PBF Logistics LP (NYSE: PBFX) and PBF Energy Inc. (NYSE: PBF) announced Sept. 15 that the partnership entered into an agreement to acquire the Delaware City Heavy Crude Unloading Rack from a subsidiary of PBF for $150 million.

PBFX and PBF Energy CEO Thomas Nimbley said in a statement, “We are excited to announce PBF’s first dropdown which is an important step in our commitment to delivering growth to PBFX’s unit holders. We are also pleased to continue to unlock the value potential of PBF Energy’s logistics assets and provide cash to PBF for the pursuit of growth opportunities and to return value to our shareholders through our previously announced share buyback program.”

The asset to be acquired is the newly-commissioned West Rack collocated with PBF Energy’s Delaware City Refinery and will continue to support the refinery going forward. The West Rack is capable of unloading unit trains at a throughput rate of over 40,000 barrels per day (bbl/d). It is equipped with steam and nitrogen facilities to facilitate the unloading of heavy crude oil, primarily originating in Canada, delivered by rail. The West Rack is also capable of discharging light crude oil.

Upon closing, the Parsippany, N.J.-based partnership plans to enter into a seven-year term throughput agreement with subsidiaries of PBF Energy containing a minimum throughput volume commitment of 40,000 bbl/d. The West Rack is expected to contribute roughly $15 million of EBITDA in its first full year of operation after the close. Annual maintenance capital expenditures are expected to be nearly $1.25 million.

The purchase price payable to PBF will consist of cash of $135 million and PBFX limited partner interests of $15 million. The dropdown acquisition is expected to close by Sept. 30.

The transaction will be funded by the sale of $30 million in U.S. Treasuries that were purchased with proceeds from the partnership’s May IPO and $105 million in borrowings under its revolving credit facility.

The terms of the transaction were approved by the board of directors of the general partner of the partnership and its conflicts committee, which is composed of independent directors and was advised by Tudor, Pickering, Holt & Co., its financial advisor, and Vinson & Elkins LLP, its legal counsel.