Tallgrass Energy Partners, LP today announced two strategic acquisitions by its Tallgrass Terminals business. The acquisitions include:
- A 51 percent membership interest in the Pawnee, Colo. crude oil terminal from Zenith Energy for approximately $31 million.
- A 38 percent interest in Deeprock North, LLC, which owns for $19.5 million or approximately eight times current cash flow.
The Pawnee Terminal is an injection point for the Tallgrass Pony Express Northeast Colorado Lateral, with 300,000 barrels of storage and backed by minimum volume commitments of approximately 90,000 barrels per day. It will provide commercial and operational synergies with the Pony Express Pipeline and offers the potential for incremental sourcing opportunities such as directly connecting nearby producers. The transaction is expected to close in Q1 2018, subject to certain closing conditions.
Deeprock North owns a crude oil terminal in North Cushing, Okla., immediately adjacent to Deeprock Development, LLC’s crude oil terminal facility. Immediately following the acquisition, Deeprock North was merged into Deeprock Development, which now owns a larger and more diverse terminalling complex with total storage capacity of four million barrels. Tallgrass Terminals owns approximately 60 percent of the combined entity and retains significant strategic and commercial control. The company expects the acquisition to enhance and expand commercial offerings for both Pony Express customers and other customers in Cushing.
“Today’s announcements, along with last week’s news of the five-year contract extension with Pony Express’ largest customer, continue to solidify Pony Express’ track record as a reliable and diverse pipeline and strengthens its ability to serve crude oil markets for decades to come,” said David G. Dehaemers Jr., Tallgrass Energy President and Chief Executive Officer. “With news of increasing crude oil production in basins Pony Express serves, we’re even more confident that utilization of our pipeline will continue to increase in the future.”