The Mattox Pipeline, which is a 145km long crude oil pipeline, serves the Royal Dutch Shell-operated Appomattox platform
Shell Midstream Partners has agreed to acquire a 79% stake in Mattox Pipeline and certain logistics assets at the Shell Norco Manufacturing Complex from affiliates of its sponsor Royal Dutch Shell.
Apart from the sale of the assets, Royal Dutch Shell has signed an agreement to scrap all incentive distribution rights (IDRs) and economic general partner (GP) interest in Shell Midstream Partners.
Royal Dutch Shell will be issued 160 million newly issued shares of Shell Midstream Partners plus $1.2bn of Series A perpetual convertible preferred units, priced at $23.63 per unit.
Details of the Mattox Pipeline
The Mattox Pipeline, which is a 145km long crude oil pipeline, serves the Appomattox platform, which is operated by Royal Dutch Shell. The pipeline carries oil into the Proteus and Endymion pipeline systems, which eventually connect to onshore markets through a storage hub in Clovelly, Los Angeles.
The 24inch Mattox Pipeline, which has a capacity of 300,000 barrel per day, is underpinned by a long-term contract with a monthly minimum quantity (MMQ) at a fixed transportation rate for the Appomattox field and also the Vicksburg field.
The logistics assets to be acquired at the Norco Manufacturing Complex include crude, chemicals, intermediate and finished product pipelines, docks, storage tanks, truck and rail racks, and associated infrastructure.
The deal is likely to be completed in the second quarter of this year. It will be subject to receipt of regulatory approvals and meeting of other customary closing conditions.
The assets are supported by take-or-pay contracts with fully-owned subsidiaries of Shell with an initial term of fifteen years and an option to extend for an additional term of five years.
Shell Midstream Partners CEO Kevin Nichols said: “This transaction positions the Partnership well for the future, simplifying our structure and lowering our cost of capital.
“Our diversified portfolio continues to deliver sustainable growth – and I’m pleased with the addition of the Mattox Pipeline and Norco logistics assets, which will enhance our strategic position both onshore and offshore.”