Sunoco snaps up Vitol Permian assets

27.09.2016. Sunoco Logistics Partners has bought Vitol Group’s Permian Basin crude oil system.
Sunoco entered into an agreement with Vitol Inc to purchase the West Texas crude oil business for approximately US$760 million.
The acquisition provides the Sunoco with 2 million barrel crude oil terminal in Midland, Texas, a crude oil gathering and mainline pipeline system in the Midland Basin, including a significant acreage dedication from an investment grade Permian producer, and crude oil inventories related to Vitol’s crude oil purchasing and marketing business in West Texas.
It also includes the purchase of a 50 percent interest in SunVit Pipeline LLC which results in the partnership owning all of the membership interests in SunVit. SunVit connects the Midland terminal to the Sunoco’s Permian Express 2 pipeline, a key takeaway to bring Permian crude to various markets. The acquisition is expected to close in the fourth quarter 2016.
“We are pleased to announce this strategic crude oil acquisition,” said Michael J Hennigan, president and CEO for Sunoco Logistics Partners. “The addition of the Vitol system is an excellent synergistic fit to our growing crude platform in the Permian Basin. The Permian is the most prolific of all of the US shale areas with strong growth expectations. The Vitol pipeline assets are located in what we believe are the three best counties in the Midland Basin. Adding a 2 million barrel terminal in Midland is complementary to our Permian strategy.”
In connection with the acquisition, Energy Transfer Partners, LP and Energy Transfer Equity, LP, as the owners of Sunoco Partners, LLC, the partnership’s general partner, have agreed to reduce the incentive distributions the general partner receives from the partnership by a total of $60 million over a two year period. The reduction will be recognised evenly over eight quarters beginning with the quarterly cash distribution paid for the third quarter 2016.