SemGroup Corp. (NYSE: SEMG) agreed to sell its SemLogistics business unit, a petroleum storage facility in the U.K., to Valero Logistics UK Ltd., a subsidiary of Valero Energy Corp. (NYSE: VLO), the companies said in a joint press release Feb. 23.

Though the terms of the transaction weren't disclosed, the companies said the agreement included potential earnout payments to be made to SemGroup if certain revenue targets are met in the four years following the close of the transaction.

SemGroup said it intends to use proceeds from the sale of the Milford Haven fuel storage facility on the west coast of Wales toward its capital raise plan and to pre-fund capital growth projects.

“We are pleased to execute this transaction and to reach another milestone in our plan to divest noncore legacy assets and move forward with a more focused North American midstream strategy,” said SemGroup President and CEO Carlin Conner in a statement. “I appreciate the dedication of the SemLogistics’ employees and all they have done over the years to safely and efficiently operate this facility. I’m glad to know they will be joining an industry leader with a strong presence in this region.”

Situated across the Haven from Valero’s refinery at Pembroke, the facility is one of the largest petroleum products storage facility in the U.K., according to the companies' joint press release.

The Milford Haven fuel storage facility has capacity of 8.5 million barrels for storing gasoline, gasoline blendstocks, naphtha, jet fuel, gas oil, diesel and crude oil. More than 67% of the storage capacity is multiproduct or dual purpose, giving Valero the flexibility to meet customers’ demands in the U.K. and throughout Northwest Europe, the release said.

“This facility complements our Pembroke refinery and fuel terminal in the U.K. and Ireland making it a natural fit for the company,” Joe Gorder, Valero chairman, president and CEO, said in a statement. “This purchase demonstrates Valero’s commitment to Wales and the U.K., and it aligns with our strategy to grow the logistics business and reduce secondary costs.”

Milford Haven will continue to operate as a third-party storage facility, offering storage options for third-party customers across the European petroleum markets. Valero said it also expects to retain the U.K. employees currently engaged in the business to be acquired.

The SemLogistics sale is expected to close by the end of third-quarter 2018, subject to the receipt of certain governmental approvals and the satisfaction of other customary closing conditions.