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In a joint statement
today, Western Refining, Inc.
WNR and Western Refining Logistics, LP
announced that WNRL has acquired WNR's 375-mile segment of the
TexNew Mex pipeline that extends from WNRL's crude oil station in Star Lake,
New Mexico in the Four Corners region to WNRL's T Station in Eddy County,
New Mexico. WNRL also acquired an 80,000 barrel crude oil storage tank
located at its crude oil pumping station in Star Lake, New Mexico.
The primary consideration for the assets consisted of $180 million comprised
of $25 million in cash, $145 million in revolver borrowings and $10 million
in WNRL common units issued to WNR. In connection with the closing, WNR and
WNRL amended certain commercial agreements. As part of these amendments,
WNR will provide minimum volume commitments for ten years of 13,000 barrels
per day (bpd) on the TexNew Mex pipeline and approximately 80,000 barrels of
crude oil storage. WNRL also issued to WNR a new class of WNRL partnership
interests in connection with the acquisition that entitle WNR to 80% of the
economics resulting from crude oil throughput on the TexNew Mex pipeline
above 13,000 bpd. WNRL will be entitled to 20% of the economics resulting
from crude oil throughput above this minimum volume commitment.
"The purchase of the TexNew Mex pipeline by WNRL is the next step of our
strategy to grow the asset base and distributions of WNRL," said Jeff
Stevens, President and CEO of both WNR and WNRL. Stevens added, "Today, this
pipeline supplies WNR's El Paso refinery with cost-advantaged crude oil, and
as crude oil production grows in the Four Corners, this pipeline will also
provide a potential outlet for crude oil shipments to Midland and the US
Gulf Coast."
The TexNew Mex pipeline and crude oil storage tank are expected to generate
2016 EBITDA in a range of $18.5 to $19.0 million.
Stevens continued, "WNR's long-term strategy is to continue to develop
newly-constructed logistics assets in the Delaware and San Juan basins,
which will enhance the crude oil advantage of our refineries and, as WNR
sells these assets to WNRL, provide continued cash distribution growth and
diversification for WNRL."
The terms of the transaction were approved by WNR's Board of Directors and
the Conflict Committee of the Board of Directors of the general partner of
WNRL which is composed of independent directors.
Non-GAAP Financial Measures
This press release includes the non-GAAP measure earnings before interest,
taxes, depreciation and amortization (EBITDA). We believe certain investors
and financial analysts use EBITDA to evaluate WNRL's financial performance
and compare WNRL's performance to certain competitors. EBITDA is also
included to help facilitate comparisons of the forecasted operating
performance of the acquired assets with other companies in our industry. The
GAAP measure most directly comparable to EBITDA is net income. This non-GAAP
measure should not be considered as an alternative to net income or any
other measure of financial performance presented in accordance with GAAP.
EBITDA excludes some, but not all, items that affect net income.
Additionally, because EBITDA may be defined differently by other companies
in our industry, our definition of EBITDA may not be comparable to similarly
titled measures of other companies, thereby diminishing its utility.
The following table reconciles forecasted net income to forecasted EBITDA
for the acquired assets for the year ending December 31, 2016 (in millions):
For the year ending
December 31, 2016
Net Income $11.3 to $11.8
Add back: Depreciation and Amortization $ 7.2
----- --------------
EBITDA $18.5 to $19.0
About Western Refining Logistics, LP
Western Refining Logistics, LP is principally a fee-based, growth-oriented
master limited partnership formed by Western Refining, Inc.
WNR to
own, operate, develop, and acquire terminals, storage tanks, pipelines and
other related businesses. Headquartered in El Paso, Texas, WNRL's assets
after giving effect to this transaction include approximately 675 miles of
pipelines, approximately 8.2 million barrels of active storage capacity,
distribution of wholesale petroleum products, and crude oil trucking.
More information about Western Refining Logistics is available at
www.wnrl.com.
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