October 25, 2016 [OPIS] - Buckeye Partners has agreed to acquire a 50% interest in VTTI B.V. -- one of the largest independent global marine terminal businesses -- for $1.15 billion, the Houston-based midstream logistics MLP said Monday.
VTTI will be jointly owned by Buckeye and both global petroleum trading company Vitol and Vitol Investment Partnership (VIP), which is an investment vehicle sponsored and managed by Vitol.
VTTI will continue to operate as a stand-alone entity and its existing management team and employees will remain in place to operate the assets, Buckeye said.
Through its subsidiaries and partnership interests, VTTI owns and operates about 54 million bbl of petroleum products storage across 13 marine terminals in Northwest Europe, the United Arab Emirates and Singapore. They offer marine terminaling and storage services for refined products, crude oil and liquid petroleum gas.
A majority of VTTI’s cash flows are supported by take-or-pay storage agreements with Vitol.
The transaction is expected to close in early January, Buckeye said.
Buckeye Chairman and CEO Clark Smith touted the access to storage assets and growth opportunities afforded by the deal, adding that the company expected the acquisition to be immediately accretive to distributable cash flow per limited partner in 2017.
Monday also saw the release of Buckeye’s third-quarter earnings. Income from continuing operations in the July-September period was $160.3 million, up from $99.9 million one year earlier.
Distributable cash flow from continuing operations was $194.0 million, some 43% higher year on year. Buckeye also reported distribution coverage of 1.2 times, representing $32.2 million of cash flow in excess of distributions for the quarter.
Total throughput on Buckeye’s domestic pipelines averaged 1.458 million b/d in Q3, brought down by about a quarter percentage point lower versus Q3 2015 on lower flow of middle distillates (down 12% at 265,100 b/d).
Terminal throughput averaged 1.242 million b/d, which was 3.75% higher compared to Q3 2015. Operating income for the domestic pipeline and terminal segment was $127.3 million, up from $95.9 million one year earlier.
Buckeye noted that its Q3 results were favorably impacted by a $14 million payment resulting from a customer’s exercise of an early buy-out of a crude-by-rail throughput services contract at Buckeye’s Albany, N.Y. terminal.
Operating income for Buckeye’s global marine terminal segment was $72.8 million, up from $46.9 million in Q3 2015.
