Blueknight Energy Partners recently closed on the sale of its crude oil terminaling segment to Enbridge for $132 million.
The purchase price is subject to customary post-closing adjustments.
Including the previous divestment of its crude oil pipeline and trucking segments—both transactions closed in February 2021—the company says it has completed an exit from the crude oil industry, and positioned the Blueknight partnership as a “pure-play terminalling company focused on infrastructure and transportation end-markets.”
“Exiting our crude oil businesses has been a top priority for Blueknight since early 2020,” said Andrew Woodward, chief executive officer. “Now with a more focused strategy and business model, coupled with an improved leverage profile and available liquidity, we believe we are well-positioned to identify and capture growth opportunities and benefit from long-term positive investment trends in U.S. infrastructure.”
Total cash consideration for the combined crude oil terminalling, pipeline and trucking transactions was approximately $164 million, including estimated crude oil linefill and inventory. Net proceeds, after transaction costs, will be used initially to reduce borrowings outstanding under the partnership’s revolving credit facility and for general partnership purposes, Blueknight said.
The crude oil terminaling segment includes 34 tanks with approximately 6.6 million barrels of crude oil storage in Cushing OK. The combined transaction included a definitive agreement for Blueknight to sell its crude oil trucking business to an undisclosed buyer.
“This announcement represents a significant milestone as we transition Blueknight away from traditional oil and gas operations into a pure-play, downstream terminalling business focused on infrastructure and transportation end markets,” Woodward said last year. “We are excited about the financial flexibility to both materially improve our balance sheet and pursue future investment opportunities predicated on risk-adjusted returns while maintaining our long-term financial targets.
“Pro forma for the transactions, Blueknight’s differentiated, asphalt terminalling business delivers an industry-leading, stable cash flow profile underpinned by long-term, take-or-pay contracts with a weighted average term of six years. Our leverage ratio is expected to be approximately 2.0 times initially, and our coverage ratio on all distributions is expected to be approximately 1.2 times or greater on an annual basis. We believe these transactions, coupled with our new and improved strategy, best position the Partnership for long-term growth and success.
“I would also like to express my deepest thanks to all the employees who have supported these operations over the years and during this time of transition. On behalf of the entire organization, we sincerely appreciate all of your hard work and continued dedication.”