NGL Energy Partners LP and Magnum Liquids, LLC, a portfolio company of Haddington Ventures LLC, along with Magnum Development, LLC and other Haddington-sponsored investment entities (Magnum) have announced the formation of a joint venture to focus on the storage of natural gas liquids and refined products by combining NGL’s Sawtooth Storage Facility with Magnum’s refined products rights and adjacent leasehold.
Sawtooth is a natural gas liquids storage facility with a capacity of 6.1 million barrels in five existing salt caverns, providing rail and truck access to western U.S. markets and located southwest of Salt Lake City. Magnum’s refined products project is currently in late stage development.
NGL will sell an interest in Sawtooth to Magnum for $45m in cash due at closing. Magnum will contribute its right, title and interest in certain leasehold and other assets located at the site, which will be utilised to expand Sawtooth’s existing operations and allow for the addition of refined products storage at the facility. NGL will own approximately 67.6% of the joint venture and Magnum will own the remaining 32.4% at closing. Magnum will have an option to acquire an additional 21.6% interest from NGL under similar terms with an additional option to acquire NGL’s remaining 46.0% interest within three years of closing. The initial transaction, which is subject to certain closing conditions, is expected to close by March 31, 2018.
Mike Krimbill, NGL’s CEO, said: “This new joint venture will allow Sawtooth to utilize existing capacity to store refined products with very minimal capital requirements. It will also accelerate the earnings potential and broaden the scope of services offered at the facility. The proceeds received by NGL will be utilised to further reduce indebtedness and improve our leverage profile.”
James Lam, Managing Director commented: “The earmarking of an existing cavern for gasoline or diesel storage expedites our ability to provide the service to our customers and accelerates further development of our unique site.”
For more information, visit: www.nglenergypartners.com
12th Mar 2018