Rose Rock to buy interest in White Cliffs Pipeline for $273.9MM

Source:Rose Rock Midstream

Rose Rock Midstream, L.P. (NYSE:RRMS) and SemGroup(R) Corporation (NYSE:SEMG) (SemGroup) announced today that Rose Rock Midstream has agreed to acquire a 33.3 percent interest in SemCrude Pipeline, L.L.C., which owns 51 percent of the White Cliffs Pipeline, from SemGroup for $273.9 million. Following the acquisition, Rose Rock Midstream will effectively own 17 percent of White Cliffs Pipeline.

The White Cliffs Pipeline is a 527-mile common carrier, crude oil pipeline system that originates in Colorado and terminates in Cushing, Oklahoma. It has a current capacity of 70,000 barrels per day and has announced an expansion project for an additional 80,000 barrels per day resulting in total capacity of 150,000 barrels per day. This expansion is expected to be completed in the first half of 2014.

"We are excited to announce our first drop down transaction for Rose Rock Midstream, which will be immediately accretive to the partnership's common unit holders," said Norm Szydlowski, president and CEO of Rose Rock Midstream. "This acquisition supports our strategic plan and is complementary to our existing crude-based business. The White Cliffs Pipeline is a very strategic asset and the only pipeline that directly transports crude oil from the DJ Basin to Cushing, OK."

The acquisition, which is expected to close by January 14, 2013, will be immediately accretive to distributable cash flow on a per unit basis and will be funded with approximately:

  --  $130.3 million of cash borrowings under Rose Rock Midstream's revolving

      credit facility,

  --  $59.3 million of equity from the private placement of common units,

  --  $44.4 million of equity from the issuance of common units to SemGroup,


  --  $37.0 million of equity from the issuance of Class A units to SemGroup.

      The Class A units will not receive any distributions, but are

      convertible into common units on a one-for-one basis once the White

      Cliffs Pipeline achieves an average monthly volume of 125,000 barrels

      per day.


SemGroup will maintain its two percent general partner interest in Rose Rock Midstream.

In connection with the transaction, Rose Rock Midstream exercised the accordion on its revolving credit agreement which increased the total borrowing capacity from $150 million to $385 million.

The terms of the acquisition were approved by the Conflicts Committee of the Board of Directors of Rose Rock Midstream's general partner. The Conflicts Committee engaged Evercore Partners to act as its independent financial advisor and to render a fairness opinion, and Akin Gump Strauss Hauer & Feld, LLP to act as its legal advisor. LCT Capital, LLC and Citi acted as financial advisors to SemGroup on the transaction.

2013 Adjusted EBITDA and Capex Guidance

Rose Rock Midstream expects 2013 Adjusted EBITDA of $56 million to $60 million; capital expenditures of $60 million, including $4 million for maintenance; and a target distribution growth rate of 10 to 15 percent year-over-year.


Did You Like this Article? Get All the Energy Industry News Delivered to Your Inbox

Subscribe to an email newsletter today at no cost and receive the latest news and information.

 Subscribe Now


Logistics Risk Management in the Transformer Industry

Transformers often are shipped thousands of miles, involving multiple handoffs,and more than a do...

Secrets of Barco UniSee Mount Revealed

Last year Barco introduced UniSee, a revolutionary large-scale visualization platform designed to...

The Time is Right for Optimum Reliability: Capital-Intensive Industries and Asset Performance Management

Imagine a plant that is no longer at risk of a random shutdown. Imagine not worrying about losing...

Going Digital: The New Normal in Oil & Gas

In this whitepaper you will learn how Keystone Engineering, ONGC, and Saipem are using software t...

Latest PennEnergy Jobs

PennEnergy Oil & Gas Jobs