Newton Square, Pa.-based Sunoco Logistics Partners L.P. reached an agreement to purchase Vitol Group’s integrated crude oil business in West Texas for approximately $760 million plus working capital.
Sunoco Logistics Partners L.P. is purchasing the Vitol Group’s Permian Basin crude oil system in West Texas for approximately $760 million plus working capital, the companies said Tuesday.
With the acquisition, Sunoco Logistics gains an approximately two million barrel crude oil terminal in Midland Texas, a crude oil gathering, and a mainline pipeline system in the Midland Basin, which includes a significant acreage dedication from an investment grade Permian producer, along with crude oil inventories related to Vitol’s crude oil purchasing and marketing business in the western part of the state.
The acquisition also includes the purchase of a 50 percent interest in SunVit Pipeline LLC, giving Sunoco Logistics all of the membership interests in SunVit.
The acquisition is expected to close in the fourth quarter of 2016 and is subject to certain closing conditions and regulatory approval.
“The addition of the Vitol system is an excellent synergistic fit to our growing crude platform in the Permian Basin,” Sunoco Logistics Partners President and CEO Michael J. Hennigan said. “The Permian Basin is the most prolific of all of the U.S. shale areas with strong growth expectations. The Vitol pipeline assets are located in what we believe are the three best counties in the Midland Basin.”
In connection with the acquisition of Vitol’s crude oil platform, Energy Transfer Partners, L.P. and Energy Transfer Equity, L.P., as the owners of Sunoco Partners, LLC, the partnership’s general partner, have agreed to decrease the incentive distributions the general partner receives from the partnership by a total of $60 million over a two-year period, which will be recognized evenly over eight quarters, starting with the quarterly cash distribution paid for the third quarter of 2016.
“We appreciate Energy Transfer’s support on this acquisition,” Hennigan said. “They share our vision of the substantial growth opportunities from production on the Permian Basin. Their financial assistance via incentive distribution relief provides us with accretive economics for this strategic acquisition. Long-term, with Energy Transfer’s growing crude gathering presence in West Texas combined with our extensive mainline crude platform and gathering assets, we expect growth opportunities for our partnerships in this very competitive region.
Sunoco Logistics buys Vitol’s crude platform in the Permian Basin
