Shell Midstream Partners has signed a $448m deal to acquire additional stake in Zydeco Pipeline Company and Colonial Pipeline Company from Shell Pipeline Company.
Shell Pipeline Company is a wholly owned subsidiary of the Anglo-Dutch oil and gas firm Royal Dutch Shell.
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Under the terms of the agreement, the firm’s stake in Zydeco will be raised to 62.5% from 43%, while its share in Colonial will go up to 3% from 1.612%.
The purchase deal is expected to be directly accretive to the Partnership’s distributable cash flow per unit.
It will be based on an additional estimate of $45m annualised adjusted earnings before interest, taxes, depreciation and amortisation averaged over the duration of the following eighteen months.
Shell Midstream Partners CEO Peggy Montana said: "Shell Midstream Partners is committed to delivering top tier distribution growth to unit holders.
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By GlobalData"Our initial asset base generates stable and predictable cash flow from long-term fee based contracts."
The acquisition in the two key assets is expected to assist the firm in strengthen its cash flow base.
The expanded cash flow base will help Shell Midstream Partners to aim at strong distribution growth.
Shell Midstream Partners will be funding the acquisition with a combination of proceeds from private placement of new common units, borrowings under the revolving credit facility and cash on hand.
The deal, which is likely to be closed on May 18 this year, is subject to customary closing conditions.
Shell Midstream Partners is a midstream master limited partnership by Royal Dutch Shell, which is aimed at owning, operating, developing and acquiring pipelines and other midstream assets.
