BP Explores Pipeline Asset Sale To Form MLP & Make It Public
Zacks Investment Research | Jul 18, 2017 10:30PM ET
Integrated energy giant BP (LON:BP) plc (NYSE:BP) is contemplating spinning off some of its Midwest and Gulf Coast pipelines into a master limited partnership ("MLP") and filing for an initial public offering ("IPO") to raise cash. The MLP will incorporate pipelines of crude oil, natural gas, and refined petroleum products and will be called BP Midstream Partners. The company expects the regulatory process for the same to begin toward the end of the year.
The plan was originally proposed internally five years ago but put on hold due to the persistent weakness in oil prices. The company had to reduce its capital spending over the past three years to counter the price drop.
BP expects this move to result in increased efficiency for the MLP and provide it with capital in favorable terms. This tax-avoiding corporate structure will help the MLP to generate more value for its unit holders while creating opportunities for the expansion of the pipeline business.
BP is yet to provide details on the valuation of the transaction. The company will retain general partner position of the MLP and the most of its limited partner interests. BP will also hold all of the MLP’s distribution rights, which will allow it to have greater control over the assets.
This kind of a move is not unprecedented in the space. BP seems to be following the footsteps of Royal Dutch Shell (LON:RDSa) plc Original post
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