By SAABIRA CHAUDHURI
Magellan Midstream has agreed to buy Plains All American Pipeline's noncore refined-product pipelines and related assets in the Rocky Mountain and New Mexico areas for about $190 million, as the petroleum pipeline-and-storage company looks to extend its existing refined-products distribution system and capture new markets.
The assets to be sold include a pipeline system that delivers refined products throughout Wyoming, South Dakota and Colorado and associated tankage, as well as a pipeline system that delivers refined products from El Paso, Texas, to Albuquerque, N.M., and Juarez, Mexico.
Magellan said it expects the acquisition to immediately add to distributable cash flow per unit, with the potential for additional growth in cash flow from the assets over time. It will pay for the deal with cash on hand and borrowings under its revolving credit facility, if necessary.
The transaction is expected to close during the second quarter.
Magellan primarily transports, stores and distributes petroleum products. It owns the longest refined petroleum-products pipeline system in the country, with access to more than 40% of the nation's refining capacity.
Meanwhile, Houston-based Plains transports, stores and markets crude oil and refined products, as well as natural-gas liquids.
Earlier this month, Magellan reported its fourth-quarter earnings rose 40% as it benefited from improved volume and stronger margins.
Plains said its fourth-quarter earnings jumped 15% as the pipeline company reported strong results in its supply-and-logistics segment, while profits at its PAA natural gas storage (PNG) business improved 1.6% as it reduced costs.
Dow Jones Newswires