USD Partners LP (NYSE: USDP) said June 5 it acquired a crude oil terminal in Oklahoma to support growing oil sands production in Western Canada.
Houston-based USD Partners agreed to pay $25 million for the terminal located in Stroud, Okla. The seller wasn't disclosed.
The Stroud terminal is located on 76-acres and includes 104 railcar spots with the ability to unload one unit train per day, two 70,000 barrel (bbl) onsite storage tanks and one truck bay. Additionally, the terminal includes a 12-inch diameter, 17-mile pipeline directly connected to the Cushing, Okla., crude oil hub.
USD Partners said the terminal will help facilitate rail-to-pipeline shipments of crude oil from the company's Hardisty terminal in Western Canada to the Cushing oil hub.
"We are proud to announce the successful repositioning of an underutilized asset to create a competitive network solution for our new customer’s growing oil sands production," Dan Borgen, CEO, said in a statement. "Our Hardisty to Stroud rail solution delivers immediate takeaway capacity, preserves the integrity of our customer’s heavy barrels and enables substantial end market optionality at Cushing with available pipeline capacity to the Gulf Coast."
Inbound product is delivered by the Stillwater Central Rail, which handles deliveries from both the BNSF and the Union Pacific railways. USD Partners also obtained a lease for 300,000 bbl of crude oil tank storage at the Cushing hub to receive outbound shipments of crude oil from the Stroud terminal.
As part of the transaction, USD Partners extended the term of take-or-pay terminalling services agreements related to 25% of the Hardisty terminal’s available capacity by about one year.
In addition, USD Partners entered a new multiyear, take-or-pay terminalling services agreement with an investment grade rated, multi-national energy company for the use of about 50% of the Stroud terminal’s available capacity. The term of the agreement is scheduled to begin on Oct. 1 and to conclude on June 30, 2020.
The purchase price represents about 2.5x the estimated 2018 adjusted EBITDA to be generated by the 33-month take-or-pay contract with the Stroud customer and includes about $2.2 million of one-time costs and anticipated growth capex to retrofit the Stroud terminal to handle heavy grades of Canadian crude oil, according to the company release.
USD Partners said it expects the acquisition to be accretive to its 2018 and 2019 distributable cash flow per limited partner unit. The company funded the transaction with available capacity on its revolving credit facility.
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