Shell Midstream Partners has agreed to buy out its parent company Royal Dutch Shell’s stake in Amberjack Pipeline Company, the operator of a 215km long crude oil pipeline in Gulf of Mexico, for $1.22bn.
Image: Royal Dutch Shell head office in Carel van Bylandtlaan, Netherlands. Photo: courtesy of P.L. van Till at nl.wikipedia.
As per the deal, Shell Midstream Partners will acquire Shell’s 75% interest in Amberjack Series A shares and 50% interest in Amberjack Series B shares. The deal marks the biggest acquisition of Shell Midstream Partners till date.
Amberjack Pipeline is originally a joint venture formed between Chevron and Shell’s subsidiaries – Chevron Pipe Line and Shell Pipeline.
The joint venture’s 24inch Amberjack pipeline connects the Jack and St. Malo fields in the deepwater US Gulf of Mexico to a Shell-owned and operated platform in Green Canyon Block 19 (GC19).
Shell Midstream Partners CEO Kevin Nichols said: “The Amberjack pipeline is strategically located to capture value in a prolific area in the Gulf of Mexico and represents another key corridor that is set to benefit from organic growth.”
“This acquisition, combined with our equity raise earlier in the year, further demonstrates our ability to deliver against our promises and positions us well for the future.”
Currently, the Amberjack pipeline is delivering nearly 300,000 barrels per day.
According to Shell Midstream Partners, the pipeline, which has delivery options along the Texas and Louisiana Gulf Coast, is expected to transport close to 400,000 barrels per day by the end of 2019. This will be through continued in-field development along with new projects that are likely to be commissioned, said the company.
Shell Midstream Partners expects its share of annualized net income from the Amberjack pipeline during the second quarter of 2018 to be about $120m.
Formed recently as a master limited partnership by Shell, Shell Midstream Partners’ objective is to own, operate, develop and buy pipelines along with other midstream assets.
Last November, Shell Midstream Partners agreed to acquire 100% stake held by certain Shell subsidiaries in five products terminals along with a partial stake in two Gulf of Mexico corridor pipelines and in two strategic onshore pipelines for a total of $825m.