HOUSTON–(BUSINESS WIRE)–Enterprise Products Partners L.P. (NYSE:EPD) today announced that it has executed definitive agreements to sell its offshore Gulf of Mexico pipelines and services business, which primarily consists of its Offshore Pipelines & Services business segment to Genesis Energy, L.P. (“Genesis”) for approximately $1.5 billion in cash. The transaction is expected to close during the third quarter of 2015. Enterprise’s offshore assets include its ownership interest in nine crude oil pipeline systems with more than 1,100 miles of pipeline; nine natural gas pipeline systems totaling approximately 1,200 miles of pipeline; and its ownership interest in six offshore hub platforms.
“We are pleased to execute this agreement to sell our offshore Gulf of Mexico business to Genesis,” said Michael A. Creel, chief executive officer for Enterprise’s general partner. “In recent years, earnings from our offshore business represented only three percent of Enterprise’s gross operating margin, and our offshore assets do not effectively integrate with our downstream crude oil and natural gas pipeline systems. We plan to redeploy proceeds from this sale into attractive growth opportunities that would extend and expand our integrated midstream system and should generate higher risk-adjusted returns on capital, such as acquisitions and organic projects in the Eagle Ford and Permian shale plays. In addition to enhancing our overall financial flexibility, the proceeds from this sale will effectively provide funds to finance the first installment of our recent acquisition of EFS Midstream LLC in the Eagle Ford and, furthermore, eliminates our need for equity capital for the remainder of 2015 based on our current expectations.”
“I cannot think of a better owner for the future development of these assets than Genesis. For over twenty years, Grant Sims, the chief executive officer of Genesis, has been a pioneer and a visionary in the development of midstream energy infrastructure in the Gulf of Mexico. These assets should be very complementary to Genesis’ existing offshore investments. Furthermore we would like to thank the Enterprise employees who will join Genesis in this transaction. These employees have built and operated award-winning offshore assets such as the Independence Hub platform and Trail pipeline and the Poseidon, Cameron Highway, Shenzi and Southeast Keathley Canyon crude oil pipelines in a safe and efficient manner,” stated Creel.
Enterprise expects to record non-cash asset impairment and related charges of approximately $100 million, or $0.05 per common unit on a fully-diluted basis in connection with the sale of its offshore Gulf of Mexico pipelines and services business. Since these assets were viewed as held-for-sale at June 30, 2015, these non-cash charges will be reflected in Enterprise’s consolidated results for the three and six months ended June 30, 2015.
Enterprise Products Partners L.P. is one of the largest publicly traded partnerships and a leading North American provider of midstream energy services to producers and consumers of natural gas, NGLs, crude oil, refined products and petrochemicals. Our services include: natural gas gathering, treating, processing, transportation and storage; NGL transportation, fractionation, storage and import and export terminals; crude oil and refined products transportation, storage and terminals; petrochemical transportation and services; and a marine transportation business that operates primarily on the United States inland and Intracoastal Waterway systems. The partnership’s assets include approximately 49,000 miles of onshore pipelines; 225 million barrels of storage capacity for NGLs, crude oil, refined products and petrochemicals; and 14 billion cubic feet of natural gas storage capacity.
This press release includes “forward-looking statements” as defined by the Securities and Exchange Commission. All statements, other than statements of historical fact, included herein that address activities, events, developments or transactions that Enterprise and its general partner expect, believe or anticipate will or may occur in the future are forward-looking statements. These forward-looking statements are subject to risks and uncertainties that may cause actual results to differ materially from expectations, including required approvals by regulatory agencies, the possibility that the anticipated benefits from such activities, events, developments or transactions cannot be fully realized, the possibility that costs or difficulties related thereto will be greater than expected, the impact of competition, and other risk factors included in Enterprise’s reports filed with the Securities and Exchange Commission. Readers are cautioned not to place undue reliance on these forward-looking statements, which speak only as of their dates. Except as required by law, Enterprise does not intend to update or revise its forward-looking statements, whether as a result of new information, future events or otherwise.