Houston, May 13, 2015 (GLOBE NEWSWIRE) -- Shell Midstream Partners, L.P. (NYSE: SHLX) today announced the execution of a Purchase and Sale Agreement to acquire additional interests in Zydeco Pipeline Company, LLC (Zydeco) and Colonial Pipeline Company (Colonial) for $448 million from Shell Pipeline Company LP, a wholly owned subsidiary of Royal Dutch Shell plc. This represents the Partnership's first acquisition since its initial public offering in November 2014. The acquisition will increase Shell Midstream Partners' ownership interest in Zydeco to 62.5% from 43.0% and in Colonial to 3.0% from 1.612%.
"Shell Midstream Partners is committed to delivering top tier distribution growth to unitholders," said Peggy Montana, chief executive officer. "Our initial asset base generates stable and predictable cash flow from long-term fee based contracts. The additional interest in these two key assets will continue to build our cash flow base to help us deliver strong distribution growth."
The acquisition is expected to be immediately and strongly accretive to the Partnership's distributable cash flow per unit based on an assumption of an additional $45 million of annualized adjusted earnings before interest, taxes, depreciation and amortization averaged over the next eighteen months. The acquisition will be funded through a combination of proceeds from a private placement of new common units, borrowings under the revolving credit facility and cash on hand. The acquisition is expected to close on May 18, 2015 with an effective date of April 1, 2015, subject to customary closing conditions.
The terms of the acquisition were approved by the conflicts committee of the Board of Directors of the General Partner of Shell Midstream Partners, which is comprised entirely of independent directors. This committee was advised by Evercore Group, L.L.C. as to financial matters and Andrews Kurth LLP as to legal matters.
For more information about the assets involved in this transaction, visit http://www.shellmidstreampartners.com/assetsoverview.cfm
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About Shell Midstream Partners, L.P.
Shell Midstream Partners is a fee-based, growth-oriented midstream
master limited partnership formed by Royal Dutch Shell to own,
operate, develop and acquire pipelines and other midstream assets.
Shell Midstream Partners' assets consist of interests in entities
that own crude oil and refined products pipelines serving as key
infrastructure to transport growing onshore and offshore crude oil
production to Gulf Coast refining markets and to deliver refined
products from those markets to major demand centers.
FORWARD-LOOKING STATEMENTS
This press release includes various "forward-looking statements"
within the meaning of Section 27A of the Securities Act of 1933, as
amended, and Section 21E of the Securities Exchange Act of 1934, as
amended. All statements other than statements of historical fact
are, or may be deemed to be, forward-looking statements.
Forward-looking statements are statements of future expectations
that are based on management's current expectations and assumptions
and involve known and unknown risks and uncertainties that could
cause actual results, performance or events to differ materially
from those expressed or implied in these statements.
Forward-looking statements include, among other things, statements
concerning the potential exposure of Shell Midstream Partners, L.P.
to market risks and statements expressing management's
expectations, beliefs, estimates, forecasts, projections and
assumptions. You can identify our forward-looking statements by
words such as "anticipate", "believe", "estimate", "expect",
"forecast", "goals", "objectives", "outlook", "intend", "plan",
"predict", "project", "risks", "schedule", "seek", "target",
"could", "may", "will", "should" or "would" or other similar
expressions that convey the uncertainty of future events or
outcomes. In accordance with "safe harbor" provisions of the
Private Securities Litigation Reform Act of 1995, these statements
are accompanied by cautionary language identifying important
factors, though not necessarily all such factors, which could cause
future outcomes to differ materially from those set forth in
forward-looking statements. In particular, expressed or implied
statements concerning future actions, conditions or events, future
operating results or the ability to generate sales, income or cash
flow or to make distributions are forward-looking statements.
Forward-looking statements are not guarantees of performance. They
involve risks, uncertainties and assumptions. Future actions,
conditions or events and future results of operations may differ
materially from those expressed in these forward-looking
statements. Forward-looking statements speak only as of the date of
this press release, May 13, 2015, and we disclaim any obligation to
update such statements for any reason, except as required by law.
All forward-looking statements contained in this document are
expressly qualified in their entirety by the cautionary statements
contained or referred to in this paragraph. Many of the factors
that will determine these results are beyond our ability to control
or predict. These factors include the risk factors described in
Part I, Item 1A. "Risk Factors" in our Annual Report on Form
10-K filed with the SEC on March 25, 2015. If any of those risks
occur, it could cause our actual results to differ materially from
those contained in any forward-looking statement. Because of these
risks and uncertainties, you should not place undue reliance on any
forward-looking statement.
NON-GAAP FINANCIAL MEASURES
This press release includes the terms Adjusted EBITDA and cash
available for distribution. Adjusted EBITDA and cash available for
distribution are non-GAAP supplemental financial measures that
management and external users of our condensed consolidated
financial statements, such as industry analysts, investors, lenders
and rating agencies, may use to assess:
- our operating performance as compared to other publicly traded partnerships in the midstream energy industry, without regard to historical cost basis or, in the case of Adjusted EBITDA, financing methods;
- the ability of our business to generate sufficient cash to support our decision to make distributions to our unitholders;
- our ability to incur and service debt and fund capital expenditures; and
- the viability of acquisitions and other capital expenditure projects and the returns on investment of various investment opportunities.
We believe that the presentation of Adjusted EBITDA and cash available for distribution provides useful information to investors in assessing our financial condition and results of operations. The GAAP measures most directly comparable to Adjusted EBITDA and cash available for distribution are net income and net cash provided by operating activities. These non-GAAP measures should not be considered as alternatives to GAAP net income or net cash provided by operating activities. Adjusted EBITDA and cash available for distribution have important limitations as analytical tools because they exclude some but not all items that affect net income and net cash provided by operating activities. They should not be considered in isolation or as substitutes for analysis of our results as reported under GAAP. Additionally, because Adjusted EBITDA and cash available for distribution may be defined differently by other companies in our industry, our definition of Adjusted EBITDA and cash available for distribution may not be comparable to similarly titled measures of other companies, thereby diminishing their utility.
References in this press release to Adjusted EBITDA refer to net income before income taxes, net interest expense, gain or loss from disposition of fixed assets, allowance oil reduction to net realizable value, and depreciation and amortization, plus cash distributed to Shell Midstream Partners, L.P. from equity investments for the applicable period, less income from equity investments. We define Adjusted EBITDA attributable to Shell Midstream Partners as Adjusted EBITDA less Adjusted EBITDA attributable to noncontrolling interests. References to cash available for distribution refer to Adjusted EBITDA attributable to Shell Midstream Partners, less maintenance capital expenditures attributable to Shell Midstream Partners, net interest paid, cash reserves and income taxes paid, plus net adjustments from volume deficiency payments attributable to Shell Midstream Partners. Cash available for distribution will not reflect changes in working capital balances.
Information required to complete a reconciliation to the closest
GAAP financial measures is unavailable.