Magellan Midstream Partners LP announced that its purchase of substantially all of the assets of Longhorn Partners Pipeline LP has been approved by the bankruptcy court. Closing was set for July 29 with no additional approvals required.
The 700-mile common carrier pipeline system transports refined petroleum products from Houston to El Paso TX. A terminal in El Paso, comprised of a five-bay truck loading rack and more than 900,000 barrels of storage, is included in the purchase. This terminal serves local petroleum products demand and distributes product to connecting third-party pipelines for ultimate delivery to markets in Arizona, New Mexico and, in the future, northern Mexico.
The purchase price for the pipeline system is $250 million plus the fair market value of line fill, which is currently estimated at approximately $100 million. Management intends to finance the acquisition with debt.
After closing of the acquisition, Magellan intends to connect this pipeline system to the partnership’s terminal at East Houston to provide additional supply options for current and potential customers to transport petroleum products to Southwestern markets. Further, Magellan will complete construction of an additional 400,000 barrels of storage that is underway at the El Paso terminal. Both projects should be complete by mid-2010 at an estimated cost of $25 million.