Genesis Energy To Obtain Gulf Pipeline Interests From Marathon
To acquire interests in several Gulf of Mexico crude oil pipeline systems, gaining 28% interest in Poseidon Oil Pipeline Co. LLC, 29% interest in Odyssey Pipeline LLC and 23% interest in the Eugene Island Pipeline System.
Genesis Energy LP, Houston, (NYSE: GEL) plans to acquire interests in several Gulf of Mexico crude oil pipeline systems from Marathon Oil Co., a subsidiary of Marathon Oil Corp., Houston, for $205.76 million.
The deal value includes an estimated $29 million valuation of crude oil line fill at current market prices owned by the interests to be acquired.
The deal includes 28% interest in Poseidon Oil Pipeline Co. LLC, 29% interest in Odyssey Pipeline LLC and 23% interest in the Eugene Island Pipeline System.
The Poseidon system is comprised of a 367-mile network of crude oil pipelines, varying in diameter from 16 to 24 inches, with capacity to deliver approximately 400,000 barrels per day of crude oil from developments in the central and western offshore Gulf of Mexico to other pipelines and terminals onshore and offshore Louisiana. Affiliates of Enterprise Products Partners LP and Shell Oil Co. each own a 36% interest in Poseidon. An affiliate of Enterprise will continue in its role as operator of Poseidon.
The Odyssey system is comprised of a 120-mile network of crude oil pipelines, varying in diameter from 12 to 20 inches, with capacity to deliver up to 300,000 barrels per day of crude oil from developments in the eastern Gulf of Mexico to other pipelines and terminals onshore Louisiana. An affiliate of Shell owns the remaining 71% interest in Odyssey. An affiliate of Shell will continue to serve as the operator.
The Eugene Island Pipeline System is comprised of a 183-mile network of crude oil pipelines, the main pipeline of which is 20 inches in diameter, with capacity to deliver approximately 200,000 barrels per day of crude oil from developments in the central Gulf of Mexico to other pipelines and terminals onshore Louisiana. Other owners in Eugene Island include affiliates of ExxonMobil, Chevron-Texaco, ConocoPhillips and Shell Oil. An affiliate of Shell will continue to serve as the operator.
The Poseidon and Odyssey interests are subject to the expiration or waiver of rights of first refusal, and Genesis is not obligated to consummate any transaction unless it is ultimately successful in acquiring the interest in Poseidon. Additionally, Marathon Oil has the right to dispose of certain of the other oil pipeline assets prior to any final closing of a transaction with Genesis.
Genesis chief executive Grant Sims says, “These pipelines, especially Poseidon, would complement our existing infrastructure in the Gulf of Mexico, and enhance our ability to provide attractive capacity and market optionality to producers for their existing and future developments as well as our refining customers onshore Texas and Louisiana.”
Genesis plans to fund the deal with the more than $400 million of funds available under its revolving credit facility.
The deal is expected to close before year-end.