Magellan snaps up BP midstream package

Magellan Midstream Partners said it will buy crude oil storage and active petroleum pipelines from a BP unit for $289 million to increase its presence in Cushing, Oklahoma and Houston, Texas.

BP said earlier that plans to sell non-core assets, which will help pay for a $20 billion clean-up fund, were moving forward.

Magellan said it will acquire 7.8 million barrels of crude oil storage in Cushing, Oklahoma, supported by a multi-year utilisation agreement from the BP unit, BP Pipelines (North America).

Yesterday, Apache and other companies were reported to be considering buying BP Plc assets in Alaska.

Magellan will also acquire 100 miles of oil pipelines from the unit, including 40 miles of pipelines between Houston and Texas City.

Magellan, which primarily transports and stores refined oil products, expects the deal to immediately add to its distributable cash flow per unit.

The purchase price of the deal is nine to 10 times the annual EBITDA expected initially to be generated by the assets at their current performance level, Magellan said.

Upon closing, Magellan will also get certain crude oil tank working inventory at fair market value, which is currently estimated to be about $50 million, according to a Reuters report.


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