PHILADELPHIA, March 1 /PRNewswire-FirstCall/ -- Sunoco Logistics Partners L.P. announced today that it has completed the previously announced acquisitions of two Texas crude oil pipeline systems from Alon USA Energy, Inc. ("Alon USA") and Black Hills Energy, Inc. ("Black Hills") for a total of $108.9 million. The purchases were financed with cash drawn under the Partnership's credit facility. The Partnership expects to issue additional equity in the future to repay a substantial portion of the additional indebtedness, incurred under the credit facility, consistent with its conservative capital structure.
The system acquired from Alon USA for approximately $68 million, consists of (a) the Amdel Pipeline, a 503-mile, 10-inch, common carrier crude oil pipeline with 27,000 barrels per day operating capacity, originating at the Partnership's Nederland, Texas Terminal, and terminating at Midland, Texas; and (b) the White Oil Pipeline, a 25-mile, 10-inch crude oil pipeline with 40,000 barrels per day operating capacity originating at the Amdel Pipeline and terminating at Alon USA's Big Spring, Texas refinery. Alon USA has also agreed to ship a minimum of 15,000 barrels per day under a 10-year, throughput and deficiency agreement on the pipelines, with an option by Alon USA to extend the agreement by four additional thirty-month periods. These pipelines, currently idled, are scheduled to be returned to service on June 1, 2006. The Partnership also expects to complete an approximate $12 million program to expand capacity on the Amdel Pipeline from 27,000 to 40,000 barrels per day, and to construct new tankage at the Nederland Terminal to service these new volumes by the end of 2006.
The system acquired from Black Hills for approximately $40.9 million consists of (a) the Millennium Pipeline, a 200-mile, 12-inch crude oil pipeline with 65,000 barrels per day operating capacity, originating near the Partnership's Nederland Terminal and terminating at Longview, Texas; (b) the Kilgore Pipeline, a 190-mile, 10-inch crude oil pipeline with 35,000 barrels per day of operating capacity originating in Kilgore, Texas and terminating at refineries in the Houston, Texas region; (c) approximately 340,000 shell barrels of active storage capacity at Kilgore and Longview, Texas; (d) a lease acquisition marketing business; and (e) crude oil line fill and working inventory. The Partnership also anticipates undertaking an approximate $19.5 million program to connect the Millennium pipeline to the Nederland Terminal where new tankage will be constructed. These projects are expected to be completed by the middle of 2007.
"These acquisitions will be a significant addition to our Western crude oil investment platform," said Deborah M. Fretz, President and Chief Executive Officer. "Not only will they allow for the continued growth of our Nederland, Texas Terminal, but our customers will be provided with additional flexibility for crude oil supply."
Sunoco Logistics Partners L.P. , headquartered in Philadelphia, is a master limited partnership formed to acquire, own and operate refined product and crude oil pipelines and terminal facilities, including those of Sunoco, Inc. The Eastern Pipeline System consists of approximately 1,787 miles of primarily refined product pipelines and interests in four refined products pipelines, consisting of a 9.4 percent interest in Explorer Pipeline Company, a 31.5 percent interest in Wolverine Pipe Line Company, a 12.3 percent interest in West Shore Pipe Line Company and a 14.0 percent interest in Yellowstone Pipe Line Company. The Terminal Facilities consist of 8.9 million barrels of refined product terminal capacity and 19.4 million barrels of crude oil terminal capacity (including 12.5 million barrels of capacity at the Texas Gulf Coast Nederland Terminal). The Western Pipeline System consists of approximately 3,635 miles of crude oil pipelines, located principally in Oklahoma and Texas, a 43.8 percent interest in the West Texas Gulf Pipe Line Company and a 37.0 percent undivided interest in the Mesa Pipe Line System. For additional information visit Sunoco Logistics' web site at http://www.sunocologistics.com/.
Note: Those statements made in this release that are not historical facts are forward-looking statements. Although Sunoco Logistics Partners L.P. (the "Partnership") believes that the assumptions underlying these statements are reasonable, investors are cautioned that such forward-looking statements are inherently uncertain and necessarily involve risks that may affect the Partnership's business prospects and performance causing actual results to differ from those discussed in the foregoing release. Such risks and uncertainties include, by way of example and not of limitation: whether or not the transactions described in the foregoing news release will be cash flow accretive; increased competition; changes in demand for crude oil and refined products that we store and distribute; changes in operating conditions and costs; changes in the level of environmental remediation spending; potential equipment malfunction; potential labor issues; the legislative or regulatory environment; plant construction/repair delays; nonperformance by major customers or suppliers; and political and economic conditions, including the impact of potential terrorist acts and international hostilities. These and other applicable risks and uncertainties have been described more fully in the Partnership's December 31, 2005 Annual Report on Form 10-K filed with the Securities and Exchange Commission on March 1, 2006. The Partnership undertakes no obligation to update any forward-looking statements in this release, whether as a result of new information or future events.
