Rose Rock Midstream, L.P.
RRMS and SemGroup^® Corporation SEMG (SemGroup) announced today
that Rose Rock Midstream has agreed to acquire a 33.3 percent interest in
SemCrude Pipeline, L.L.C., which owns 51 percent of the White Cliffs Pipeline,
from SemGroup for $273.9 million. Following the acquisition, Rose Rock
Midstream will effectively own 17 percent of White Cliffs Pipeline.
The White Cliffs Pipeline is a 527-mile common carrier, crude oil pipeline
system that originates in Colorado and terminates in Cushing, Oklahoma. It has
a current capacity of 70,000 barrels per day and has announced an expansion
project for an additional 80,000 barrels per day resulting in total capacity
of 150,000 barrels per day. This expansion is expected to be completed in the
first half of 2014.
"We are excited to announce our first drop down transaction for Rose Rock
Midstream, which will be immediately accretive to the partnership's common
unit holders," said Norm Szydlowski, president and CEO of Rose Rock Midstream.
"This acquisition supports our strategic plan and is complementary to our
existing crude-based business. The White Cliffs Pipeline is a very strategic
asset and the only pipeline that directly transports crude oil from the DJ
Basin to Cushing, OK."
The acquisition, which is expected to close by January 14, 2013, will be
immediately accretive to distributable cash flow on a per unit basis and will
be funded with approximately:
* $130.3 million of cash borrowings under Rose Rock Midstream's revolving
credit facility,
* $59.3 million of equity from the private placement of common units,
* $44.4 million of equity from the issuance of common units to SemGroup, and
* $37.0 million of equity from the issuance of Class A units to SemGroup.
The Class A units will not receive any distributions, but are convertible
into common units on a one-for-one basis once the White Cliffs Pipeline
achieves an average monthly volume of 125,000 barrels per day.
SemGroup will maintain its two percent general partner interest in Rose Rock
Midstream.
In connection with the transaction, Rose Rock Midstream exercised the
accordion on its revolving credit agreement which increased the total
borrowing capacity from $150 million to $385 million.
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