April 3, 2012 [OPIS] - Tesoro said today that it has contributed its Martinez crude oil marine terminal in the San Francisco Bay area to its master limited partnership - Tesoro Logistics - for total consideration of $75 million.
When Tesoro spun off portions of its logistics into the partnership, it said that it would look at properties under the refinery aegis that made sense for operation by the logistics company. Such deals are known as “drop down” transactions.
The Martinez terminal is located on the Sacramento River near Tesoro’s Martinez refinery and has a single berth dock with five crude oil storage tanks holding a maximum 425,000 bbl of capacity. The facility receives crude via pipeline and barge for delivery to the refinery, and it has a total throughput capacity of 145,000 b/d.
The $75 million price includes $67.5 million in cash as well as Tesoro Logistics equity valued at about $7.5 million. The cash came through borrowings under a revolving credit facility.
Tesoro and Tesoro Logistics have negotiated a 10-year terminalling agreement with minimum throughput commitment. The deal should give Tesoro Logistics incremental revenue of $15 million, including $8 million of incremental annual EBITDA.
Sources suspect that other terminals and pipelines, currently under Tesoro’s ownership and management, will be considered for “drop down” treatment in future months and years.
