NGL Energy Partners LP, Magnum Liquids, LLC (a portfolio company of Haddington Ventures LLC), along with Magnum Development, LLC and other Haddington-sponsored investment entities (collectively Magnum) have formed a joint venture (JV) to focus on the storage of natural gas liquids and refined products by combining NGL’s Sawtooth Storage Facility with Magnum’s refined products rights and adjacent leasehold.
The Sawtooth Storage Facility is a natural gas liquids storage facility with 6.1 million bbls of capacity in five existing salt caverns, including rail and truck access to western US markets located southwest of Salt Lake City, Utah.
NGL will sell an interest in Sawtooth to Magnum for US$45 million in cash. Magnum will contribute its right, title and interest in certain leasehold and other assets located at the site, which will be utilised to expand Sawtooth’ s existing operations and allow for the addition of refined products storage at the facility. NGL will own approximately 67.6% of the JV and Magnum will own the remaining 32.4% at closing. Magnum will have an option to acquire an additional 21.6% interest from NGL under similar terms with an additional option to acquire NGL’s remaining 46% interest within three years of closing. The initial transaction, which is subject to certain closing conditions, is expected to close by 31 March 2018.
“We are very excited to bring together NGL’s Sawtooth natural gas liquids storage asset with the refined products storage rights and commercial expertise of the Magnum team,” stated Mike Krimbill, NGL’s CEO. “This new joint venture will allow Sawtooth to utilize existing capacity to store refined products with very minimal capital requirements. It will also accelerate the earnings potential and broaden the scope of services offered at the facility. The proceeds received by NGL will be utilized to further reduce indebtedness and improve our leverage profile.”
“We are very excited to enter into this joint venture with NGL by combining Magnum’s refined products project, which is in late stage development, with Sawtooth,” stated James Lam, Managing Director at Haddington. “The earmarking of an existing cavern for gasoline or diesel storage expedites our ability to provide the service to our customers and accelerates further development of our unique site.”
Read the article online at: https://www.tanksterminals.com/storage-tanks/06032018/magnum-liquids-to-acquire-stake-in-ngls-sawtooth-storage-facility/