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Plains to buy BP’s natural gas liquids business for $1.67 bln
Plains All American Pipeline (NYSE:PAA) said Thursday it has agreed to acquire BP’s (NYSE:BP)(LON:BP) natural gas liquids unit in a deal worth $1.67 billion.
Plains will acquire assets that include 2,600 miles of pipelines, storage facilities, processing plants with a capacity of eight billion cubic feet per day, and long-term leases on rail cars used to move the petroleum product. About 450 BP employees will now work for Plains, according to the agreement.
Collectively, the BP assets provide access to approximately 140,000 to 150,000 barrels per day of natural gas liquids across Western and Eastern Canada and the Great Lakes region in the U.S.
In a statement, Plains All American chief executive Greg Armstrong, said: "BP’s Canadian natural gas liquids business is an asset-rich platform that significantly expands our liquefied petroleum gas asset footprint."
"We expect to generate meaningful operating and commercial synergies by more fully connecting, integrating and utilizing these assets together with our existing North American LPG assets and our Canadian crude oil assets and activities."
The deal, which is subject to customary closing conditions and regulatory approvals, is expected to be completed in the second quarter of 2012.
BP made the sale to Plains Midstream Canada, a unit of Plains All American Pipeline, as it works to shed $45 billion in assets, mainly to meet compensation costs arising from the oil well blowout in the Gulf of Mexico a year ago.
Separately, Plains on Thursday announced four more recent acquisitions worth an additional $620 million.
Plains acquired 120 miles of South Texas pipelines from Velocity Midstream Partners. The pipeline, which is under construction, is expected to have an output of 150,000 barrels per day.
In early October, the company also closed the acquisition of a small trucking operation in Canada.
The first transaction with Western Refining includes a petroleum storage and distribution terminal in Yorktown, Virginia.
Plains said it plans to sell surplus equipment and upgrade the site so that it could store oil, refined products, propane, butane, ethanol and other bio-diesel fuels.
The second transaction with Western Refining includes an 82-mile oil pipeline in New Mexico. Plains said the pipeline can transport up to 100,000 barrels of oil per day.
Because of the expansion, Plains said it expects company distributions to rise by eight to nine percent in 2012. Its current annual distribution is $3.98 per unit.
Plains, headquartered in Houston, Texas, gained 41 cents, or 0.63 percent, to reach $65.27 a share today on the New York Stock Exchange.
