Shell Midstream Partners Plan to Spend $800 Million to Boost Stakes in Explorer, Colonial Pipelines

9:49 AM, May 13, 2019 — Shell Midstream Partners (SHLX) said on Monday it will spend $800 million to bolster stakes in two US pipeline companies.

Houston-based Shell Midstream said it would buy Royal Dutch Shell’s (RDS.A) 25.97% stake in Explorer Pipeline Co. and a 10.125% interest in Colonial Pipeline Co. The investments will increase its stakes in Explorer to 38.59% and Colonial to 16.125%, the company said.

The company’s shares were higher in pre-market trading before declining after the open amid a wider selloff. Shell was trading 0.9% stronger early in the regular session.

“This acquisition is evidence of our strategy in action — we will continue to build scale with diversified assets that provide robust, reliable cash flows,” Shell Midstream Partners Chief Executive Kevin Nichols said. “The Explorer and Colonial systems have the capacity to deliver some three million barrels per day of refined products, providing energy to key demand centers of the United States.”

The acquisitions are expected to close in the second quarter, Shell Midstream said.

Tulsa-based Explorer delivers petroleum products to more than 70 big cities in 16 states via an 1,800-mile pipeline which has a capacity of 660,000 barrels per day. Colonial, based in suburban Atlanta, supplies nearly 50% of the refined products consumed on the East Coast through its Houston-to-New York pipeline.

Explorer is owned by Royal Dutch Shell, Phillips 66 (PSX), Sunoco’s (SUN) Sunoco Logistics business and Marathon OIl (MRO). Colonial’s owners include CDPQ Colonial Partners, IFM (US) Colonial Pipeline 2, KKR-Keats Pipeline Investors, Koch Capital Investments Co., Shell Pipeline Co., and Shell Midstream Operating.

Companies: Shell Midstream Partners, L.P.
Price: 21.50 Price Change: +1.31 Percent Change: +6.49

Get Live Briefs Pro