BP Midstream Partners buys equity interests in BP assets for $468m

BP Midstream Partners (BPMP) has purchased equity interests in Mardi Gras Transportation System Company, URSA Oil Pipeline Company and KM-Phoenix Holdings (collectively the ‘Dropdown Assets’) from subsidiaries of BP in a $468m transaction.

Comprising assets with predictable cash flows and growth opportunities, the transaction is said to be immediately accretive to distributable cash flow per unit to unitholders.

The acquisition will also allow BPMP to further diversify its portfolio.

BPMP general partner CEO Rip Zinsmeister said: “We are pleased to announce the signing of our first drop-down acquisition since the partnership’s initial public offering.

“This acquisition demonstrates our commitment to deliver unitholders consistent, top-tier distribution growth. We expect the high quality of the assets that have been acquired to allow us to generate mid-teens distribution growth within our stated coverage ratio range through 2019.”

As a result of the transaction, BPMP will have an additional 45% stake in Mardi Gras oil and gas transportation system, increasing its interest from 20% to 65%. BP is set to retain the remaining 35% interest in Mardi Gras.

The company will also acquire BP’s 22.6916% interest in Ursa offshore pipeline, as well as a 25% interest in KM-Phoenix.

The Mardi Gras system comprises joint venture interests in four pipelines in the Mississippi Canyon and Green Canyon areas of the Gulf of Mexico.

Operated by an affiliate of Shell, these pipelines serve offshore upstream developments, including Mad Dog, Holstein, Atlantis and Thunder Horse fields.

The Ursa pipeline is located off the coast of Louisiana in the Gulf of Mexico deepwater. It connects Mississippi Canyon area with Mars Pipeline at West Delta 143 platform.