroup has paid $301m as initial payment and issued 12.4 million common shares to Alinda at a predetermined price of $32.30 per share, as well as assumed $761m of existing HFOTCO net debt.
The company will fund the second payment of $600m by the end of 2018.
Situated on the US Gulf Coast, the 16.8 million barrel terminal has crude pipeline delivery connectivity to the local refining complex, deep water marine access and inbound crude receipt pipeline connectivity.
The terminal also offers rail/truck loading and unloading capabilities from major producing basins.
The acquired assets are situated on 330 acres on the Houston Ship Channel, which is claimed to be one of the world’s active trading centers for residual fuel oil, clean products, LPGs and crude oil.
HFOTCO is also involved in the development of growth projects, including new ship dock, new pipeline and connections and an additional 1.45 million barrels of crude oil storage, which is expected to be operational in mid-2018.
SemGroup president and CEO Carlin Conner said: “As planned, this acquisition helps fulfill our long-term strategy to further de-risk our business by adding secure, downstream cash flow to our portfolio mix.
“In addition to generating stable earnings for SemGroup on day one, this remarkably versatile asset provides an entirely new growth platform to capture opportunities within the Houston Ship Channel’s massive processing, trading and import/export complex.”
Image: SemGroup has acquired crucial assets on Houston Ship Channel. Photo courtesy of SemGroup Corporation.