October 21, 2016 [Reuters] - Martin Midstream Partners is in the process of selling its Corpus Christi, Texas, crude terminal, according to three sources familiar with the matter, as the company scrambles to boost cash flows.
Interested buyers have offered between $80 million and $100 million for the facility, two of the sources said. The facility is located on 10 acres of land leased from the Port of Corpus Christi in South Texas.
It was not immediately clear which companies were in the lead to acquire the facility, but two sources said private-equity-backed NorthStar Midstream is among the bidders.
A representative from Martin did not respond to several requests for comment, and NorthStar did not immediately respond to a request for comment.
Dealmaking activity in the U.S. energy sector has picked up on renewed optimism about the direction of oil prices. Benchmark U.S. crude CLc1 futures have almost doubled in value since February, and in early October, U.S. crude jumped above $50 a barrel on news that the Organization of the Petroleum Exporting Countries could reach a deal to curb output and stabilize global prices.
Martin’s terminal in Corpus Christi has 900,000 barrels of storage capacity, with loading and unloading capabilities for barges, vessels and trucks, as well as pipeline access.
Shell leases space at the terminal, according to the sources.
Demand for space at the port of Corpus Christi, historically a refining hub, has grown since Congress lifted the ban on exporting U.S. crude in December. Of Gulf Coast ports, Corpus Christi sits closest to Texas’ Eagle Ford and Permian Basin oilfields that produce hundreds of thousands of barrels a day in crude and condensate.
Martin’s terminal, which already competes with peers NuStar and Buckeye Partners LP in Corpus Christi, will face new competition relatively soon.
Enterprise Products Partners, which is building a new marine terminal with Plains All American in Corpus Christi, told Reuters the dock is now slated to start service in 2018, later than an originally planned 2017.
Midstream companies such as Martin make money by charging fees for use of their facilities, which are often likened to toll roads, but have faced sharp declines in throughput due to a two-year rout in oil prices.
In a note to investors last month, Capital One Securities suggested that Martin may look at asset sales to boost cash flows, or even lower its distribution payouts.
Daily throughput at the Corpus facility averaged around 154,000 barrels per day in 2015, down 6 percent from the prior year, according to the company’s latest annual filing.
The company also operates a barge terminal in Corpus Christi with 250,000 barrels of capacity for fuel oil and diesel, which one source said was also for sale.
