SemGroup Corp. (NYSE: SEMG) completed the $350 million sale of a stake in a Louisiana Gulf Coast crude oil pipeline system, the Tulsa, Okla.-based company said Oct. 22.
Investment funds managed by Alinda Capital Partners agreed in August to acquire a 49% stake in SemGroup’s Maurepas Pipeline. The transaction was structured as the sale of Class B interests and values Maurepas at roughly 13 times EBITDA, according to the SemGroup press release.
The Maurepas Pipeline is a crude oil pipeline system owned and operated by SemGroup that consists of three separate transportation pipes located in the Gulf Coast region of Louisiana.
SemGroup will remain the majority owner and operator of the pipeline system following the transaction.
Under the terms of the company’s agreement with Alinda, SemGroup will also have an option to acquire Alinda’s interest prior to the fifth anniversary of closing, after a 24-month non-call period. The call price is based on a predetermined fixed return on Alinda’s investment, including capital contributions.
SemGroup President and CEO Carlin Conner said the transaction with Alinda brings the company “significantly closer” toward achieving its leverage goals. The company plans to use proceeds from the sale to pay down debt and for general corporate purposes.
“In addition to paying down debt and de-levering our balance sheet with a very efficient cost of capital transaction, we plan to reinvest some of the proceeds in high-return areas surrounding our footprint,” Conner said in a statement. “Additionally, the terms of the transaction give us the ability to buy back Alinda’s interest in Maurepas, a cash flow-stable pipeline serving Gulf Coast refineries, at favorable terms.”
Recommended Reading
EIG’s MidOcean Closes Purchase of 20% Stake in Peru LNG
2024-04-23 - MidOcean Energy’s deal for SK Earthon’s Peru LNG follows a March deal to purchase Tokyo Gas’ LNG interests in Australia.
Crescent Point Divests Non-core Saskatchewan Assets to Saturn Oil & Gas
2024-05-07 - Crescent Point Energy is divesting non-core assets to boost its portfolio for long-term sustainability and repay debt.
Sitio Closes D-J Basin Deal, Looks to Defragment Minerals Space
2024-05-09 - Sitio Royalties closed its acquisition of 13,062 net royalty acres. CEO Chris Conoscenti has a strong pipeline of minerals acquisition opportunities.
Magnolia Bolts-on 27,000 Acres in South Texas’ Giddings Field
2024-05-09 - Magnolia Oil & Gas said it paid $125 million to a private operator to acquire the acreage, which has minimal production.
Multi-basin Mayhem: Conoco, Marathon Tout Eagle Ford, Bakken Runway
2024-05-31 - ConocoPhillips and Marathon Oil—which both trace their roots to the breakup of John D. Rockefeller’s Standard Oil Trust more than a century ago—are combining in a $22.5 billion deal.