May 28, 2018 [JW Energy] - Less than 10 days after announcing its plans for a new oil storage and terminal business in Cushing, OK, Keyera Corporation has purchased a logistics and liquids blending terminal just 50 miles away near Tulsa.
The terminal receives, blends and delivers diluent, the majority of which is transported by pipeline from the Mont Belvieu area to the Chicago area and ultimately into the Alberta market for oilsands transportation.
The acquisition is valued at approximately US$80 million, plus up to US$10 million in additional consideration over five years.
On May 15 Keyera announced its plans for the new US$205 million Wildhorse Terminal, which will have will have 4.5 million barrels of working storage capacity. It is expected to start operations by mid-2020. In 2012, the company purchased an NGL midstream rail and truck terminal in Hull, Texas from ExxonMobil, for consideration at the time of $10 million to $15 million including facility modifications.
“The approach to expand into the U.S., targeting major liquids hubs and establishing a complementary network is similar to the company’s approach it successfully deployed within the Western Canada Sedimentary Basin, and more recently the approach it is taking with the liquids rich Montney,” GMP FirstEnergy analysts Ian Gillies and Nate Heywood wrote in a research note on Friday.
“We are confident that Keyera has the blending expertise to make the terminalling business in the U.S. effective, and expect the company to continue to deploy capital at similar opportunities in the region, providing an avenue to grow cash flows and offering further diversification.
“Even prior to the completion of Wildhorse, we believe that Keyera will be working towards building commercial relationships in the region to support Keyera’s unique blending product offering.”
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