USD Partners to acquire 100% stake in Casper Crude to Rail

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USD Partners to acquire 100% stake in Casper Crude to Rail

USD Partners LP has agreed to acquire 100% of the equity interests in Casper Crude to Rail, LLC from Stonepeak Infrastructure Partners, Cogent Energy Solutions and The Granite Peak Group for total consideration of $225.0 million, subject to closing adjustments. The purchase price includes $208.3 million of cash and $16.7 million of limited partner units issued to the sellers.

The Casper terminal’s principal assets include

  • a unit train-capable crude oil loading rail terminal with 100,000 barrels per day of capacity and dual loop tracks,
  • six customer-dedicated storage tanks with 900,000 barrels of total capacity and
  • a six-mile, 24-inch diameter pipeline with a direct connection from Spectra Energy Partners LP’s Express crude oil pipeline, which runs from Hardisty, Alberta, to Casper, Wyoming, and provides access to multiple grades of Canadian crude oil.

The terminal’s advantaged location supports best-in-class access to multiple refining centers across the U.S., enhanced by onsite storage and blending capabilities, which enables customers to ship preferred grades of crude oil from Casper. Additionally, the terminal’s footprint and modular design allows for the addition of a second loading station and an additional 1.1 million barrels of storage capacity with minimal disruption to existing operations and relatively low incremental capital costs.

Dan Borgen, the Partnership’s Chief Executive Officer, stated:

“We are pleased to announce our first acquisition since the Partnership’s initial public offering last October. The Casper terminal represents an attractive opportunity to deliver a highly accretive, complementary acquisition to our unitholders and supports the Partnership’s ability to achieve its targeted distribution growth over the next several years. The terminal’s high-quality customer base and strategic location ensure competitive, sustainable market access, as well as provide an additional platform for heavy crude oil solutions.”

The Casper terminal commenced operations in September 2014 and is supported by take-or-pay contracts with primarily investment grade refiners and a weighted-average remaining contract life of approximately three years. For the full year 2016, the Casper terminal is expected to contribute minimum contracted Adjusted EBITDA of approximately $26 million.

The Partnership intends to fund the cash portion of the purchase price with approximately $35 million of cash on hand and approximately $173 million of senior secured credit facility borrowings. The Partnership will issue approximately 1.7 million common units as equity consideration based on a unit price of $9.62, the volume-weighted average daily closing price for the Partnership’s common units for the 30 trading day period prior to October 12, 2015. The Partnership believes the transaction will be immediately accretive to distributable cash flow per unit upon closing, which is expected to occur in Q4 2015.

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