As part of the transaction, the partnership has extended the term of take-or-pay terminalling services agreements related to 25% of the Hardisty terminal‘s available capacity by approximately one year.

Concurrent with the acquisition, the partnership entered into a new multiyear, take-or-pay terminalling services agreement with an investment grade rated, multinational energy company (Stroud customer) for the use of approximately 50% of the Stroud terminal’s available capacity. The term of this agreement is scheduled to begin on Oct. 1, 2017, and to conclude on June 30, 2020.

The all-in $25 million purchase price represents approximately 2.5x the estimated 2018 adjusted EBITDA to be generated by the 33-month take-or-pay contract with the Stroud customer and includes approximately $2.2 million of one-time costs and anticipated growth capital expenditures to retrofit the Stroud terminal to handle heavy grades of Canadian crude oil, the partnership said.

The Stroud terminal is located on 76 acres and includes 104 railcar spots with the ability to unload one unit train per day, two 70,000-bbl onsite storage tanks and one truck bay. Additionally, the terminal includes a 12-inch diameter, 17-mile pipeline directly connected to the Cushing hub.

Inbound product is delivered by the Stillwater Central Rail, which handles deliveries from both the BNSF and the Union Pacific railways. The Partnership also obtained a lease for 300,000 bbl of crude oil tank storage at the Cushing hub to receive outbound shipments of crude oil from the Stroud terminal.

To facilitate the origination of barrels from the partnership’s Hardisty terminal, USD Marketing (USDM), a wholly owned subsidiary of USD Group (USDG), assumed the terminalling services agreement the partnership previously had with J. Aron & Company at the Hardisty terminal and entered into an agreement with the Stroud customer to provide access to the combined monthly loading slots previously held by both USDM and J. Aron. Additionally, the contracted term for this capacity has been extended to June 30, 2020.

In exchange for contributing its Hardisty rail slots to facilitate the origination of barrels for the Stroud customer, the partnership granted USDM the right to market the remaining capacity at the Stroud terminal in exchange for a per barrel marketing fee.

USDM will fund any related capital costs associated with increasing the throughput or efficiency of the terminal to handle additional barrels.

USD Partners’ assets consist primarily of: a crude oil origination terminal in Hardisty, Alberta, Canada, with capacity to load up to two 120-railcar unit trains per day, a crude oil terminal in Casper, Wyoming, with unit train-capable railcar loading capacity in excess of 100,000 b/d and six customer-dedicated storage tanks with 900,000 bbl of total capacity and a unit train-capable ethanol destination rail terminal in West Colton, California. In addition, the partnership provides railcar services through the management of a railcar fleet.

————————–

TankTerminals.com – Research, Market and Expand Your Presence within the Tank Storage Industry Learn more.