Magellan Midstream is to acquire a 40-mile crude oil pipeline system in the Houston Gulf Coast area from BridgeTex Pipeline Company, LLC, a company owned jointly by Magellan and Occidental Petroleum Corporation.
“The acquisition of this crude oil pipeline will solidify Magellan’s position as the premiere system to deliver crude oil within the Houston Gulf Coast area,” said CEO Michael Mears. “Magellan’s comprehensive Houston distribution network will have the capability to access all domestic inbound crude production and deliver crude oil to all refineries in Houston and Texas City as well as to refineries throughout the Gulf Coast via third-party pipelines.”
The acquisition will include an approximate 40-mile, 24-ins diameter pipeline from Magellan’s East Houston terminal to Texas City, TX and 1.4 million barrels of crude oil storage at East Houston. Magellan will purchase Occidental’s 50 percent interest for US$75 million and will own 100 percent of these assets following the acquisition. Further, Magellan will provide BridgeTex shippers access to the distribution system through a long-term capacity lease with BridgeTex. The acquisition is expected to generate a five times EBITDA multiple on the purchase price.