Source: Valero, CHOPS
Valero Energy Corporation (NYSE:VLO) has signed an agreement to sell its 50 percent indirect equity interest in the Cameron Highway Oil Pipeline Co. (CHOPS) to Genesis Energy (NYSE:GEL) for $330 million in cash.
Valero has owned its interest in Cameron Highway since the Gulf of Mexico pipeline system was constructed in 2004. Over the past two years, Valero’s share of annualized distributions from the partnership has ranged from $27 million to $33 million.
“This sale is part of our ongoing strategy of divesting non-core assets,” Valero Chairman and CEO Bill Klesse said. “At the end of a competitive process, we received an attractive price that unlocks significant value for our shareholders.”
Cameron Highway, built for $458 million, is a 390-mile pipeline with the capacity to deliver up to 500,000 barrels of oil per day from the southern Green Canyon and western Gulf of Mexico areas to the major refining areas of Port Arthur and Texas City, Texas.
The system originates at the Ship Shoal 332 A/B Hub as a 30" diameter pipeline, extends across the GB 72 platform and then splits into two 24" diameter pipelines at the High Island A5-C platform. One 24" leg terminates in Texas City, Texas, while the second terminates in Port Arthur, Texas.
The pipeline is one of the largest crude oil delivery systems in the Gulf of Mexico, sized to handle oil movement for the major Deepwater Trend discoveries. The pipeline currently has dedications from the Holstein, Mad Dog, Atlantis, K2, Constitution and Ticonderoga fields, all located in the deepwater Green Canyon area offshore Louisiana.
Enterprise Products Partners (NYSE:EPD) serves as the operator of the pipeline with 50 percent interest.
The sale is expected to close in the fourth quarter, subject to regulatory approvals. The proceeds will be used for general corporate purposes.