Rose Rock Midstream LP (NYSE: RRMS) announced June 24 it acquired the remaining one-third interest in SemGroup Pipeline LLC, which owns a 51% interest in White Cliffs Pipeline LLC, from SemGroup Corp. (NYSE: SEMG) for $300 million.
Tulsa, Okla.-based Rose Rock now owns a 100% interest in SemCrude Pipeline and, indirectly, a 51% interest in White Cliffs Pipeline.
The acquisition will be immediately accretive to Rose Rock’s distributable cash flow on a per unit basis. The acquisition was funded with:
- $114.4 million of cash borrowings under Rose Rock’s revolving credit facility;
- $120 million of equity from the issuance of 2.4 million common units to SemGroup; and
- $61.9 million of equity from the issuance of 1.25 million Class A units to SemGroup. The units will not receive any distributions, but are convertible into common units on a one-for-one basis once White Cliffs Pipeline reaches an average monthly volume of 125,000 barrels per day (bbl/d).
SemGroup now owns about 57% of the limited partner common units and all of the 2% general partner interest of Rose Rock. SemGroup gains increased distributions from Rose Rock for the limited partner common units it received from the acquisition.
The 527-mile White Cliffs Pipeline is a common carrier, crude oil pipeline system originating in Colorado and terminating in Cushing, Okla. The system currently has a capacity of 76,000 bbl/d and is undergoing construction to increase capacity to 150,000 bbl/d. The expansion’s expected completion date is in August.
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