Lawyers involved in the company’s IPO declined to comment on the IPO timetable, and Oiltanking senior management in Houston was not available for comment.   Industry sources said that the private logistics company, which has a vast global operations stretching from Asia to Europe to the U.S., chose the U.S. for its IPO because it could avoid double taxation and it could get a favorable valuation for its IPO, and it could raise capital efficiently in this equity market.  

Also, the capitalization of $200 million appears to be small, considering the charges of a few million dollars to be paid to investment banks for the IPO. The registration fee for IPO was $23,220.  
The capitalization value could rise significantly beyond the $200 million estimate if the company stock receives favorable price valuation and the IPO is oversubscribed.   According to the IPO prospectus, Oiltanking Americas is a growth-oriented Delaware limited partnership formed in March 2011 to engage in the terminaling, storage and transportation of crude oil, refined petroleum products and liquefied petroleum gas.  

The owner of its general partner is Oiltanking Holding Americas Inc., a wholly owned subsidiary of Oiltanking GmbH, the world’s second-largest independent storage provider for crude oil, refined products, liquid chemicals and gases.  Oiltanking GmbH intends for the American subsidiary to be its growth vehicle in the United States to acquire, own and operate terminaling, storage and pipeline assets that generate stable cash flows.  
Its core assets are located along the upper Gulf Coast of the United States on the Houston Ship Channel and in Beaumont, Texas.   
Its 12.1-million-bbl Houston terminal stores 64% crude, 26% heavy petrochemical feedstocks, 7% clean products and 3% fuel oil. Its 5.7-million-bbl Beaumont terminal stores 59% clean products, 40% vacuum gasoil and 1% fuel oil.  

The company’s cash flows are primarily generated by fee-based storage, terminaling and transportation services that it performs under multi-year contracts with its customers.   It does not take title to any of the products it stores or handles on behalf of its customers and, as a result, is not directly exposed to changes in commodity prices.  
For the year ended Dec. 31, 2010, Oiltanking Americas generated approximately 75% of its revenues from storage services fees, which its customers pay to reserve the storage space in tanks and to compensate the company for handling up to a fixed amount of product volumes, or throughput, at its terminals.  

These fees are owed to Oiltanking regardless of the actual storage capacity utilized by its customers or the volume of products that it receives.   
Oiltanking generates the remainder of its revenues from throughput fees independent of or incremental to those included as part of its storage services and ancillary services fees, charged to its storage customers for services such as heating, mixing and blending their products stored in its tanks, transferring their products between Oiltanking’s tanks and marine vapor recovery.  

OPTIMISTIC OUTLOOK

In addition to its existing business and operations, Oiltanking believes that current and planned expansion projects of other companies will, if completed as planned, allow it to take advantage of the service needs for significant new crude oil supplies expected to enter the upper Gulf Coast through a number of announced pipeline projects.  

TransCanada’s Keystone Pipeline is expected to transport crude oil from the Alberta oil sands and the Bakken Shale formation to the Gulf Coast region for refining at a rate of up to 900,000 b/d within the next two years.   

Enbridge’s Monarch Pipeline is expected to transport crude oil from the Cushing storage interchange in Oklahoma to Houston at a rate of up to 350,000 b/d within the next two years.   Enterprise Products Partners’ proposed pair of pipelines are expected to transport crude oil from the Eagle Ford Shale in south Texas to Houston at a rate of up to 350,000 barrels per day within the next 18 months.  

Magellan Midstream Partners’ reversal and conversion of its Longhorn pipeline is expected to transport crude oil from El Paso to Houston at a rate of up to 200,000 barrels per day within 18 to 24 months upon approval of the project.  
These pipelines are expected to transport additional crude oil volumes from the Canadian oil sands, the Bakken Shale formation in North Dakota and Montana, the Eagle Ford Shale in south Texas as well as other crude oil development and exploitation projects throughout the western and central United States.  
Oiltanking believes these supplies will create additional volumes of Gulf Coast crude oil for local refiners necessitating additional storage capacity.   

In addition to the increases in crude oil supplies from these pipeline projects, Oiltanking also received a number of inquiries from merchant trading firms seeking to secure significant storage capacity in order to continue trading operations following the implementation of the Dodd Frank Act.