USD Partners LP (NYSE: USDP) has agreed to acquire 100% of the equity interests in Casper Crude to Rail LLC from Stonepeak Infrastructure Partners, Cogent Energy Solutions, and The Granite Peak Group for total consideration of $225 million, subject to closing adjustments. The purchase price includes $208.3 million of cash and $16.7 million of limited partner units issued to the sellers.
The Casper terminal’s principal assets include a unit train-capable crude oil loading rail terminal with 100,000 barrels per day of capacity and dual loop tracks; six customer-dedicated storage tanks with 900,000 barrels of total capacity; and a six-mile, 24-in.-diameter pipeline with a direct connection from Spectra Energy Partners LP’s Express crude oil pipeline, which runs from Hardisty, Alberta, Canada, to Casper, Wyoming, and provides access to multiple grades of Canadian crude oil.
The terminal’s location supports access to multiple refining centers across the US, enhanced by onsite storage and blending capabilities, which enables customers to ship preferred grades of crude oil from Casper. Additionally, the terminal’s footprint and modular design allows for the addition of a second loading station and an additional 1.1 million barrels of storage capacity with minimal disruption to existing operations and relatively low incremental capital costs.
The acquisition is USD Partners’ first acquisition since the Partnership’s initial public offering in October 2014. The Casper terminal began operations in September 2014 and is supported by take-or-pay contracts with primarily investment grade refiners and a weighted-average remaining contract life of approximately three years. For the full-year 2016, the Casper terminal is expected to contribute minimum contracted adjusted EBITDA of approximately $26 million.
The Partnership intends to fund the cash portion of the purchase price with $35 million of cash on hand and $173 million of senior secured credit facility borrowings. The Partnership will issue approximately 1.7 million common units as equity consideration based on a unit price of $9.62, the volume-weighted average daily closing price for the Partnership’s common units for the 30-trading-day period prior to Oct. 12. The Partnership believes the transaction will be immediately accretive to distributable cash flow per unit upon closing, which is expected to occur in the fourth quarter of 2015.