BP said on Monday that its wholly owned indirect subsidiary BP Midstream Partners LP had filed for an initial public offering (IPO) on the NYSE that is expected to take place in the fourth quarter this year, depending on market conditions.
The proposed maximum aggregate offering price is US$100 million, according to the filing with the SEC.
BP Midstream Partners was set up as a vehicle to own, operate, develop, and acquire pipelines and other midstream assets. The company will be headquartered in Houston, with offices in Chicago, Illinois, BP said.
In July, BP said that it was considering a restructuring of its oil, gas, and petroleum product business in the U.S. that would involve the spin-off of some of the company’s pipelines. The restructuring would see BP’s pipeline operations in the Midwest and the Gulf Coast become a master limited partnership, to be controlled by BP. Although the company’s management has not made a final decision yet, the restructuring will improve the growth potential of the pipeline operations and enhance shareholder returns, BP said back then. Master limited partnerships, Houston Chronicle notes, are a corporate structure that’s unique to the United States. With it, companies can avoid paying taxes by giving most of their profits to investors, much like dividends.
The initial assets of BP Midstream Partners are expected to be ownership stakes in one onshore crude oil pipeline system, one onshore refined products pipeline system, and one onshore diluent pipeline system, which carry shipments to or from BP’s Whiting Refinery in Whiting, Indiana. In addition, the assets will include stakes in four offshore crude oil pipeline systems and one offshore natural gas pipeline system linking offshore production areas in the Gulf of Mexico with the Gulf Coast refining and distribution hubs, BP said today.
If the IPO is successfully completed, the oil supermajor will own the general partner of BP Midstream Partners, all of its incentive distribution rights, and a majority of its limited partner interests.
BP has hired Citigroup, Goldman Sachs, and Morgan Stanley to act as book-running managers, and Citigroup will also be the structuring agent for the proposed offering.