Global Partners and Phillips 66 Sign Long-Term Crude Transportation and Logistics Contract
Global Partners LP (NYSE: GLP) today announced that it has signed a five-year contract with Phillips 66 (NYSE: PSX) under which Global will use its rail transloading, logistics and transportation system to deliver crude oil from the Bakken region of North Dakota to Phillips 66's Bayway, NJ refinery. The terms of the contract include a take-or-pay commitment from Phillips 66 to receive approximately 91 million barrels of crude oil over the contract term, which equates to approximately 50,000 barrels per day.
“We are proud to partner with one of the world's leading independent downstream energy companies,” said Eric Slifka, President and CEO of Global Partners. “Phillips 66 and its predecessor has been a long-standing strategic business partner with Global for more than 15 years in the refined products market. More recently, Phillips 66 has been an important customer for Global as we have expanded our crude supply and logistics services. Today's announcement further enhances our position as a leader in transporting crude by rail from the mid-continent of the U.S. and Canada to the East Coast. This agreement grows our mix of stable fee-based contract income.”
“Global has established a ‘virtual pipeline' for the reliable transportation of Bakken crude,” said Tim Taylor, Executive Vice President, Commercial, Marketing, Transportation & Business Development of Phillips 66. “Our five-year agreement with Global assures us long-term access to advantaged crude for our Bayway refinery through what we believe is a cost competitive origin-to-destination supply system to the East Coast.”
The Bakken crude oil is expected to be transloaded at Basin Transload LLC's North Dakota rail facilities. Global has agreed to purchase a 60% interest in Basin Transload. This transaction is expected to close in the first quarter of 2013. As a continuation of the partnership between Canadian Pacific (TSX:CP) (NYSE: CP) and Global, the crude oil will be transported on CP's rail network from the Bakken directly to Global's terminal in Albany, NY.
“CP is extremely pleased to be working with Global in providing rail direct service from the North Dakota Bakken to the Northeast U.S., which demonstrates the advantages of CP's strategic rail network and experience in moving energy products. CP is the only North American railroad to serve the Bakken Formation, the Alberta Industrial Heartland and other energy formations in the United States and Canada directly to the Northeast U.S.,” said Canadian Pacific Executive Vice President and Chief Marketing Officer, Jane O'Hagan.
“Today, Global's capacity to move product by rail to our Albany terminal is approximately 160,000 barrels a day. While the Phillips 66 agreement provides Global with the stability and certainty of crude oil flows through the Basin Transload facilities for the next five years, we continue to maintain ample capacity to supply crude oil to other refiners. In January 2013, we expect to move an average of more than 100,000 barrels a day by rail through our Albany facility,” Slifka said.
Financial Guidance and Outlook
Global Partners today announced that it is providing 2013 EBITDA guidance in the range of $175 million to $190 million. The Partnership previously provided 2012 EBITDA guidance in November 2012 of $115 million to $130 million. The Partnership's guidance is based on its current business outlook as well as assumptions regarding market conditions, including demand for petroleum products and renewable fuels, weather, credit markets and the forward product pricing curve, which will influence financial results.
“We are entering 2013 with considerable momentum on a number of fronts,” said Slifka. “Our expected growth in annual EBITDA for 2013 is the result of a combination of organic growth projects, strategic acquisitions and new contract business. Going forward, we will benefit from the expansion of logistics assets in North Dakota and bringing online our new Albany propane storage facility. We also will benefit from a full year of contributions from Alliance Energy, which we acquired in March 2012, and the addition of Basin Transload following the expected completion of that transaction in the first quarter. In terms of new contract business, our growth will be supported by our recently announced long-term unitary lease with Getty Realty Corp., our ongoing management services and supply agreement with Getty Realty, and the Phillips 66 contract. We remain confident that the Partnership is well-positioned to capitalize on the many opportunities in the dynamic and rapidly evolving energy market.”
About Global Partners LP
Global Partners LP, a publicly traded master limited partnership based in Waltham, Massachusetts, owns, controls or has access to one of the largest terminal networks of refined petroleum products and renewable fuels in the Northeast. Global Partners is a leader in the logistics of transporting crude and other products from the mid-continent region of the U.S. and Canada to the East Coast. The Partnership is one of the largest wholesale distributors of gasoline (including blendstocks such as ethanol and naphtha), distillates (such as home heating oil, diesel and kerosene), residual oil and renewable fuels to wholesalers, retailers and commercial customers in the New England states and New York. In addition, the Partnership has a portfolio of approximately 1,000 gas stations in nine Northeastern states. The Partnership also is a distributor of natural gas. A FORTUNE 500® company, Global Partners trades on the New York Stock Exchange under the ticker symbol "GLP." For additional information, please visit www.globalp.com.
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Thomas J. Hollister, 781-894-8800
Chief Operating Officer and Chief Financial Officer
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Executive Vice President, General Counsel and Secretary