Valero Energy Partners LP (NYSE: VLP) Oct. 26 said that the board of directors of its general partner has approved its acquisitions of the Port Arthur terminal assets and Parkway Pipeline LLC from Valero Energy Corp. (NYSE: VLO) for total consideration of $508 million. In the first 12 months of operation, the acquired operations are expected to contribute a total of approximately $24 million and $60 million of net income and EBITDA, respectively. The transaction is expected to close effective Nov. 1, 2017.

The Port Arthur terminal assets consist of 47 tanks with 8.5 million barrels (bbl) of storage capacity for crude oil, intermediates, and refined petroleum products, which support Valero’s Port Arthur refinery. Parkway Pipeline is a 141-mile, 16-inch refined petroleum products pipeline linking Valero’s St. Charles refinery with the Plantation and Colonial pipeline systems in Collins, Miss. Parkway Pipeline currently has 110,000 bbl/d of capacity, with the ability to expand to more than 200,000 bbl/d.

The partnership expects to finance the acquisitions primarily with borrowings under its revolving credit facility, cash on hand and the issuance of additional common units and general partner units to Valero subsidiaries. The newly issued units will be allocated in a proportion allowing the general partner to maintain its 2% general partner interest.

“We are pleased to continue growing VLP’s footprint in the Gulf Coast region,” said Joe Gorder, CEO of VLP’s general partner. “This transaction, combined with our organic growth projects, and strong distribution coverage, positions the partnership well to deliver its targeted distribution growth without the need for additional acquisitions.”

The partnership continues to target annual distribution growth of 25% for 2017 and at least 20% for 2018.

Upon closing, the partnership plans to enter into separate 10-year terminaling and transportation agreements with Valero. The agreements are each expected to include minimum volume commitments covering approximately 85% of expected throughput.