Blueknight Energy Partners to Sell Crude Oil Business for $162 Million
Hart Energy Staff
(Source: Blueknight Energy Partners LP)
Blueknight Energy Partners LP has entered into multiple definitive agreements on Dec. 21 to sell its crude oil terminalling, pipeline, and trucking business segments for approximately $162 million in total cash consideration, including estimated crude oil linefill and inventory. Net proceeds, after transaction costs, will be used initially to reduce borrowings outstanding under the Partnership's revolving credit facility and for general partnership purposes.
Blueknight entered into a definitive agreement to sell its crude oil terminalling segment to Enbridge Inc. for a purchase price of $132 million, subject to customary adjustments and excluding crude oil linefill and inventory. This segment includes approximately 6.6 million barrels (MMbbl) of crude oil storage in Cushing, Oklahoma. The transaction is subject to Hart-Scott-Rodino review and closing is expected to occur within the next 60 days.
In addition, Blueknight entered into a separate definitive agreement to sell its crude oil pipeline business to subsidiaries of CVR Energy Inc. for a purchase price of $20 million, subject to customary adjustments and excluding crude oil linefill and inventory. This business includes 604 miles of crude oil pipeline and approximately 0.3 MMbbl of related crude oil storage located primarily in Oklahoma. The transaction is subject to customary terms and conditions and closing is expected to occur within the next 45 days.
Consideration for crude oil linefill and inventory is estimated in accordance with market-based valuation formulas set forth in each of the respective agreements and is subject to change at closing.
Lastly, Blueknight entered into a definitive agreement to sell its crude oil trucking business to an undisclosed buyer, subject to customary adjustments.
"This announcement represents a significant milestone as we transition Blueknight away from traditional oil and gas operations into a pure-play, downstream terminalling business focused on infrastructure and transportation end markets," Andrew Woodward, Blueknight CEO, said. "We are excited about the financial flexibility to both materially improve our balance sheet and pursue future investment opportunities predicated on risk-adjusted returns while maintaining our long-term financial targets."
NYSE: ENB Enbridge Inc.
Blueknight Energy Partners LP
CVR Energy Inc.