Get 40% Off
🤯 This Tech Portfolio is up 29% YTD! Join Now to Get April’s Top PicksGet The Picks – Just 99 USD

Valero's Board Okays Asset Sale By Affiliate To Partnership

Published 08/22/2016, 10:14 PM
Updated 07/09/2023, 06:31 AM

Valero Energy Corporation’s (NYSE:VLO) board of directors has approved its partnership’s Valero Energy Partners LP (NYSE:VLP) acquisition of the Meraux and Three Rivers Terminal Services Business from one of the company’s subsidiaries. The acquisition is valued at about $325 million.

Per estimations, the business to be purchased by the partnership will contribute about $25 million of net income and about $39 million of earnings before interest, taxes, depreciation, and amortization (EBITDA) within the first year of operation.

Post acquisition, the business is expected to contribute approximately $25 million of net income and approximately $39 million of earnings before interest, taxes, depreciation, and amortization (EBITDA) within the first twelve months of operation. The deal is expected to close on Sep 1, 2016.

The proposed acquisition comprises terminals that support Valero’s Meraux and Three Rivers refineries. The Meraux assets include 24 tanks with a storage capacity of 3.9 million barrels for crude oil, intermediates, and refined petroleum products. The Three Rivers assets consist of 62 tanks with a storage capacity of 2.25 million barrels for crude oil, intermediates, and refined petroleum products.

The transaction is expected to be financed with borrowings under its revolving credit facility, cash on hand and the issuance of additional common units and general partner units to Valero subsidiaries. The newly issued units will be allotted in a proportion to enable Valero to retain its 2% general partner interest.

On closure of the transaction, the partnership intends to enter into a 10-year terminaling agreement with a subsidiary of Valero. The agreements are likely to include minimum volume commitments covering about 85% of planned throughput.

Valero carries a Zacks Rank #3 (Hold). Some better-ranked players from the energy sector are Devon Energy Corporation (NYSE:DVN) and Enbridge Energy Partners L.P. (NYSE:EEP) . All these stocks sport a Zacks Rank #1 (Strong Buy).

Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days.Click to get this free report >>



ENBRIDGE EGY PT (EEP): Free Stock Analysis Report

VALERO ENERGY (VLO): Free Stock Analysis Report

DEVON ENERGY (DVN): Free Stock Analysis Report

VALERO EGY PTNR (VLP): Free Stock Analysis Report

Original post

Zacks Investment Research

Latest comments

Risk Disclosure: Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.
© 2007-2024 - Fusion Media Limited. All Rights Reserved.