December 31, 2018 [Houston Chronicle] - The Houston pipeline and storage terminal operator Shell Midstream Partners LP will have more money to reinvest in new pipeline and terminal projects after one of its two parent companies agreed to give up its share of the company's profits.
In a filing with the U.S. Securities and Exchange Commission, Shell Midstream Partners reported that its general partner Shell Midstream Partners GP LLC is waiving its incentive distribution rights in 2019.
Known as IDRs in the investing world, incentive distribution rights are parent company’s share of profits that are taken out before the remaining profits are divided by shareholders.
Formed in 2014, Shell Midstream Partners is owned by two subsidiaries of oil giant Royal Dutch Shell — Shell Midstream Partners GP LLC and Shell Midstream Holdings LP.
Shell Midstream Partners owns and operates a network of pipelines and storage terminals in more than a dozen states and in the Gulf of Mexico. Traded under its stock ticker symbol SHLX, the company reported a $148.3 million profit on $153.5 million of revenue during the third quarter.
The waiver by Shell Midstream Partners GP LLC will free up an extra $50 million in cash throughout 2019 that Shell Midstream Partners plans to reinvest in projects.
“We believe this waiver is evidence of strong sponsor support and further demonstrates Royal Dutch Shell’s commitment to grow its midstream footprint through Shell Midstream Partners,” Shell Midstream Partners GP LLC Kevin Nichols said in a statement.
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