Genesis buys Enterprise Products’ GoM pipelines and services for $1.5B

Enterprise Products Partners L.P. has executed definitive agreements to sell its offshore Gulf of Mexico pipelines and services business, which primarily consists of its Offshore Pipelines & Services business segment to Genesis Energy, L.P. for approximately $1.5 billion in cash.

The transaction is expected to close during the third quarter of 2015. Enterprise’s offshore assets include its ownership interest in nine crude oil pipeline systems with more than 1,100 miles of pipeline; nine natural gas pipeline systems totaling approximately 1,200 miles of pipeline; and its ownership interest in six offshore hub platforms.

“We are pleased to execute this agreement to sell our offshore Gulf of Mexico business to Genesis,” said Michael A. Creel, chief executive officer for Enterprise’s general partner.

“In recent years, earnings from our offshore business represented only three percent of Enterprise’s gross operating margin, and our offshore assets do not effectively integrate with our downstream crude oil and natural gas pipeline systems. We plan to redeploy proceeds from this sale into attractive growth opportunities that would extend and expand our integrated midstream system and should generate higher risk-adjusted returns on capital, such as acquisitions and organic projects in the Eagle Ford and Permian shale plays.

“In addition to enhancing our overall financial flexibility, the proceeds from this sale will effectively provide funds to finance the first installment of our recent acquisition of EFS Midstream LLC in the Eagle Ford and, furthermore, eliminates our need for equity capital for the remainder of 2015 based on our current expectations.”

“I cannot think of a better owner for the future development of these assets than Genesis. For over twenty years, Grant Sims, the chief executive officer of Genesis, has been a pioneer and a visionary in the development of midstream energy infrastructure in the Gulf of Mexico. These assets should be very complementary to Genesis’ existing offshore investments. Furthermore we would like to thank the Enterprise employees who will join Genesis in this transaction. These employees have built and operated award-winning offshore assets such as the Independence Hub platform and Trail pipeline and the Poseidon, Cameron Highway, Shenzi and Southeast Keathley Canyon crude oil pipelines in a safe and efficient manner,” stated Creel.

Enterprise expects to record non-cash asset impairment and related charges of approximately $100 million, or $0.05 per common unit on a fully-diluted basis in connection with the sale of its offshore Gulf of Mexico pipelines and services business. Since these assets were viewed as held-for-sale at June 30, 2015, these non-cash charges will be reflected in Enterprise’s consolidated results for the three and six months ended June 30, 2015.

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